Book SummaryPlaying to Win, by AG Lafley

1-Page Summary1-Page Book Summary of Playing to Win

In Playing to Win, A.G. Lafley and Roger Martin explain their system for designing business strategies, which they developed while working together at Proctor and Gamble (P&G) between 2000 and 2015—Lafley as the CEO, and Martin as a consultant. The authors call their system the “strategic choice cascade” to illustrate how each step flows into the next. For this guide, we’ll use the term waterfall strategy instead, which is simpler and more intuitive.

They used this approach to double the company’s sales and market capitalization.

Lafley and Martin’s waterfall strategy requires company leaders to answer five questions. The questions flow into one another: Each builds on and refines the answer to the previous question while leading naturally into the next question.

The five questions are:

1. What is your company’s vision and purpose, or “winning aspiration”?
2. What are your target markets?
3. How do you succeed in those markets?
4. What capabilities does your company need in order to “win,” or achieve its purpose?
5. How should you manage your company in order to achieve its purpose?

Keep Your Answers Concise

These five questions form the foundation of your waterfall strategy, but it’s important not to get bogged down in pursuing too many different answers to them. Pursuing too many options, or options that work against each other, is a common reason why many business strategies fail. Instead, make a few specific choices that, taken together, form a clear and cohesive strategy to reach your goal.

The authors say that all employees, from the CEO to a retail salesperson, have to make strategic choices. In large companies, many individual choices and broader strategies function at once and in conversation with one another. For example, one employee’s strategy could play into a brand strategy, which in turn connects with a larger sector strategy, which forms part of the overarching company strategy. Each strategy flows together to form a cohesive strategy that determines the overall success of the company—the authors call this a “nested cascade,” a waterfall made up of smaller waterfalls.

Your choices may look different depending on your position, but no matter what your job title is, the authors contend you should always play to win. In fact, this is the driving force of the waterfall strategy: You should make every choice with the express purpose of winning, not just competing. Lafley and Martin tell us competition is fierce, so if you’re not playing with a competitive mindset, you’ll be defeated by more aggressive and strategic rivals.

Counterpoint: You Can’t “Win” Business

In contrast to Lafley and Martin’s emphasis on winning, Simon Sinek argues in The Infinite Game that you can’t “win” in business. That’s because business is an infinite game, an ongoing process that nobody ever wins; the point is to play as long and as well as possible. On the other hand, games and sports are finite games—distinct events that end with winners and losers.

Sinek believes this is an important distinction because infinite games require completely different mindsets and strategies from finite games. To play an infinite game like business, Sinek recommends that you:

• Focus on sustainability. Because the game lasts forever, the best strategies are the ones that you can sustain indefinitely.

• Embrace flexibility. Instead of creating specific strategies to “beat” your opponents, pursue innovations and opportunities that will make your company stronger, more resilient to market shocks, or more adaptable to changing circumstances.

• Take the long view. Worry more about your long-term success than your short-term profits.

In this guide, we’ll examine each step of Lafley and Martin’s waterfall strategy, then discuss how to design your own strategy to give you the best chance of dominating your chosen market. We’ll enrich—and occasionally contrast—Lafley and Martin’s ideas with advice in other popular business strategy guides such as Good Strategy/Bad Strategy, The Infinite Game, and Blue Ocean Strategy.

Question 1: What Is Your Company’s Ideal Future?

To answer the first question in Lafley and Martin’s waterfall strategy, figure out your definition of success and what you want your company to achieve. What is your “winning aspiration,” as Lafley and Martin refer to it, or the ideal future for your enterprise?

The authors say that your answer should encompass your company’s purpose, but it’s not only a statement of purpose. It’s also a statement of what success—or “winning”—would look like at your company.

The Three Perspectives of Business

A winning business strategy must address three critical elements:

• The customer: Who is buying your product?

• The investor: Who is covering your costs?

• The producer: Who is making your product?

Many business plans fail because they only consider the perspective of the producer, the company making the product or providing the service. Such narrow business plans tend to gush about groundbreaking technologies and revolutionary ideas, but overlook the fact that they’ll need people to invest in those innovations—and, even more importantly, they’ll need people who want to buy them.

Question 2: What Are Your Target Markets?

Lafley and Martin’s second question asks:** On which battlefields will your company fight, or what...

Playing to Win Summary Shortform Introduction

Playing to Win is a collaboration between A.G. Lafley and Roger Martin, who worked together at Procter & Gamble (P&G) as CEO and strategic adviser, respectively. The book teaches what business strategy is and how to use it effectively. Lafley and Martin suggest using a “waterfall” sequence of five questions that identify the company’s vision, target markets, and plan to dominate those markets. The answer to each question informs the next, hence the term waterfall strategy.

About the Authors

Lafley is best known for leading P&G as president, CEO, and chairman of the board from 2000 to 2010 and from 2013 to 2015. During those periods, he doubled P&G’s total sales and market capitalization—his success is credited to his heavy investments into brands that were already successful and his intense focus on customer satisfaction. Lafley stepped down as CEO in 2015 to become executive chairman of P&G, and he officially retired in 2016. When he stepped down for the second time, Fortune hailed him as [“one of the most lauded CEOs in...

Playing to Win Summary Introduction | Chapter 1: Choices in Strategy

A.G. Lafley and Roger Martin—who worked together at Procter & Gamble between 2000 and 2015 as the CEO and a consultant, respectively—open by saying that most people don’t understand why some business strategies succeed and others fail. Without this understanding, they have trouble choosing a good strategy themselves.

However, Lafley and Martin assert that developing a good business strategy is deceptively simple: It’s the process of making tough choices that puts you ahead of the competition. These choices can confine you—making one choice often means forgoing another one—but they’re necessary for success. The key to finding a good strategy is learning how to win rather than just how to play.

The authors add that all employees, from the CEO to a retail salesperson, have to make strategic choices. Furthermore, they have to make those choices not just with the intent to compete, but to win. Winning will look different for different segments of the company: On the company level, it may include becoming the number one player in the market; on an individual level, it may mean having the best sales numbers in a region.

In Playing to Win, Lafley and Martin explain...

Playing to Win Summary Chapter 2: Envision Your Company’s Ideal Future

The next five chapters will take you through Lafley and Martin’s waterfall strategy, question by question.

Question 1: What is your company’s ideal future? (In the authors’ terms, your “winning aspiration”)

To answer the first question, which starts the waterfall, figure out your definition of success and what you want your company to achieve. The answer, your ideal future, can include a statement of purpose, but it’s not only a statement of purpose. It’s also a statement of what success—or “winning”—would look like at your company. Once a company understands what it wants to achieve, it can take clear and specific actions toward that ideal future.

Lafley and Martin say that your goals must involve serving and pleasing your customers: If consumers like your company and your products, then you’ll naturally succeed in the marketplace. The authors add that focusing exclusively on internal issues (like profit margins, or marginal improvements to your products) will blind you to external market demands and make you less likely to reach your ideal future.

In other words, Lafley and Martin say that to figure out your ideal future, you have to determine what your...

Playing to Win Summary Chapter 3: Find Your Target Market

Question 2: What are your target markets?

After you’ve figured out your winning conditions, it’s time to move on to finding your playing field. Lafley and Martin’s second question asks: On which battlefield will your company fight? Or, what audience do you want to target? This can include fighting for particular demographics, to be on specific media platforms (websites, TV networks, or magazines), or in ideal geographic markets. As we’ll discuss, where you decide to play should be based on the state of the industry you’re competing in and your own company’s particular strengths.

(Shortform note: In Blue Ocean Strategy, Renée Mauborgne and W. Chan Kim compare markets to areas of the ocean. A “red ocean” is a market that’s already crowded, where competition is fierce and success is unlikely—imagine blood in the water, and the predators that it will attract. Conversely, a “blue ocean” is a fresh and new market where there’s little or no competition. When developing your business strategy, it’s best to look for blue oceans rather than trying to compete in a crowded market.)

Choosing Your Targets

Lafley...

Shortform Exercise: Figure Out Your Target Market

This exercise will help you figure out the playing field for your product. Think of a product you sell (or would like to sell) then answer the following questions.

Where (physically) are you competing? (For instance, are you selling the product in local shops, or online?)

Playing to Win Summary Chapter 4: Win in Your Arena

Question 3: How do you succeed in your chosen markets?

We’ve discussed how to figure out what you want and which market to target. Now, Lafley and Martin explain how to find a competitive advantage in your chosen market. You need to create sustainable value for customers.

Lafley and Martin say that there are two main ways to harness your strengths and find victory in your chosen market: cost leadership (beating your competitors’ prices) and differentiation (offering something your competitors don’t). Different companies have different strengths that contribute to their ability to excel in unique ways. For instance, small companies can often provide a more targeted, boutique service (differentiation) while larger companies can often deliver quality products at a more competitive price point (cost leadership).

(Shortform note: In Purple Cow, Godin makes the case that the only way to succeed is with a remarkable product or service that attracts attention. He uses IKEA as an example of standing out through cost leadership: By selling mass-produced, disassembled furniture in easy-to-stack boxes, the company greatly...

Shortform Exercise: Engineer Success

Develop your ability to find your playing field and figure out how to succeed in it.

Describe a product that your company sells or would like to release.

Playing to Win Summary Chapter 5: Build Ingredients for Success

Question 4: What capabilities does your company need in order to win?

Lafley and Martin say that once you’ve decided where you’re going to play and how you’re going to win, the next step is figuring out what resources and skills you need to achieve your victory—in other words, what capabilities your company will need, such as innovation, efficiency, or leadership. To do so, determine what your company needs to be good at—and what it needs to be the best at—in order to win in the playing field you’ve chosen.

(Shortform note: Lafley and Martin suggest that you start by coming up with goals, then figuring out what capabilities you’ll need to reach those goals. However, some business strategists suggest the opposite: Start by determining three to six things that your company already does well, invest your time and resources into further improving those capabilities, and base your business strategy around those.)

Determine and Map Your Capabilities

Lafley and Martin say that a successful strategy requires you to** identify the capabilities you’ll need to reach your goals within the context of your where-to-play...

Shortform Exercise: Determine Your Capabilities

This exercise will help you determine and develop the capabilities necessary for success.

Think of a product you’ve launched or would like to launch. Briefly outline what this product is.

Playing to Win Summary Chapter 6: Organize for Success

Question 5: How should you manage your company?

It’s tempting to believe that if you complete the previous steps—determine your aspirations, a place to play, a way to win, and the capabilities to fulfill all of those goals—then your company will succeed. But Lafley and Martin warn that, while those steps are important, a successful company also needs three management capabilities to make sure the rest of the waterfall flows smoothly:

1. Systems to review strategy
2. Systems to communicate strategy throughout the organization
3. A system to measure progress

The Challenges of a Work-From-Home Team

With the coronavirus pandemic, and the resulting increase in teleworking, these capabilities are more important than ever. Managing a work-from-home team or a hybrid team (where some employees are in the office and some aren’t) presents unique challenges. Specifically, fairness and communication are the keys to effectively managing such a team. That’s exactly what the capabilities listed above accomplish.

Clear systems for measuring progress and performance ensure fairness at both the...

Playing to Win Summary Chapter 7: Work Through the Waterfall

Now that we’ve covered the five steps of Lafley and Martin’s waterfall strategy, we’ll delve into exactly how to make decisions at each step. There’s no surefire formula for victory, but there are frameworks that, if used correctly, can serve as jumping-off points and make success more likely.

Leverage Uncertainty Through Options

Lafley and Martin say that there’s no sure way to win in the marketplace because there are always unknown variables and uncertainty in any strategy. In Antifragile, statistician and risk analyst Nassim Nicholas Taleb explains how to make uncertainty work in your favor instead of against you.

One of Taleb’s key points is to always leave yourself as many options as possible; every option you have available helps you to maximize opportunities and minimize harm from any sudden changes. For example, if you’re considering reducing your staff to save on overhead, keep those workers around for as long as is feasible—you’ll always have the option to let them go later. That way, you’re ready for one of two...

Playing to Win Summary Conclusion: Do’s and Don’ts of Strategy

Lafley and Martin conclude their book by briefly summarizing the signs of an effective strategy, as well as some common pitfalls of weak strategy.

Common Signs of a Good Strategy

In short, Lafley and Martin believe that a good business strategy is one that makes you stand out from the competition in a positive way. Here are some signs that you’re doing so:

1. You have a unique activity system. Your particular combination of goals and capabilities is different from your competitors’, and they’re not easily imitated.
2. People have strong feelings about your company. You have die-hard fans and people who can’t imagine ever buying from you. That’s a sign that you’ve made strong and clear choices.
3. Your competitors are doing well. This seems counterintuitive, but if your competitors are secure then they’re less likely to try to muscle in on your market.
4. You have more resources available than your competitors. If you’re able to spend more on business activities than your competitors do, it means that you have larger profit margins than them. That’s a good sign that you’re winning in your chosen arena.
5. **Your competitors fight each other, not you....