We wanted to play where P&G’s core strengths would enable it to win.

In great strategies, the where-to-play and how-to-win choices fit together to make the

company stronger.

Two questions flow from and support the heart of strategy: (1) what capabilities must be in place to win, and (2) what management systems are required to support the strategic choices?

With capabilities, again, winning is an essential criterion. Companies can be good at a lot of things. But there are a smaller number of activities that together create distinctiveness, underpinning specific where-to-play and how-to-win choices. P&G certainly needs to be good at manufacturing, but not distinctively good at it to win. On the other hand, P&G does need to be distinctively good at understanding consumers, at innovation, and at branding its products. When articulating core capabilities, you need to distinguish between generic strengths and critical, mutually reinforcing activities. A company needs to invest disproportionately in building the core capabilities that together produce competitive

advantage.

Because scale was a critical core competency, it was necessary to build supporting systems and to measure it in meaningful, impactful ways. It wasn’t enough to merely say that scale was important.