Strategy: An integrated set of choices that uniquely positions the firm to win in its market by creating sustainable advantage and superior valuerelative to the competition.
It is only through making and acting on choices that you can win. Clear, tough choices force your hand and confine you to a path. But they also free you to focus on what matters.
Five Strategic Choices:
- A winning aspiration – Statements about an ideal future.
- Where to play – A playing field where you can achieve that aspiration. Where the company will compete – in which markets, with which customers, in which channels, in which product categories, and at which vertical stage or stages in the industry.
- How to win – The way you win on that chosen playing field by utilizing your advantages to create superior value for customers and in turn, superior returns for the firm.
- Core capabilities – The set and configuration of capabilities required to win in the chosen way. Capabilities must be feasible, distinctive and defensible.
- Management systems – The systems and measures that enable the capabilities and support the choices
P&A Example:
- A winning aspiration:
- “Provide products and services of superior quality and values that improve the lives of the world’s consumers. As a result, consumers will reward us with sales leadership, profits and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.”
- Market leadership is all of P&G’s categories
- Where to play:
- Grow core business (consumer segments, channels, customers, geographies, brands, product tech)
- Extend leadership in laundry and home care
- Build market leadership in more demographically advantaged and structurally attractive beauty and personal-care products
- How to win:
- P&G’s competitive advantages are its ability to understand its core consumers and create differentiate brands.
- Win by relentlessly building brands and through product innovation.
- Leverage gloabal scale and strong supplier partnerships to deliver strong retail distribution and consumer value in chosen markets.
- Core capabilities:
- Understanding consumers
- Building brands
- R&D innovation
- Partnership & GTM capabilities
- Global scale
- Management systems: The OGSM Document & Strategic Review Process
Framework for documenting & discussing strategy: OGSM
- Objectives
- Consumer Impact
- Business Impact
- Goals
- Product Performance
- Sales growth
- Margin
- Strategy
- 5 Choices
- Measures
- Outcome milestones (e.g. market share and sales growth progress)
- Efficiency measures (capital or inventory efficiency measures)
- Consumer preference measures (purchase intent, NPS, etc.)