Specifically, strategy is the answer to these five interrelated questions:

• What is your winning aspiration? The purpose of your enterprise, its motivating aspiration.

• Where will you play? A playing field where you can achieve that aspiration.

• How will you win? The way you will win on the chosen playing field.

• What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way.

• What management systems are required? The systems and measures that enable the

capabilities and support the choices.

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?

“CHOICE CASCADE DOS AND DON’TS:

At the end of each chapter, we will share a few quick bits of advice—the things you should do or should avoid doing as you apply the lessons of the chapter to your own business.

• Do remember that strategy is about winning choices. It is a coordinated and integrated set of five very specific choices. As you define your strategy, choose what you will do and what you will not do.

• Do make your way through all five choices. Don’t stop after defining winning, after choosing where to play and how to win, or even after assessing your capabilities. All five questions must be answered if you are to create a viable, actionable, and sustainable strategy.

• Do think of strategy as an iterative process; as you uncover insights at one stage in the cascade, you may well need to revisit choices elsewhere in the cascade.

• Do understand that strategy happens at multiple levels in the organization. An organization can be thought of as a set of nested cascades. Keep the other cascades in mind while working on yours.

• Do remember that there is no one perfect strategy; find the distinctive choices that

work for you.

BUILDING CAPABILITIES DOS AND DON’TS:

• Do discuss, debate, and refine your activity system; creating an activity system is hard work and may well take a few tries to capture everything in a meaningful way.

• Don’t obsess about whether something is a core capability or a supporting activity; try your best to capture the most important activities required to deliver on your where-to-play and how-to-win choices.

• Don’t settle for a generic activity system; work to create a distinctive system that reflects the choices you’ve made.

• Do play to your own, unique strengths. Reverse engineer the activity systems (and where-to-play and how-to-win choices) of your best competitors, and overlay them with yours. Ask how to make yours truly distinctive and value creating.

• Do keep the whole company in mind, looking for reinforcing rods that are strong and versatile enough to run through multiple layers of activity systems and keep the company aligned.

• Do be honest about the state of your capabilities, asking what will be required to keep and attain the capabilities you require.

• Do explicitly test for feasibility, distinctiveness, and defensibility. Assess the extent to which your activity system is doable, unique, and defendable in the face of competitive reaction.

• Do start building activity systems with the lowest indivisible system. For all levels above, systems should be geared to supporting the capabilities required to win.

CHAPTER SIX: Manage What Matters

“Without supporting structures, systems, and measures, strategy remains a wish list, a set of goals that may or may not ever be achieved. To truly win in the marketplace, a company needs a robust process for creating, reviewing, and communicating about strategy; it needs structures to support its core capabilities; and it needs specific measures to ensure that the strategy is working. These management systems are needed to complete the strategic choice cascade and ensure effective action throughout the organization.