# Playing to Win **A.G. Lafley & Roger L. Martin** | [[Strategy]]  --- > "A too-modest aspiration is far more dangerous than a too-lofty one. Too many companies eventually die a death of modest aspirations." _Playing to participate_ is a form of strategic suicide. It lets you off the hook from making hard choices. It gives you permission to avoid trade-offs. And trade-offs are the whole game. The essence of strategy, Lafley and Martin argue, is **making choices**—clear, tough choices about where to play and how to win. Not vague ambitions. Not operational efficiency dressed up as strategy. Actual decisions about what you will do and, crucially, what you _won't_ do. > "The essence of great strategy is making choices—clear, tough choices, like what businesses to be in and which not to be in, where to play in the businesses you choose, how you will win where you play, what capabilities and competencies you will turn into core strengths, and how your internal systems will turn those choices and capabilities into consistently excellent performance in the marketplace." The framework is simple: winning aspiration, where to play, how to win, core capabilities, management systems. But simplicity isn't the same as easy, and the discipline this demands is rare. --- ## Core Ideas ### [[Five Choice Cascade]] Strategy isn't a plan or a statement. It's a coordinated set of five choices that fit together. **Winning Aspiration** – What does winning look like? (Not "participating" or "being a player"—winning.) **Where to Play** – Which customers, geographies, channels, products? **How to Win** – Cost leadership or differentiation? **Core Capabilities** – What few activities create competitive advantage when done together? **Management Systems** – How do you reinforce and sustain these choices? These aren't sequential. They're interdependent. Strategy is the **integration** of these choices—how they reinforce each other, creating a system that's hard to copy. **Playing to win is a choice. Playing to participate is a cop-out.** Companies that "participate" avoid the tough calls and significant investments that make winning possible. Peter Drucker's framing: the purpose of an organisation is to create a customer. Everything else follows. **You always have a choice of where to play. Always. Even if it feels given.** It's tempting to think you're stuck—because that's a great excuse for mediocre performance. But Thomson Corporation went from North American newspapers and North Sea oil to software-enhanced subscription information. It took twenty years, but it's doable. Don't dismiss entire industries as unattractive. Look for **attractive segments** within unattractive industries. Structure isn't destiny. **There are only two ways to win: cost leadership or differentiation.** Cost leadership means being the _lowest-cost player_—not just lower than some competitors. > "Only the true low-cost player can win with a low-cost strategy." Differentiation means distinctive value at roughly the same cost structure as competitors. > "Both cost leadership and differentiation require the pursuit of distinctiveness." Both strategies require **distinctiveness**. You don't become a cost leader by copying competitors' processes. You don't differentiate by producing an identical product. The two strategies treat customers differently: cost leaders sacrifice nonconforming customers for standardisation. Differentiators jealously guard customers and design new offerings when customers want something different. **Capabilities are reinforcing activities—a system, not a list.** Competitive advantage rarely comes from one thing (best sales force, best tech) but from how activities fit together. This is Porter's activity system thinking: strategic position is contained in a set of tailored activities designed to deliver it. > "A company needs to invest disproportionately in building the core capabilities that together produce competitive advantage." You need to invest **disproportionately** in the few core capabilities that together create distinctiveness. Not in generic competencies. P&G needs to be good at manufacturing—but not _distinctively_ good at it to win. > "Rather than starting with capabilities and looking for ways to win with those capabilities, you need to start with setting aspirations and determining where to play and how to win." **Start with aspirations, where to play, and how to win**—then identify capabilities. Not the other way around. Otherwise you're just looking for ways to use what you already have, rather than building what you need. **Acquisitions succeed only if you're a better owner of the business than the previous owner or the company as independent.** That usually comes down to capabilities—what you bring that makes the acquired business worth more in your hands. > "At the end of the day, it really comes down to, are you, as an acquirer, going to bring value to that acquisition or not? The acquisition is only really successful if you're a better owner of the business than either the previous owner or the company as an independent company." **Rather than acquiring your way into a better position, create an internal discipline of strategic thinking.** That enables a more thoughtful approach to the current game, regardless of industry, and connects to possible different futures. Competitive advantage comes from how you think about your choices, not just which markets you're in. --- ## Connects To - [[7 Powers]] - Complements this with a more granular typology of sustainable advantage (scale economies, network effects, counter-positioning, etc.) - [[Better, Simpler Strategy]] - Felix Oberholzer-Gee's WTP/WTS framework provides the economic underpinning for "how to win"—you win by increasing willingness-to-pay or decreasing willingness-to-sell - [[Dead Companies Walking]] - Shows what happens when companies play to participate instead of playing to win - [[Alchemy]] - Rory Sutherland's psychological reframing is one way to differentiate without increasing cost