Creating strategies that work – the P&G way

Playing to win

When we start working on a new initiative (whether in a startup or corporate setting), the possibilities are often endless.  Too often we don’t spend enough time choosing the right problem to solve.  We proceed to solve it with a beautiful solution – but the problem itself turns out to have much less impact than expected.

Let’s consider some scenarios in which you are tasked with starting a new initiative.

Scenario 1: You are a serial entrepreneur on a mission to solve problems in an area that you feel passionate about.  You and your co-founders have the domain expertise, the technical know-how, and the drive and hunger to get the job done.  You have a million ideas about how to proceed.  Since you are bootstrapping, you don’t have the resources to pursue all of them at once.  You need to pick one problem to solve, explore solutions, and quickly decide whether you have a winning idea to take to the next level.  How do you pick the right problem to solve?

Scenario 2: You are a corporate entrepreneur who just wrapped up your involvement with a product that has reached product market fit.  Over the past few years, you led the team that defined the problem, built the solution, and built a scalable and repeatable business model.  It is time for you to build the next big thing.  Senior Management gave you a quest – to make a difference in a very broad area of interest (e.g. “Improve Patient User Experience in Primary Care”).  You have a big budget.  You have the people (or the discretion to bring in whoever else you need).  You have core technologies and existing products and services to choose from.  You can build new capabilities in-house or through acquisitions. The options are overwhelming.  How do you choose where to begin?

Ideas are a dime a dozen.  Rarely do innovative initiatives fail because of a shortage of creative ideas.  Rather, they  often fail when we pick an idea without careful consideration – and create a solution in search for a problem.

How do we pick a good problem to solve?  Enter the A. G. Lafley and Roger Martin’s Playing to Win framework.  Lafley was the CEO of Procter and Gamble (P&G) from 2000 to 2009, and the Playing to Win framework is what P&G used to double its sales, quadruple its profits, and increase its market value by more than $100 billion during his tenure.  It is amazingly effective in focusing the thought process to picking good problems to solve.  Best of all, it works just as well for startups as it does for established businesses.

This framework guides leaders to think through five questions in the “strategy cascade”.

  1. What is our winning aspiration?
  2. Where will we play?
  3. How will we win?
  4. What capabilities do we need?
  5. How do we manage the execution of this strategy?

1. What is our winning aspiration?

This is the first question to answer.  Why are we taking on this initiative?  How do we define success? How do we know if we have won?

Some hypothetical winning aspirations:

  • Example idea: A novel Electronic Health Records (EHR) platform and mobile app that connects patients, doctors, hospitals and insurance companies
    • Winning Aspiration: To help patients gain the visibility and control to manage their own health care
  • Example idea: A service that streamlines supply chain management for restaurants
    • Winning Aspiration: To help maximize the freshness of produce and perishable supplies for restaurants
  • Example idea: A platform that uses an Industrial Internet of Things approach to streamline work scheduling and order management in manufacturing facilities with connected machines
    • Winning Aspiration: To maximize productivity and improve business agility for manufacturing facilities and their supply chain partners

Note that the winning aspiration is a vision statement, and does not constrain how the problem is defined or what the solution should look like.  By design, the winning aspiration alone is not actionable.  The next steps in the strategy cascade need to be resolved to create an actionable plan.

2. Where will we play?

The second question provides focus to the area of interest.  What is your beachhead market?  What types of companies are your ideal customers? Who are your buyer and user personas?  What problems do they have that are worth solving?

There is always tension between the need for a broad vision with great impact, versus the need for a laser-like focus on a specific problem to solve.  One way to balance it is to keep the “Winning Aspiration” broad, and keep the “Where to Play” parameters focused.

Here are some parameters to consider:

  • Geographical focus: What country will you start with? (Continents and regions are not countries.)
  • Target market segment: What characteristics define the sweet spot segment in the market?
  • Buyer and user personas: Who all are in the buying process – economic buyer, champion, influencers, veto powers?  Who are the primary and secondary users?
  • Customer problems: What are the needs, wants and expectations of the buyer and user personas?  What are their pain points?  What are the opportunities to delight them?
  • Technical platforms: What technology stacks will you play in, and why?

Note that these “where to play” parameters are placeholders until they are validated through primary market research.  Coming up with a set of first guesses inside the building is a necessary first step.  The rest of the iterations need to happen outside the building via customer development and continuous learning.

3. How Will We Win?

The third question explores how you can make your customer (and therefore, yourself) successful.  What’s in it for the customer? What’s in it for you?  Here is where we start to brainstorm about solutions – not before.  What products or services might solve the problems identified? What benefits might the customer derive from these offerings?

At a more granular level: On the technical front, what technical platforms are relevant for the buyers and end users?  What technologies shall we use?  On the business front, what business models are we willing to consider? What might be the parameters of these business models? If it is a for-profit play, what do the unit economics look like and can you see a way to profitability?

As with the “Where to play” parameters, “How to Win” ideas need to be validated in the market. This is where the discipline of applying primary market research and building and testing Minimum Viable Products (MVPs) in the market will really pay off.  Rather than defining the end game and building it out completely, try to break down the idea into small pieces and test each piece with buyers and end users.  The solution may completely change with a few iterations of MVP testing.  Better to find out what really works before you invest significant energy into building out the full solution.

4. What Capabilities Do We Need?

The fourth question looks at what your core competencies are to date, and therefore, what you have available as building blocks for your solution.

For a lot of startups, this step often comes before anything else happens.  However, there is a reason why P&G does it the other way around.  Starting broad with the problem statement helps you stay open to all possible ways of solving the problem.  Starting with existing capabilities can end up constraining your creativity based on the boundaries of those capabilities.

Core competencies and capabilities can be pre-existing (often the case for established companies pursuing an innovation initiative).  Alternatively, they can be built from scratch (often the case for startups).  A third way is to acquire them through partnership or a merger and acquisition event.

Capabilities can span technical disciplines (hardware and software development, or deep understanding of a related scientific discipline) and business disciplines (for example, a huge customer list from another business unit coupled with a viable sales channel to reach these customers is a core asset).

These capabilities form your defensible core.  Not only is it necessary to figure out what you have/don’t have in order to execute the program, truly understanding your strengths helps you approach the solution in a way that will make it hard for your competitors to emulate you.

5. How Do We Manage the Execution of this Strategy?

The last question is frequently overlooked in strategy work, but is absolutely critical to get right.  Vision without execution is hallucination.  How you manage the execution – coming up with a plan of attack, a high level program plan with milestones and deliverables, a staffing strategy to get the job done, and a way to keep communications open and to manage and keep track of progress – is critical to making sure the strategy ends up with a viable product at the end of the day.

There you have it – the five questions in the Playing to Win framework can help you sieve through the endless possibilities and pick out the problems worth solving.

As tempting as it might be to jump straight to conclusions, it pays to think critically and analytically about the first two questions: The winning aspirations and Where to Play.  Together, they can help you pick the right problems to solve.  Do give it a try.  You might find yourself saving a lot of time and money from the up front investment.

Hat tip to Bill Aulet and his book, “Disciplined Entrepreneurship: 24 Steps to a Successful Startup” for much of the terminology in this post

 

 

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