BOSSES fail for many different reasons. Some are just unlucky. Some are sunk by their lack of ambition. As Alan Lafley and Roger Martin see it, settling for muddling along rather than going all out for victory means that a company “will inevitably fail to make the tough choices and the significant investments that would make winning even a remote possibility.”
Mr Lafley, who usually goes by his first initials, A.G., did not fail. In his ten years at the helm of Procter & Gamble (P&G), he revived the global consumer-goods giant, roughly doubling its sales while increasing profit margins. He credits much of this to embedding a rigorous approach to business strategy in every part of P&G’s vast empire. In doing so, he drew on conversations with the leading academic thinkers on strategy, including the godfathers of the field, Peter Drucker and Michael Porter. He also had a personal “brain trust” advising him as he designed and implemented his strategies. It included Clayton Christensen, an innovation expert at Harvard Business School, and a design guru, Tim Brown of IDEO, a consultancy. Above all, he relied on Roger Martin, initially a consultant at Monitor Group and latterly dean of the Rotman School of Management at the University of Toronto.Many are brought down by making a strategic error, of which there are six common varieties. There is the Do-It-All strategy, shorthand for failing to make real choices about priorities. The Don Quixote strategy unwisely attacks the company’s strongest competitor first. The Waterloo strategy pursues war on too many fronts at once. The Something-For-Everyone tries to capture every sort of customer at once, rather than prioritising. The Programme-Of-The-Month eschews distinctiveness for whatever strategy is currently fashionable in an industry. The Dreams-That-Never-Come-True strategy never translates ambitious mission statements into clear choices about which markets to compete in and how to win in them.
As Mr Lafley’s “principal external strategy adviser”, Mr Martin was the only person with whom the boss really shared his “out-of-the-box strategic musings”, and “Playing to Win” is essentially their reflections on how to do business strategy effectively, as seen through the lens of their work at P&G. This is a fascinating tale, featuring a cast of familiar brands, including Pampers, Tide and Olay, each of which went through a transformation under Mr Lafley’s eye. He has written about this before, notably in “The Game-Changer”, a 2008 bestseller written with Ram Charan, but the extra detail in illustrating lessons learnt makes this the better, meatier book.
A good strategy has five components, the authors argue, all designed to shorten the odds of success by helping managers make the right choices. The first two are closely intertwined: figuring out what winning looks like and which markets to play in when seeking that victory. For P&G, sometimes the goal became global domination, sometimes local; sometimes just one category of consumer for a brand, other times many. The next component is figuring out how to win—the company’s distinctive strategy in any market it is trying to dominate. This in turn will be heavily influenced by the fourth and fifth components: identifying, and playing to, the company’s unique strengths relative to its competitors, and identifying those things that need to be managed for the strategy to succeed.
The mirror image of the fifth component is deciding what not to manage. One of Mr Lafley’s most important innovations was a slimmed-down strategy-review process. This replaced needlessly sprawling bureaucratic meetings with agendas that focused on the most important questions. One strength of the book comes from the examples provided to illustrate each of the five prongs of strategy, none stronger than the book’s opening tale of how Oil of Olay was transformed from a struggling skin- care brand with a declining market reflected in its nickname, “Oil of Old Lady”, into the booming Olay range serving the fastest-growing part of the market with its products for fighting the “seven signs of ageing”. A crucial part of this strategy was to convince consumers who had once shunned Olay to buy its new incarnations at prices that were significantly higher than those charged by other mass-market cosmetic brands.
The book could have benefited from more about Mr Lafley’s handful of strategies that did not deliver, for brands such as Folgers coffee, Pringles snacks, and pharmaceuticals. Rather than explore and learn from them, Mr Lafley prefers to bury these failures in an appendix.
Since Mr Lafley left P&G in 2009, the company has stumbled badly, and its new boss, Bob McDonald, is fighting to keep his job. Meanwhile, Monitor, Mr Martin’s own firm, got into financial difficulty and has been sold at a discount to Deloitte. What do these sorry tales say about strategy? Rather than explore whether their many strategic successes somehow also sewed the seeds of later problems, Messrs Lafley and Martin coyly note that “no strategy lasts forever”.
By A.G. Lafley and Roger Martin.Harvard Business Review
