This book excerpt is reprinted by permission of Harvard Business Review Press. Excerpted from Playing to Win: How Strategy Really Works. Copyright 2013 A.G. Lafley and Roger L. Martin. All rights reserved.
Six Strategy Traps
There is no perfect strategy – no algorithm that can guarantee sustainable competitive advantage in a given industry or business.
But there are signals that a company has a particularly worrisome strategy. Here are six of the most common strategy traps:
1. The do-it-all strategy: failing to make choices, and making everything a priority. Remember, strategy is choice.
2. The Don Quixote strategy: attacking competitive "walled cities" or taking on the strongest competitor first, head-to-head. Remember, where to play is your choice. Pick somewhere you can have a chance to win.
3. The Waterloo strategy: starting wars on multiple fronts with multiple competitors at the same time. No company can do everything well. If you try to do so, you will do everything weakly.
4. The something-for-everyone strategy: attempting to capture all consumer or channel or geographic or category segments at once. Remember, to create real value, you have to choose to serve some constituents really well and not worry about the others.
5. The dreams-that-never-come-true strategy: developing high-level aspirations and mission statements that never get translated into concrete where-to-play and how-to-win choices, core capabilities, and management systems. Remember that aspirations are not strategy. Strategy is the answer to all five questions in the choice cascade.
6. The program-of-the-month strategy: settling for generic industry strategies, in which all competitors are chasing the same customers, geographies, and segments in the same way. The choice cascade and activity system that supports these choices should be distinctive. The more your choices look like those of your competitors, the less likely you will ever win.
These are strategic traps to be aware of as you craft a strategy for your organization. But there are also signs that you have found a winning and defensible strategy. Let's look at these next.
Six Telltale Signs of a Winning Strategy
Because the world is so complex, it is hard to tell definitely which results are due to the strategy, which to macro factors, and which to luck. But, there are some common signs that a winning strategy is in place. Look for these, for your own business and among your competitors.
1. An activity system that looks different from any competitor's system. It means you are attempting to deliver value in a distinctive way.
2. Customers who absolutely adore you, and noncustomers who can't see why anybody would buy from you. This means you have been choiceful.
3. Competitors who make a good profit doing what they are doing. It means your strategy has left where-to-play and how-to-win choices for competitors, who don't need to attack the heart of your market to survive.
4. More resources to spend on an ongoing basis than competitors have. This means you are winning the value equation and have the biggest margin between price and costs and the best capacity to add spending to take advantage of an opportunity or defend your turf.
5. Competitors who attack one another, not you. It means that you look like the hardest target in the (broadly defined) industry to attack.
6. Customers who look first to you for innovations, new products, and service enhancement to make their lives better.
This means that your customers believe that you are uniquely positioned to create value for them.
Even companies with these telltale signs shouldn't rest, because no strategy lasts forever. All companies need to evolve their strategies – to improve, sharpen, and change to stay competitive and, ultimately, to win year after year. Ideally, companies should see strategy as a process rather than a result – adapting existing choices before business and financial results (which are always lagging indicators) start to turn down.
All strategy entails risk. But operating in a slow-growing, fastchanging, intensely competitive world without a strategy to guide you is far riskier. Leaders lead, and a good place to start leading is in strategy development for your business. Use the strategic choice cascade, the strategy logic flow, and reverse engineering of strategic choices to craft a winning strategy and sustainable competitive advantage for your organization. Play to win.