Where to Play & How to Win
Where to Play & How to Win
Introducing Roger Martin
Friends,
Another autumn Friday, another key strategic concept to discuss. Previously, we have covered Stephen Bungay’s strategic intent and Richard Rumelt’s guiding policy. Today, we turn to the amiable Roger Martin and his wildly popular Where to Play/How to Win framework.
First introduced in the smash hit Playing to Win: How Strategy Really Works co-written with former P&G CEO A.G. Lafley, Martin’s approach to strategy has become the default starting point for many practitioners. In fact, unlike the works of Michael Porter upon which he relies quite heavily for inspiration, there is little criticism or publicly expressed reasons not to use it to be found anywhere. As far as the broader strategic community is concerned, then, playing to win appears to really be how strategy works.
It also helps Martin’s cause, I would suspect, that he continuously finds time to blog about and answer questions on the practical implications of his theories. Few thinkers of his immense stature do, and he indisputably deserves credit for breaking the mold.
However, absence of evidence is not evidence of absence. Just because critique has yet to be provided, it does not mean that the framework is perfect. So let us have a closer look at how it holds up to scrutiny.
At its heart, Playing to Win relies on five pillars: the winning aspiration, where to play (WTP), how to win (HTW), the core capabilities needed to win, and management systems required to support said capabilities.
To the point of this particular newsletter, we are going to focus on the first three.
The winning aspiration, per Martin’s definition, establishes the purpose of the enterprise through a statement about its ideal future and thereby frames all subsequent choices. Crucially, it should be tied to a desire to win in a particular place and in a particular way, not least to allow later stage benchmarking. Clarity is thus key; anything less will ensure that actions at brand, category, sector, and company level fail to deliver against the ideal.
While the winning aspiration broadly sets the scope of the firm’s activities, the next two questions ‘define the specific activities of the organization – what the firm will do, and where and how it will do this, to achieve its aspirations’.
Put differently, if the aspiration is the larger what, WTP and HTW provide the detailed where and how.
Where to play ultimately represents a set of choices that narrows the competitive field by establishing the markets, segments, channels, categories and so forth in which the company intends to compete. No company can be all things to all men (and/or women), so narrowing down the strategic playing field makes intuitive sense.
How to win, meanwhile, defines the choices made to win within the aforementioned field. Ideally, these should be based not only on the winning aspiration, but too on how the company can best create and deliver unique value to customers. By being suited to context and highly difficult to copy, this should in turn create a competitive advantage.
It all sounds rather good in theory. But, like in the case with Rumelt last week, despite its creator’s focus on the pragmatic, the framework often amounts to something a lot less concrete in practice.
To be fair to Martin, this is not entirely his fault, and as mentioned above, he has made a rather substantial effort to prevent it from happening. The unfortunate problem is that many of the examples he provides fail to help his case.
To illustrate, a winning aspiration mentioned in Playing to Win and often referred to by proponents of the approach is that of Starbucks, i.e., ‘to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time’. Even with the best will in the world, that is not a winning aspiration that brings clarity to subsequent choices as much as nonsensical fluff. As has been embarrassingly noted on more than one occasion, people do not go to coffee place conglomerates to have their spirits nurtured. They go there to buy coffee.
Similar contradictions can be found throughout the book. A rule of thumb, he argues at one point, is to include the customer in the winning aspiration, not money. Yet the most important company to the overall narrative, Olay, defines its winning aspiration as ‘market share leadership in North America, $1 billion in sales, and a global share that put[s] the brand among the market leaders’. This has nothing to do with customers as such, nor has it strictly speaking got anything to do with winning other than in relation to the US market.
Among my issues with his approach (which, to be clear, are far fewer than with many other famous bodies of work), the focus on beating the competition is arguably the biggest. Martin makes a point of repeatedly stressing that winning is the only thing that matters – ‘the ultimate criterion of a successful strategy’ – and that anything less is self-defeating. But, clearly, that is not true.
Potential correlations between chasing market superiority and negative profitability aside, calling winning ‘the ultimate criterion’ implies that in any given market there will only be one company with a truly successful strategy. Though I do not think that is what he means, it is nonetheless often how it is interpreted; I have had conversations with more than one strategist who argued that it should be taken verbatim, and that any strategy that fails to win also fails to be a strategy. Not only is this demonstrably false, but too a rather problematic statement. If the merits of a strategy truly are to be defined solely by its outcomes, it would require a controllable linear causality that does not exist in complex markets. Assuming that a good result equals a good strategy, and conversely that a bad result equals a bad strategy, is nothing more than halo affected reasoning. Just because Starbucks are doing very well, it does not mean that their winning aspiration is brilliant. It is not.
Now, one might counterargue that an aspiration to win is not the same thing as actually winning, and that is a fair point. But it still hinges on performing against the competition. The question then becomes who one is competing against.
The answer is a lot harder to come by than most realize. No matter how much companies would love to be able to themselves delimit their opposition, simply naming a market segment, to paraphrase Byron Sharp, does not make it exist. A manufacturer of individually wrapped, chocolate coated candy, say, does not merely compete with producers of identical confectionary, but a myriad of brands within a broader category. Other categories can provide competition too; all kinds of products and services can cover the same need and be sold across geographical markets. A product feature implemented does not automatically mean a product feature recognized, prioritized or valued.
Consequently, the competitive set against which companies attempt to win on paper inevitably ends up being significantly wider in reality than they would like it to be – and perpetually in motion. Attempting to limit competition by narrowing it down in a strategy document generally does not make it possible to do so, which makes notions of cost-leadership and differentiation a lot more difficult in practice than in theory.
Although this admittedly is an issue with much of traditional strategic discourse, there is no denying that it undermines the underlying reasoning in Playing to Win. Strategy in reality is typically more about you than them and, for most, more about managing challenges than achieving superiority. No company will act in a vacuum, of course, but nor are markets zero sum games.
It is for this reason that the strategic ambition in the ABCDE framework does not include winning, but a shared understanding of success. Though it can, I suppose, be interpreted as a statement about what winning looks like in the eyes of the beholder, that may be taking it too far; in and of itself, it does not have to include competition in either explicit or implicit terms.
On the whole, Martin stands among the behemoths of the industry due to his excellent additions to the body of knowledge that is strategic doctrine. However, as we have seen, WTP/HTW is not without flaws. Despite loud calls for the contrary, it may therefore be best taken in metaphorical rather than literal terms.
Next week, we will see whether Henry Mintzberg’s concept of strategic perspective will help us further. Until then, have a lovely weekend.
Onwards and upwards,
JP
Dear JP:
Thanks for taking the time to thoughtfully critique Playing to Win. And thanks for the kind words about my attempt to provide useful amplification of the framework through my Medium blog posts – that has been a labor of love.
There is very little in your critique with which I fundamentally disagree.
I would like to add some perspective on my views of winning and WTP. I am as keen as I am about winning not because I want to beat competitors but rather, I want to convince competitors to choose to invest behind a different WTP/HTW combination. That makes Playing to Win a positive sum construct not a zero-sum construct. Does Vanguard beat Fidelity? Or does Fidelity beat Vanguard? It would be hard to argue either. But do they both encourage the other to invest heavily in a different WTP/HTW than their own? Damn right! And who benefits? Customers, employees, shareholders (though the great Jack Bogle operated Vanguard as a mutual company so its fund holders were the beneficiaries not himself), and the communities in which they operate. Does Four Seasons beat its luxury hotel chain competitors? No, it encourages them to play elsewhere in different ways.
That is why the WTP box is probably the box in my cascade on which I think that practitioners don’t spend enough hard thinking time. As key part of your goal in strategy is to figure out how to focus on a space in a way that encourages others to play elsewhere and/or differently. Of course, this isn’t a utopia where everybody bows and goes elsewhere. But if you think of your WTP as a shape – like a circle – a successful strategy is one in which the circles of others don’t overlap too much with your own. That is Apple’s success in smartphones. A bunch of Android players have highly overlapping circles. And Apple’s circle overlaps the least with anybody else – so it wins biggest. LG had to exit because its WTP and its HTW overlapped completely with others including Samsung, which, in nerd-speak, stochastically dominated LG.
On Byron Sharp, he is just one smart dude. There is very little I disagree with in his viewpoint and in fact long before I came across his work – thanks to his friend Craig Wynett now-retired from P&G – I was saying some similar things. But for sure his viewpoint is important and additive – like I say, the guy is good. Customers decide what ‘segment’ they are in. You can’t be too precious about segments. Customer actions are probabilistically distributed not deterministically distributed. That all having been said, you have to have a point of view about WTP and build a HTW/Caps/MS around that view. If you don’t, someone else will and leave you in the dust.
In my view, you can believe every intelligent thing that Sharp says and believe that you need to have a WTP/HTW.
The only thing that I have a serious quibble about in your write up is the ‘perpetually in motion’ crack. I simply do not know where this criticism – which is widespread – that having a WTP/HTW means that you think that industries have fixed, unchanging boundaries came from. No one with even modest strategy intelligence has ever imagined that. Of course, industries are continuously evolving, with shifting boundaries and new players creating spaces that overlap with previously defined spaces.
My view has always been that there are two possible reactions to this reality. One is to sit with your cash in the corporate treasury and wait until ‘things become clearer.’ The other is to make a bet based on your best guess as to what the playing field is now and how you think it is going to change (and how you might actually drive that change by your actions).
The vast majority of executives do the former – and call it ‘emergent strategy’ even though that is not what Henry Mintzberg meant by it. I do the latter – and help my clients do it. And I get them to be clear about the logic of their strategy choice – the “what would have to be true” (WWHTBT) about it – which includes WWHTBT about the industry. I encourage them to wake up every morning and, before starting whatever work they were going to do, to ask if the WWHTBT that underpins the strategy still hold true. If so, keep working. If not, start thinking how to shift your strategy to take account of the change. That is how you gain a strategy learning advantage over your competitors who sit on their hands waiting for clarity to emerge.
Anyway, JP, that is my only real quibble and I thank you for taking the time to critique my work.
Best
Roger