The leaders of McGrath’s outliers also prefer to be fast and roughly right versus slow and precisely right, taking up an option rather than engaging in an endless analysis of anticipated net present value. And contributing to the culture they want to create, outlier leaders hire not so much for existing or demonstrated skills as for what Kris Gopalakrishnan, cofounder of Infosys, calls learnability—the capacity to acquire new skills. Like the ones that will be required in that new business just over the next hill.
Five Strategic Injunctions
At first blush, Playing to Win: How Strategy Really Works, by A.G. Lafley and Roger L. Martin, seems at odds with McGrath’s focus on the transience of competitive advantage. If you read only Lafley and Martin’s prescribed steps for making business strategy, you might think you’ve been presented with a semi-classic framework, albeit one tempered by years of practical experience. Lafley was the highly successful CEO of Procter & Gamble from 2000 to 2009, helping the company double its sales and quadruple its profits (so successful, in fact, that he was recently called back to his old job when his successor floundered). Martin was his longtime strategy consultant at Monitor Company, before going on to become dean of the University of Toronto’s Rotman School of Management.
Lafley and Martin invoke Michael Porter’s five forces model for gauging industry attractiveness, a model long criticized for its allegedly static quality. (Forget “industry” anyway, argues McGrath, concentrate instead on “arena.”) They ritually tug their respective forelocks to the received wisdom that any competitive advantage you devise must be sustainable.
It’s only when you dig down into the book’s many detailed examples, drawn from P&G’s experience, that its affinity with The End of Competitive Advantage becomes clear. Almost every case is a tale of a brand gone flat or under attack that must be reinvented, including Oil of Olay (derided by critics as “Oil of Old Lady”), Bounty paper towels (by the late 1990s, the “business was struggling”), and, of course, the redoubtable Pampers. (Ah, where would the study of strategy be without the rich lessons of the diaper wars? See, for example, Michael Porter’s terrific HBS case study, “The Disposable Diaper Industry in 1974.”)
Viewed from this perspective, as a set of cases illuminating the strategy of renewal, Playing to Win belongs right alongside The End of Competitive Advantage and, in fact, may be more useful on how to shake up a company long set in its ways. The real-world examples also provide bite and clarity to Lafley and Martin’s five overall injunctions, which on their own can seem a bit windy, bordering on the banal.
For example, the first, “Define your winning aspiration,” seems less like the ol’ squishy vision statement when it’s sharpened to focus on what you’re going to do for customers—the proper focus rather than products—that others have not done. Rebranded simply as “Olay,” reformulated, and repackaged, P&G’s skin-care product found a nifty niche for itself at an $18.99 price point—the “Oil of” version had sold for $8 or less—able to attract both the “mass shopper” who thought that at that price it must really be something special and the “prestige shopper” who found it a bargain compared to competing products from Clinique and Estée Lauder.
The second injunction, choosing where to play, echoes McGrath’s call for relentless empiricism in looking for arenas where you want to compete—geographies, industry segments, customers. Lafley and Martin include the bracing thought that you shouldn’t view your company’s existing choices as immutable. Deciding how to win, the third injunction, also presents the chance to create new choices where none currently exist. Indeed, if you can’t find a fresh approach, you may want to seek another arena or get out of the game entirely.