Ultimately, there is no perfect place to start and the process isn’t linear—you need to go back and forth between the levels, just as you need to loop back and forth between the five questions in the strategic choice cascade. However, you can use three principles to help the company put together integrated activity systems at multiple organizational levels.”

(Lafley and Martin, “Playing to Win”, p.122) “1. Start at the Indivisible Level...

Build activity systems starting at the ground level—the point of indivisible activity systems

—and work your way up from there. Why? The capabilities at the indivisible level drive the

ones above.” (Lafley and Martin, “Playing to Win”, p.122-123) “2. Add Competitive Advantage to the Level Below...

Activities that don’t add value to activity systems below should be minimized, because they destroy value. For example, only if the hair-care category can demonstrate value (from sharing of activities and transfer of skills) that is greater than the financial and

administrative costs that it imposes on Head & Shoulders, Nice ’n Easy, Pantene, Herbal

Essences, and so forth, should it exist as a level of aggregation in the corporation. Otherwise, the level should be eliminated.

An activity system captures the most important activities of the organization in a single visual representation. The large nodes of the map are the core capabilities, while the smaller nodes are the activities that support those core capabilities. The activity system should be feasible, distinctive, and defensible if it is to enable you to win. If the system is missing any of these three qualities, you need to return to the where-to-play and how-to- win choices, refining or even entirely changing those choices until they result in a

distinctive and winning activity system.

You have to integrate that into the company. The processes that you put in place to do that, they have to be very deliberate. It doesn’t happen by itself. What happens [naturally] is entropy. You have to leverage scale in a way that doesn’t disable entrepreneurialism, business ownership. It’s integrative. It’s not centralized. Centralized is a very different thing. This scale work is bringing the leaders of the businesses to work together towards a plan that not only optimizes the company, but in its best form, optimizes their category as well. As we approach a market, for instance, with multiple categories, the chance for success for each of them increases.” Going into a new emerging market with several complementary categories, rather than just one, for instance, can enable cost sharing and increase local influence, thereby increasing the chance of success in the region.

I have always believed a successful company must have a customer/marketplace orientation and a strong marketing organization. That’s why my second step in creating a global enterprise had to be to fix and focus IBM’s marketing efforts.

In other words, acquisitions that fit within an existing strategy have the most likely probability of success. Those that represent attempts to buy new positions in new marketplaces or that involve smashing together two very similar companies are fraught with risk.