Strategy as Winning – A.G. Lafley:

By the time of my election to CEO in 2000, most of P&G’s businesses were missing their goals, many by a wide margin. The company was overinvested and overextended. It was not winning with those who mattered most—consumers and customers. When I visited all our top retailers in my first thirty days on the job, I found that P&G was their biggest supplier but nowhere near their best supplier. Consumers were abandoning P&G, as evidenced by declining trial rates and market share on most of our leading brands. I was

determined to get P&G’s strategy right. To me, right meant that P&G would focus on

achievable ways to win with the consumers who mattered the most and against the very

best competition. It meant leaders would make real strategic choices (identifying what they would do and not do, where they would play and not play, and how specifically they would create competitive advantage to win). And it meant that leaders at all levels of the company would become capable strategists as well as capable operators. I was going to teach strategy until P&G was excellent at it. I wanted my team to understand that strategy is disciplined thinking that requires tough choices and is all about winning. Grow or grow faster is not a strategy. Build market share is not a strategy. Ten percent or greater earnings-per-share growth is not a strategy. Beat XYZ competitor is not a strategy. A strategy is a coordinated and integrated set of where-to-play, how-to-win, core capability, and management system choices that uniquely meet a consumer’s needs, thereby creating competitive advantage and superior value for a business. Strategy is a way to win—and nothing less.

It is tempting to believe that strategy in general, and where-to-play and how-to-win choices in particular, are needed only for outward-facing functions—those folks who interact with external consumers and competitors. But every line of business and function

should have a strategy—one that aligns with the strategy of the company overall and decides where to play and how to win specifically for its context. At P&G, corporate functions are all tasked with crafting their own strategies in this way. Joan Lewis, global consumer market knowledge officer, explains: “Where to play and how to win has been a very important framework for us. Organizations are often good at one or the other without realizing that they’re two different sets of decisions. At one point, we weren’t as disciplined about our where-to-play choices. It was everywhere anybody needed consumer insight or anywhere we thought it could add value. Just like a business dilutes its focus and in turn its growth potential when you try to do too many things at a time or do things that are further away from your core strengths, we were relatively diluted in the nature of the impact we could have.

We wanted to foster a team-like approach that would allow the CEO to collaborate with the presidents and to help advance their thinking in real time. We wanted to create useful dialogue in place of a one-way, bulletproof presentation. Instead of burying the issues, we wanted to talk about them openly. We wanted a new management system for the creation and review of the five strategic choices.

So we worked up a new process to begin in the fall of 2001. It was a radical change for all involved. Previously, a president would come into a review meeting with a lengthy PowerPoint presentation, which captured all the material that he or she wanted to share. The president would go through the deck, slide by slide, revealing the material to the mass audience in real time. We changed the meeting completely. It went from a formal presentation (by the business to management) to a dialogue focused on a very few critical strategic issues identified in advance. Whatever strategic issues the president wanted to discuss were delivered in writing in advance of the strategy review meeting. The senior team would review the submission and select the issues it wished to discuss (or propose alternative points of discussion).

These reviews focused on very basic, very fundamental questions with the intent of helping the team make better strategic choices. The group would spend three or four hours chewing on the few critical issues together. We had three reasons for the shift in process.

First, we wanted to shift the culture of the organization to one that was more dialogue oriented. Second, we wanted to create a structure in which the business teams could truly benefit from the experience and cross-enterprise perspective of senior leaders. And finally, we wanted to build the strategic-thinking capabilities of P&G’s executives, asking them to practice thinking through strategic issues with others in real time. P&G executives are great operators in the businesses and the functions. The company needed its leaders to become better strategists because better, more choiceful strategies would enable yet better operations. P&G needed multidimensional leaders who could both make tough strategic calls and lead effective operating teams.