Published by HBR Press in 2013, Playing to Win (A.G Lafley and Roger L. Martin) has become the de-facto strategy handbook in many organizations.
I have also come to learn that it is indeed the go to guide used by many firms in the industry I work in (maybe why we all tend to look alike)!! To be clear, I like many aspects of the book and minds far greater than mine laud its usefulness and impact on strategic thinking. My critique is more how the central tenets of the book have been misinterpreted or misapplied.
The foundations of the book are based mainly on the positioning school of strategy popularized by Harvard professor Michael Porter (kicked off by his book Competitive Strategy in 1980). His firm, Monitor Group, was also the lead consultancy that worked with P&G when Lafley (a co author of Playing to Win), was CEO. Hardly surprising then this is the school of strategy adopted by P&G and what is described in the book.
Although I did my doctoral studies in business, this article will not be full of references or have the academic rigour some may expect, it will be opinion backed by alternative views from different knowledge bases. One of the advantages of doing an MBA from a 2nd tier school in the UK is exactly the opposite of doing an Ivy league MBA (see this damning article in Bloomberg from ex Harvard professor Shoshana Zuboff), I am exposed to different lines of thinking, namely systems thinking and cybernetics. These ideas along with the writings of Ralph Stacey and Milan Zeleny have greatly influenced my thinking.
Blown to bits – not really but a criticism of the superficial adoption of the books core message!
Let’s hope my confidence (some may say over confidence, a few may say arrogance) in addressing the weaknesses of the books core message is not subject to the Dunning Kruger effect…you be the judge.
To me, there are two stand out factors that hit you hard when reading this book. Firstly, P&G is obviously a consumer goods company and the stories are based on these experiences. Secondly, the authors hit you hard right of the bat that strategy is choice. Choice means trade offs which are the antithesis of knowledge based strategies.
Consumer goods
Let’s address the consumer goods company piece first. P&G sells undifferentiated products, as simple as that (many will argue I know). Like the perfume or beer industry, the vast majority of consumers couldn’t tell the difference between one product or another without the branding and packaging that envelop that product (and all the advertising that goes with it). The way P&G differentiates its products is through image differentiation.
This means they can spend inordinate amounts of money on promotion to ‘position’ the product in your mind without any real differentiation (see the excellent book by Al Ries and Jack Trout: Positioning) which is essentially what they did with Oil of Olay. You try doing that in the B2B world selling hardware or manufacturing equipment. Differentiation in this world is based on tangible elements that customers can actually ‘touch’ and define including product performance, after sales service, ROI, etc.
The other issues related to the stories told in this book is that they suffer from narrative fallacy (forcing links between events to make sense of these events) and hence the halo effect. In his superb book (The Halo Effect), Phil Rosenzweig identifies a number of delusions with popular management books and research. He calls this the delusion of connecting the winning dots. By looking at one data set, that of P&G, and explaining their success through the strategy processes they undertook, corrupts the data from the very start. Attribution is easy in hindsight when you are successful. Let’s not forget that Lafley wasn’t so successful in his second time around at P&G.
Strategy as choice – the positioning school
The book does an admirable job of bridging the gap between the traditional concepts of the positioning school and those more closely associated with the resource based view of the firm. They do this by addressing core capabilities and the activity systems that support them. The problem I see is that the discussion and framework in the book still sticks to a deterministic view of linear decision making more suited to stable environments. Again, if you have a broad view of approaches to strategy this is not an issue, it is the issue of how it is adopted by managers.
One of the central tenets of Playing to Win is that strategy is about choice. Choices about where to play (segments) and how to win (capabilities needed). This follows the prescriptions of Porter that strategy can be derived from an analytical process that identifies a few unique positions in the market (generic strategies, 5 forces) which a firm must then align towards. This trade off, as identified by Milan Zeleny (Strategy as Action: from Porter to anti Porter, International Journal of Strategic Decision Sciences, 2010), originates from the ideas of Pareto optimality. He goes on to say: ‘this is not efficiency…but a marginalization of the customer”. The danger of pursuing some competencies at the expense of others is those neglected competencies atrophy and all advantages are temporary.
In addition, ignoring all the issues of cognitive biases and indeed cognitive capacity, these assumptions clearly have underlying problems.
- The environment is knowable – the term VUCA (volatile, uncertain, complex, ambiguous) has been thrown around to the point of ubiquity but it doesn’t make it any less relevant. Many industries are facing significant upheaval and the fitness industry (the one I work in) is most likely on the edge of severe disruption if big tech continue their drive into health and fitness (Apple+, Amazon Halo and health care, Google and Fit Bit). Do managers really feel in an unknowable environment that they have all the information they need to drop on a few choices?
- The future – strategy has various timelines addressing the short, medium and long term. Clearly the future is unknowable and hence if you don’t think differently as Gary Hamel says, the future will always arrive as a surprise. In her recent book How to Navigate the Future, Margaret Heffernan gives a dizzying array of examples of how different types of professions and artisans rely on learning and emergence to envisage the future, not analysis.
- Strategy is top down – although not explicitly identified in the book, the strategy process described is a positivist one that seems to ignore the employee element. Not only does an exec team not have the monopoly on intellectual capital, in today’s dynamic environments, how can those at the top believe they have all the processing power needed to devise a viable strategy? Not only does this defy common sense, it also defies what is known as Ashby’s law of requisite variety (Ross Ashby, a British cyberneticist and systems thinker). Complexity requires equal complexity in dealing with it. That requires the collective intelligence of the whole organisation. That then requires a shift in mental models and culture, something not even addressed by the positioning school. Although not a book about strategy, the work of James Surowiecki in his book The Wisdom of Crowds, is well worth a look in terms of collective decision making.
- Strategy is exempt from strategy – in their 2015 book (Your Strategy Needs a Strategy), Reeves, Haanaes, and Sinha identify that strategies themselves need a strategy. They identify a strategy palette with 5 approaches: classical, adaptive, visionary, shaping, and renewal. The approach you take will depend upon the environment you are in. According to the authors, analytical approaches such as those espoused in Playing to Win are best suited to mature stable industries.
- Overly prescriptive – limiting yourself to certain segments or capabilities does exactly that, limits your alternative options. Strategy in changing or disrupted industries require an innovation approach often associated with start ups. This may include lean, design thinking and agile approaches. The idea is to test and validate options rapidly whilst allowing you to pivot if the market changes. Resources are not necessarily limited but bought and re-configured all the time.
Alternative views of strategy
Most authors categorize strategic approaches into 4 categories, the prescriptive approach, the emergent approach, the positioning approach (the foundation of Playing to Win) and the resource based view (RBV including core competencies and capabilities). Henry Mintzberg and colleagues go even further and identify 10 schools (in their book Strategy Safari). Mintzberg has been particularly critical of deterministic approaches (such as the positioning school) to strategy and his criticisms are well argued. Some of these arguments are mirrored in my points above.
RBV, cultural, learning and emergent approaches to strategy have a lot to offer. Whereas the positioning school is essentially an outside in top down approach accepting a priori that customers accept trade offs, these approaches are a mixture of inside and outside first thinking. More importantly they don’t take strategy as given but rather something which can emerge from the lower levels of the organization. Not only can the collective wisdom of the crowd outweigh those at the top, involving and listening to those who actually execute strategy has a huge impact on employee engagement and motivation. We know there is an empirical link between these factors and firm performance. In their latest book, Humanocracy, Gary Hamel and Michele Zanini paint a compelling picture of the end of bureaucracy and the need for more humanistic approaches to management. In my view, adhocracy and other self emergent systems are much better suited to the job than typical structures. In fact, toxic ‘strategy’ mechanisms such as yearly budgeting can be eliminated almost entirely by beyond budgeting approaches which involve the concepts of sociocracy.
Source: Zeleny, M. (2010). Strategy as Action: from Porter to anti Porter. International Journal of Strategic Decision Sciences, Vol 1, No, 1).
In the thought provoking book, Surfing the Edge of Chaos, Richard T. Pascale identifies how complexity theory is being applied to strategic thinking. He states in an MIT Sloan piece published in 1999 ‘One cannot direct a living system, only disturb it. Complex adaptive systems are characterized by weak cause-and-effect linkages… treating organizations as complex adaptive systems provides useful insight into the nature of strategic work’. That is exactly the problem with Playing to Win, it assumes cause and effect are given.
In the Lafley and Martin book, they do signify the importance of capabilities as something you choose to leverage based on your strategic analysis. This assumes that structure follows strategy. Again, this assumption doesn’t fit well with a learning approach. On p.115 of the book, the authors discuss a strategy session which leads to the creation of five core capabilities. This description of capabilities not only misses the underlying concept of capabilities as discussed in the RBV, it completely ignores the cultural elements in capabilities. David J Teece (in his book Dynamic Capabilities) identifies dynamic capabilities as sensing, seizing and managing threats/transforming. He also criticizes concepts such as the five forces as being overly static in nature. His ideas highlight the very real need to consider organizational culture in the role of strategy. How can one become ‘capable’ at sensing or transforming if the culture of the organization is insulated, siloed and hierarchical? This is barely considered in the positioning school, if at all.
It is in fact a knowledge, market and learning orientation that have a significant impact on firm performance. It may not be ‘strategy’ as most people know it but if strategy is the ‘how’ and the key source of competitive advantage (in the words of Porter), then in fact your culture is your strategy. If not, then at least we can agree with Peter Drucker when he stated that culture eats strategy for breakfast!
There are numerous examples of organizations that did not seem to have a ‘strategy’ but in fact just had alternative views of what strategy is. I could create a long list but the most well known examples would be the entry of Honda into the US motorcycle industry or the success of Toyota following multiple generic strategies at once. Some may even say that Toyota’s focus on the Toyota Production System was more about organizational effectiveness than strategy, again depending on what your view of strategy is.
To sum up
Don’t get me wrong, Playing to Win has many redeeming points and is a good read. If you understand that what you are looking at is only one part of the elephant then gorge away. What I object to is organizations adopting this book as their ‘play book’ and that this is how strategy should be approached in different contexts and the year 2021 and beyond. To be put it bluntly, it isn’t!
Strategy & Competitiveness 