This article is an excerpt from the Shortform book guide to "Playing To Win" by AG Lafley. Shortform has the world's best summaries and analyses of books you should be reading.
Like this article? Sign up for a free trial here .
What is the Playing to Win Framework? How can you apply the Playing to Win strategy framework?
The Playing to Win framework is a set of five choices that include having a winning aspiration, knowing where to play, knowing how to win, developing core capabilities, and fine-tuning your management systems. These choices help you win in the marketplace. You can only use the framework successfully after answering the five questions in the strategic choice cascade.
Read on to learn how to implement the Playing to Win framework.
Get Through the Cascade
Now that we understand the five steps of the cascade, we’ll delve into exactly how to make decisions at each step. There’s no formula for success, but there are frameworks that, if used correctly, can serve as a jumping-off point and make correct decision-making more likely.
As a general rule, remember that no decision is final and that each step of the cascade affects the other steps and can change based on changing market conditions.
Applying the Playing to Win Framework
Here are the five steps for applying the framework from Playing to Win:
Step 1: Identify Your Winning Aspirations
Given that strategy is frequently changing, don’t worry too much about creating a definition of winning that’s perfect. Instead, agree to continue to return to your winning aspirations as you define the other pieces of the Playing to Win framework.
Steps 2 and 3: Decide Where to Play and How to Win
To implement the Playing to Win framework, you must decide where to play and how to win. When making your choices, consider four questions, which you can think of as a flowchart that moves from the first question to the last. Answer them in order and then make a strategic choice based on your answers:
1) How is your industry structured—who are the big players and small players on the rise—and how much money could its component pieces make you?
Map the industry to answer this question. This is not easy, given that the industry changes a lot. For decades, Crest was the #1 toothpaste in the U.S. because it offered protection against cavities. However, in the 90s, as every toothpaste began to offer that service, Colgate took over by offering hygiene more generally. Continually monitor how the industry is changing.
Also consider how attractive different parts of the industry are. Remember the P&G research with paper towels that found that there were segments of the world where people weren’t interested in buying high-quality paper towels. These segments were thus unattractive to the business. Compete in places that are attractive. This requires an analysis of competition—if there’s too much competition somewhere, it becomes a less attractive industry.
2) What do your customers want?
In cases like P&G, which sells to retailers, “customers” includes both the people who are buying P&G products on the shelves and the retailers the company sells to.
If your company is selling to retailers, think about what they find attractive. They also want high margins and people coming back to their stores. Data about how customers are buying your product and what distributors want can help you decide whether it’s best to pursue a strategy of widespread distribution of a cheaper product or a more prestigious product with bigger margins. If customers are only willing to buy your product at a very low price, the former strategy is likely better. In contrast, if they think of your product as a luxury good and are willing to pay more for it, the latter might be more successful. Additionally, embedding employees with retailers to see what they are looking for and what’s selling can be invaluable to making strategic decisions.
Every company, whether they are selling to them directly or not, has to worry about their “end consumers”: the people buying the products off the rack. You can’t just ask them what they want. Customers don’t always know what they want until you show them something new—as Henry Ford said, before the invention of the car, people would have said they want a faster horse. So you have to invest a lot of resources to ascertain customer needs—observe customer patterns, what they buy, what they look at but don’t buy, and what their return rate is.
3) How is your company measuring up against its competitors?
Ask yourself if you are meeting the needs of your customers better than your competitors. If not, and you can’t figure out how to improve based on a good understanding of what your customers want, you might have to exit the sector.
Additionally, ask yourself if your costs are lower than your competitors’. These two questions determine whether you have a comparative advantage.
4) How do you think your competitors will respond to any action you decide to take?
Ultimately, unlike with the other three questions, you’ll have to guess. You can’t predict scientifically what your competitors will do at any given moment. However, you have to make these guesses, because if you don’t, you’ll be building a strategy based only on the current equation. If the equation shifts based on a competitor’s response and you’re unprepared, your strategy will completely blow up.
A good example here is P&G’s decision to launch Joy dish detergent in Japan. Joy was entering a market dominated by two competitors, Kai and Lion, that produced similar dish soaps. Joy made dish soap in a smaller container that dealt with grease better than the leading brands. P&G’s calculation was that the worst-case scenario was that eventually they would come out with a product similar to P&G’s, but P&G could still invest the resources necessary to win. They were correct in their assessment, and Joy captured a 30% market share and quickly became the leading dish brand in Japan.
Step 4: Identify the Capabilities You Need to Succeed
Capabilities are the resources and competencies required to find your market and succeed in it. The Playing to Win framework outlines five capabilities that are essential to success:
- Knowing and understanding the customer: You need to know what the prospective customer needs—more so than your competitors do.
- Innovating: Successful companies change in response to their deep understanding of the customer. Don’t rest on your laurels—improve your products even if things are going well.
- Creating a strong brand: You need a marketing strategy that will help customers easily recognize who you are and build their trust in you.
- Being able to maneuver, or “go-to-market,” quickly: This is the ability to get your innovations in the hands of customers quickly by building good relationships along your distribution line.
- Scaling up: In order to scale successfully—leading to better margins—you need to understand the global market.
Olay realized it needed to innovate an entirely new product in order to compete to win. So P&G (again, Olay’s parent company) brought in scientists, marketing professionals, distribution experts, influencers, and others to create, brand, and market their new product. This required creating capabilities that did not exist before and improving on ones that did.
Step 5: Figure out How to Manage Your Company for Success
The final step of the Playing to Win framework is introducing effective management systems. You need managers who can successfully implement and monitor your overall strategy and help you make important decisions along the rest of the cascade. The mantra among your management team and employees should be: Discuss issues and review strategy in the open, to see if the strategy is working and to continue to innovate based on new challenges.
The best way to do this is to have regular open strategic discussions. Focus on simple strategic questions and don’t expect to come up with an entirely new strategy in one fell swoop—this can be a continuous process of innovation, discovery, and review of existing systems.
Likewise, train employees to be able to deliver results in line with your aspirations. This includes having a Human Resources department that’s strong and can provide opportunities for advancement. This will keep people happy so that there is little turnover, and thus little need to re-teach your system.
Assertive Inquiry
To conduct the strategic discussions required to implement the Playing to Win framework, consider moving towards a system called assertive inquiry that aids in the process of having open strategic discussions. This combines the process of advocacy (speaking up for your own ideas with data to back yourself up) with an inquiry into the reasoning of everyone else.
Not only does assertive inquiry sharpen your critical reasoning skills and make others look into the data and motivation behind their own ideas, but it also helps you be more open to change. If a group asks good questions, individuals in that group will be more likely to change their minds about their own ideas. They’ll also be more likely to ask these kinds of questions of themselves.
Be confident in yourself, but also know that you could have missed something that someone else can clarify or tease out. You’re both advocating and listening during the inquiry process.
There are some simple steps you can implement to make assertive inquiry work:
- Present your argument and ask for comments or questions.
- Example: “To appeal to this market, I think we should use Approach A. What are the pros and cons of this approach, and what are alternative approaches?”
- Paraphrase the comments and questions of the questioner.
- Example: “It seems you believe that Approach A won’t work because of Problem Y. Is that accurate?”
- If you don’t understand, ask clarifying questions..
- Example: “Could you tell me more about why Problem Y would hinder Approach A?”
Creating strategy is the work of a group, not an individual. High-achieving individuals will inevitably have different ideas about how to succeed in a sustainable way and what strategies are going to get a company there. Differences aren’t always productive or easy to resolve, but these methods can help.
———End of Preview———
Like what you just read? Read the rest of the world's best book summary and analysis of AG Lafley's "Playing To Win" at Shortform .
Here's what you'll find in our full Playing To Win summary :
- Why the cascade strategy will help you become victorious in your chosen field of play
- Why you should make every choice with the purpose of not just competing, but winning
- How to develop a system of decision-making for your company
