Alan G.Lafley
Review
This book offers an easy-to-understand strategy framework with just 5 questions and plenty of practical tips. It presents a straightforward and non-controversial view on strategy creation that aligns with existing literature, drawing heavily from Michael Porter's earlier work.
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Key Takeaways
The 20% that gave me 80% of the value.
Strategy is fundamentally about making specific, deliberate choices that create a sustainable competitive advantage. A clear vision or a well-organised plan is helpful, but neither alone qualifies as strategy. True strategy goes beyond generic statements and instead revolves around five interlocking decisions: defining a winning aspiration, identifying where to play, determining how to win, building core capabilities, and establishing management systems that reinforce those choices.
A winning aspiration is more than a mission statement. It paints a vivid picture of what genuine success looks like, keeping the organisation focused on customer needs rather than just products or internal processes. Leaders who aim merely to "stay in the game" risk sinking resources into half-measures. By contrast, those who play to win accept that some trade-offs must be made. In other words, doing some things exceptionally well means consciously choosing not to do others.
Once a company knows its ultimate goal, it must decide where to play. This entails picking specific markets, customer segments, or product categories that best fit the firm's strengths. Spreading resources across all segments typically results in mediocrity. Instead, uncovering underserved niches or unexpected angles can allow a smaller player to flourish alongside larger competitors. These choices require ruthless clarity: in a highly competitive environment, half-hearted attempts to win in all places lead to wasted energy and diluted efforts.
Deciding how to win is about creating or delivering superior value in a way that others cannot easily imitate. A business may lead on cost, finding efficiencies that let it offer comparable products at a lower price, or excel at differentiation, commanding a premium by offering unique features or service. This approach must align closely with where the firm has chosen to focus and the special capabilities it possesses. Even the best technology or product idea can fail without a clear plan for building advantage. The right path might also involve new business models or unexpected partnerships if these secure the desired position without direct warfare against entrenched rivals.
Core capabilities breathe life into where-to-play and how-to-win decisions. They form an integrated activity system of complementary skills and assets that together create something competitors find tough to replicate. Such systems must pass three main tests: they must be feasible (the company can actually build them), distinctive (they aren't easily copied), and defensible (the firm can adjust or reinforce them if attacked). When acquiring another business, for instance, a good strategic fit emerges if the combined companies share capabilities that mutually strengthen each other, enabling a broader or faster route to winning.
Yet even the strongest set of choices can collapse without supportive management systems. Leaders need reliable processes for discussing strategy candidly, clarifying who does what, and measuring tangible outcomes. Far from rubber-stamp gatherings, these strategy sessions should encourage "assertive inquiry," where team members clearly articulate their own reasoning while seeking to understand others' views. Tools like a simple one-page strategy document or consistent performance metrics help keep day-to-day decisions anchored to core strategic choices. By calibrating which initiatives work or fall short, organisations stay agile and adjust before results deteriorate.
Another dimension is a thorough understanding of the environment. Organisations must analyse both channel and end consumers' changing desires, carefully mapping where the biggest opportunities lie. This often requires rethinking how the industry is segmented, since new consumer needs or emerging technologies can form previously unrecognised profit pools. Leadership teams also need a frank assessment of their own capabilities and costs relative to competitors. Plus, they must anticipate how rivals may counter. No matter how promising a strategy looks in isolation, it will face scrutiny if another player can neutralise it with a swift response.
Rather than hunting for the single "correct" plan, an iterative approach asks "What would have to be true?" for different strategic possibilities. Through this question, a leadership team pinpoints which assumptions must hold in order for each option to succeed. Then they test the riskiest assumptions first. Should a critical assumption fail, they discard that option early, saving time and resources. By focusing on data rather than opinion, and by ensuring sceptics' concerns get tested, the team builds genuine commitment around whichever course remains viable.
Though a robust strategy improves the odds of success, certain traps frequently undermine it. These include trying to do everything at once, battling the largest competitor directly, opening multiple fronts simultaneously, blindly serving all customers, issuing lofty missions with no follow-through, or copying generic industry tactics. In contrast, winning strategies exhibit telltale signs: they are grounded in a distinctive system of activities, attract loyal customers baffling to outsiders, allow competitors to profit elsewhere (reducing attacks), yield resource surpluses for reinvestment, deflect direct challenges, and inspire customers to request new innovations from you first.
Ultimately, no strategy remains static. Markets shift, technologies evolve, and customer preferences transform. Leaders must treat strategy as an ongoing discipline rather than a static plan on paper. By constantly reapplying the five core choices, employing rigorous analyses of industry conditions, and validating assumptions about how to win, organisations can keep refining their advantage. Embracing such strategic thinking—clear aspirations, sharp where-to-play decisions, credible how-to-win approaches, integrated capabilities, and strong management systems—brings focus in a volatile world. Instead of becoming victims of uncertainty, companies equipped with a living strategy continuously adapt, ensuring they play to win, over and over again.
Deep Summary
Longer form notes, typically condensed, reworded and de-duplicated.
Introduction: How Strategy Really Works
Strategy hinges on making specific, deliberate choices that determine how to win in a chosen space. It goes beyond generic vision statements or detailed plans, requiring a clear decision on what to do and—just as importantly—what not to do. In Michael Porter’s terms…
Strategy is about making specific choices to win in the marketplace.
Strategy is an integrated set of choices that uniquely positions the firm in its industry os as to create sustainable advantage and superior value to the competition.
Many leaders take ineffective approaches to strategy:
- Defining strategy solely as a lofty vision
- Presenting it only as a plan, without ensuring a unique competitive advantage
- Claiming strategy isn't possible amid rapid change
- Simply optimizing the status quo rather than seeking genuine advantage
- Benchmarking best practices instead of forging a unique path
A robust strategy weaves together five choices:
- A winning aspiration: a clear goal to excel rather than just participate
- Where to play: the specific markets, segments, or categories to pursue
- How to win: the way to offer unique value and outmaneuver rivals
- Core capabilities: the skills and assets required to deliver on the chosen approach
- Management systems: the processes and structures that support and sustain the strategy
It is only through making and acting on choices that you can win. Yes, clear, tough choices force your hand and confine you to a path. But they also free you to focus on what matters.
These choices form a cohesive cascade. Making them forces trade-offs but creates the path to a sustainable advantage. The objective: craft a winning position in which capabilities, activities, and management systems fit together in a way competitors find difficult to match.
A strategy is a coordinated and integrated set of five choices: a winning aspiration, where to play, how to win, core capabilities and management systems.
Chapter 1: Strategy Is Choice
Strategy is about making clear, coordinated choices that define how an organization wins. It requires choosing not just what to do but also what not to do, creating a path that sets the company apart from its competitors. Instead of treating strategy as an abstract concept, it becomes actionable when broken down into five interconnected choices.
The five choices are:
- Defining a winning aspiration: a specific statement of what “winning” looks like.
- Deciding where to play: the fields (categories, segments, channels, geographies) that matter most.
- Determining how to win: the unique approach that generates a sustainable competitive advantage.
- Identifying core capabilities: the essential activities and strengths that deliver success (e.g., deep consumer insight, product innovation, brand building).
- Establishing management systems: the structures, processes, and measures that support these choices.
Each choice influences and is influenced by the others in an iterative process. A firm’s existing capabilities can guide its where-to-play and how-to-win choices, while new capabilities might be required to support them. Larger organisations have multiple levels of choice cascades—corporate, brand, category, or even the front line—each set reinforcing the others. At every level, the goal is to create a cohesive framework for winning rather than simply playing.
Core capabilities are those that underpin a firm’s unique way of competing. Examples include deep consumer understanding, brand-building skill, technical innovation, and strong channel partnerships. When these capabilities reinforce each other—such as when product R&D is paired with effective retail merchandising—they are difficult for competitors to replicate. Management systems then align people, investments, and processes to sustain these capabilities.
- Strategy is about winning, built on a set of specific choices.
- Ensure all five choices are addressed—stopping at vision or tactics alone won’t suffice.
- Approach strategy iteratively, revisiting each choice as new insights emerge.
- Keep in mind there are nested cascades at each level of the organisation.
- There is no single perfect strategy; identify the distinctive choices that work best for your situation.
Chapter 2: What Is Winning
A guiding aspiration defines what winning looks like for an organisation. It starts with a mission that centres on people rather than money, focusing on how to serve customers or internal stakeholders in a way that propels genuine success rather than just participation. Meaningful aspirations aim to inspire action and direct energy toward a clear definition of victory, prompting the necessary investments and commitment.
Playing only to stay in the game often leads to mediocre outcomes. One example shows that aspiring simply to defend a fading position can drain resources while more ambitious rivals forge ahead. By contrast, aiming for leadership often spurs the tough decisions, resources, and innovation required to stand out.
A customer-focused perspective avoids "marketing myopia," which comes from focusing on products rather than the deeper customer need or experience. Seeing the true purpose of the organisation—connecting people, improving health, simplifying chores—shifts attention outward to what truly matters for consumers.
Defining winning also involves identifying the "best" competitor in the space, even if it's not the usual rival. Observing that competitor's success can prompt questions about how they achieve it and how to outperform them, rather than settling for small, incremental gains or a narrow view of the marketplace.
Aspirations alone are insufficient without explicit choices on where to play and how to win. Employees find it frustrating when a lofty mission statement lacks guidance on action. The next steps in the strategy cascade—deciding where to compete and how to succeed—are essential for turning aspirations into tangible results.
Winning Aspiration Dos and Don'ts
- Aim to win, not just participate. Draw a vivid picture of what success looks like.
- Create aspirations that connect with both employees and customers, emphasising purpose.
- Keep consumer needs at the forefront, rather than obsessing over products or internal milestones.
- Define winning for internal functions too. Ask who their "customers" are and what winning means for them.
- Consider unexpected but high-performing rivals when measuring your competitive aspirations.
- Don't mistake aspirations for strategy. They're just the first step in shaping a broader set of strategic choices.
Chapter 3: Where to Play
Deciding where to play shapes the potential for winning. The playfield can look different in different industries, but think selecting geographies, customer segments, product types, channels, or stages of production. Create clarity about what is in and what is out. A broad approach rarely works unless carefully matched with distinct advantages. Narrowing the field often helps a business focus its resources, energy, and creativity on places where it can serve customers uniquely well.
Three tempting pitfalls can derail these choices:
- Refusing to choose, hoping to cover all consumer segments or markets and ending up serving none of them effectively.
- Trying to buy a better position through acquisitions when the current strategy has never been addressed properly.
- Assuming current choices are unchangeable, even though a shift in customer focus or product lines may transform an industry position.
An explicit choice of where to play and how to win forms the heart of strategy. Where to play defines the target playing field; how to win spells out the means of competitive advantage in that field. Both must fit together, grounded in an understanding of the best customers and the strongest competitors. The right field amplifies a company’s capabilities; the wrong field dilutes them.
- Clearly define which customers, categories, and geographies you will serve (and not serve).
- Explore potentially attractive segments within otherwise difficult industries; a broad category may have profitable niches.
- Look for ways to attack from unexpected angles rather than going head-to-head with the toughest competitor.
- Try to be everything to everyone. If you pursue too many areas, you risk spreading resources too thinly.
- Attempt to buy your way out of a poor strategy without a disciplined approach to building capabilities.
- View current positions as unalterable; shifting to a new field or a new customer group can open significant opportunities.
Chapter 4: How to Win
How to win depends on creating a sustainable advantage that delivers more value than competitors can match. This involves choosing whether to be a cost leader, producing goods or services at the lowest cost in the market, or pursuing differentiation, offering a distinct benefit that justifies a higher price. Some companies manage both simultaneously, but this dual strategy is rare and eventually forces a choice as market conditions change.
Examples of new product technologies show that having a superior product alone isn’t enough. Facing powerful competitors in well-established markets requires an approach that goes beyond conventional launches and straightforward licensing. In one instance, P&G formed a joint venture with a direct rival rather than risk a bruising battle that might not yield a clear win. The lesson is that “how to win” can mean rethinking usual business models if it secures a decisive advantage.
Firm capabilities also guide how to win. Where technology, scale, or brand building provides a unique edge, playing to that strength makes it harder for others to replicate. Integrating these strengths with a clear “where to play” choice—such as focusing on certain market segments or distribution channels—reinforces the strategy. Combining both decisions thoughtfully often leads to stronger results than chasing every segment or relying solely on a big innovation.
Internal functions should also define how to win. They might outsource activities that don’t drive competitive advantage, invest in new techniques that serve their “customers” inside the organisation, or structure teams in ways that lower costs or enhance unique capabilities. The same approach applies: pick a playing field (like certain processes or service offerings) and decide how to outperform alternatives.
- Look for ways to create fresh options if your current setup doesn’t suggest a clear win.
- Align how to win with where to play—choices should reinforce each other.
- Remember industry dynamics can often be changed with a new approach.
- Don’t limit these questions to external, consumer-facing units; internal teams also need a strategy.
- Don’t cling to an impossible or unclear path if you can’t find a credible way to win; shift fields or exit as needed.
- Don’t expect a single perfect strategy to last forever. Competitors and consumer preferences evolve, so remain open to revisiting your approach.
Chapter 5: Play to Your Strengths
An organisation’s core capabilities are those activities that, when performed at the highest level, enable the organisation to bring its where-to-play and how-to-win choices to life. They are best understood as operating as a system of reinforcing activities.
A winning strategy depends on mapping the capabilities needed to bring specific where-to-play and how-to-win choices to life. These capabilities work best when configured as an “activity system”—an interconnected set of reinforcing activities that is both distinctive and hard for competitors to replicate. Each node in the system represents a core activity (e.g., consumer research, product design), while the links illustrate how each activity strengthens others.
An activity system is of no value unless it supports a particular where-to-play and how-to-win choice. Again, the various choices along the cascade must be considered iteratively. You need to go back and forth between the choices. You can think through a tentative where-to-play and how-to-win choice. Then you can ask, what activities system would effectively underpin this choice? Once you lay out such a system map, you can ask a sequential set of questions about feasibility, distinctiveness, and defensibility.
- A feasible activity system must be realistic to build and affordable to implement - if not, the strategic choices need to be reconsidered (feasible).
- The system must be distinctive from competitors - if a competitor has similar capabilities, they could potentially copy your strategic choices and erode your competitive advantage.
- The system must be defensible against competitive action - if it can be easily replicated or overcome, you need to revise your strategy to find choices that are harder to defend against.
The goal, then, is an integrated and mutually reinforcing set of capabilities that underpin the where-to-play and how-to-win choices and that are feasible, distinctive, and defensible.
At each level of a multi-business organisation (e.g., brand, category, corporate), shared capabilities act as reinforcing rods, benefitting all business units. A higher-level group should only exist if it makes the lower-level units more competitive; otherwise, the additional cost and complexity drag performance down. To maintain coherence, leaders expand (e.g., launch new brands) or prune (e.g., divest brands) based on where shared capabilities can add real advantage.
Acquisitions can succeed when there is a strong strategic and capability fit between the combining firms. Gillette joined P&G because both companies focused on comparable areas of strength: consumer understanding, innovation, brand building, go-to-market excellence, and scale. These core capabilities complemented each other across brands and product lines, especially in men’s and women’s shaving and in toothbrushes. Leveraging P&G’s size and cross-category expertise helped Gillette expand more efficiently, while Gillette’s own expertise in in-store marketing and targeted product launches enhanced P&G’s capabilities.
Start capability mapping at the lowest indivisible level—where activities differ meaningfully from one brand or product to another.
Focus on truly critical capabilities that enable your where-to-play and how-to-win choices, rather than everything you do well.
Look at competitor activity systems to test and refine your own for uniqueness.
Don’t cling to capabilities or entire business lines that no longer align with the core strategy or reinforce your main strengths.
Don’t accept a capability system if it fails the feasibility, distinctiveness, or defensibility tests; revise your strategic choices to ensure a winning fit.
Chapter 6: Manage What Matters
Good strategy can still fail without management systems that support its execution. These systems include a process for creating and reviewing strategy, clear structures for nurturing critical capabilities, and measures to track results. Absent such support, even the best strategic choices remain aspirational rather than actionable.
P&G changed how senior leaders and business units discussed strategy, replacing formal “present-and-defend” reviews with smaller, issue-focused dialogues. Executives submitted materials ahead of time and agreed on key discussion points rather than walking through endless slides. This encouraged open conversation and made constructive debate possible, moving the culture from performative presentations to genuine inquiry.
To foster productive debate, P&G promoted “assertive inquiry.” Leaders advocated their positions clearly, explained their reasoning, and sincerely asked questions about opposing views. This balanced advocacy with genuine curiosity about where they might be missing something. The result was more candid engagement and higher-quality decisions, rather than argument for its own sake.
Employees captured strategy on a one-page “OGSM” (Objectives, Goals, Strategy, Measures), clarifying critical where-to-play and how-to-win choices. Strategy reviews and ongoing dialogues used the OGSM as a focal point, ensuring that every conversation connected directly to the brand’s or function’s most important priorities. Together with repeated, simple messaging—such as “The consumer is boss” and “Win the consumer value equation”—this created alignment throughout the company.
Systems also had to support each of P&G’s core capabilities, from consumer research to brand building to leveraging global scale. This meant investing in specialised structures, training, and methodologies. Some capabilities were corporate-wide, such as brand-building frameworks and common purchasing processes, while others were unique to certain businesses, like department-store counters for luxury skincare lines.
Measuring outcomes was critical. By linking each strategic choice to explicit measures, managers gained tangible feedback on whether those choices were delivering superior value.
Strategy remains incomplete until the right management systems are in place. Processes for collaborative review and decision-making, the support structures for capabilities, and robust metrics that focus attention on what matters are the final piece of the strategic choice cascade. They enable strategy to shift from abstract intent to sustained impact in the marketplace.
Chapter 7: Think Through Strategy
Strategy begins with defining a winning aspiration but truly comes to life through the choices of where to play and how to win. These choices hinge on four analytical dimensions:
- the structure and segments of the industry
- the needs of channel and end customers
- the company’s relative capabilities and costs
- likely competitor reactions
Mapping each dimension systematically reveals strategic opportunities and warns of potential pitfalls.
Industry analysis means recognising that all markets have multiple segments that vary in their structural attractiveness. Sizing up those segments involves looking at bargaining power, threat of entry, and rivalry, among other factors (often via Porter’s five forces). A once-unquestioned industry map may need rethinking if new consumer needs or technological shifts create new, more viable segments.
Exploring customer value—for channel partners and end consumers—clarifies the benefits and trade-offs they care most about. This is rarely reducible to “just ask them.” Deeper research, including observation of shopping habits and product use, can reveal dimensions of value that enable a brand to differentiate or match competitors at lower cost.
A realistic look at capabilities and costs compared with rivals rounds out where-to-play and how-to-win possibilities. Organisations must see how well they can meet customer needs (differentiation) or whether they can operate at superior or comparable cost (cost leadership). Knowing strengths and weaknesses helps decide if a new segment or business area is promising or if it mismatches the firm’s capabilities.
Before settling on final choices, it’s crucial to anticipate competitor responses. Even great ideas may fail if entrenched rivals can quickly undercut or replicate them. Mapping possible reactions allows strategic refinement or withdrawal from a move that a competitor could easily nullify. Only a robust plan, unlikely to be neutralised at the first sign of competition, is worth pursuing.
Combining these four dimensions—the industry, the customer, the company’s relative position, and competitor analysis—forms a “strategy logic flow’ although in practice it’s iterative. Insights gained at one stage often prompt reconsideration of earlier assumptions, and teams must loop back and refine their view of the market or their potential capabilities.
Strategy Logic Flow Dos and Don’ts:
- Look at multiple ways to segment your industry instead of sticking to outdated maps.
- Probe what genuinely constitutes value for your channel partners and end consumers, rather than relying on what they say in a survey.
- Examine your unique capabilities and cost position relative to top rivals; a merely adequate position might not deliver a real advantage.
- Anticipate how competitors could thwart your moves and whether you can defend against them.
- Don’t assume entire industries are unavoidably unattractive; uncover which segments or innovations might be more promising.
- Don’t treat industry analysis and customer needs as static; iterate and refine your findings based on each new insight.
Chapter 8: Shorten Your Odds
Traditional strategy efforts often involve analysing everything at once, deciding on a single "right" answer early, and then selling it to others. This tends to discourage creative thinking and frustrates sceptics. A more effective approach asks, "What would have to be true?" for each possible strategy to work. Instead of battling over who is right, teams work together to identify the conditions needed for a proposal to succeed, then systematically test the riskiest conditions first. This shifts the process from trying to force agreement to collaboratively exploring where the evidence leads.
The process for exploring what would have to be true has seven steps:
- Frame the Choice. Begin by defining the decision as a clear, mutually exclusive set of options (at least two). Instead of talking endlessly about a problem, crystallise it into a real choice, such as deciding whether to improve the current product line, cut costs drastically, or exit a business.
- Generate Strategic Possibilities. Once one or two basic options are identified, broaden the list with more creative ideas—even ones that feel like a stretch. Each possibility should be treated as a positive scenario worth exploring, so long as at least one team member finds it compelling.
- Specify Conditions. For each possibility, reverse engineer what would have to be true in order for that possibility to be a great choice. Use the logic flow (industry structure, customer needs, relative capabilities and costs, likely competitor reaction) to outline these conditions. At this point, don't argue whether the conditions are actually true; just identify them.
- Identify Barriers to Choice. Flip perspective and ask which of those conditions are least likely to hold up in reality. These are the major barriers keeping the team from committing. If even one of them fails, the strategy can't work.
- Design Valid Tests. For each barrier condition, design a test the entire group agrees is credible—especially any sceptics. That might include pilot programmes, consumer research, or analyses of competitor actions. The aim is to create evidence robust enough that, if positive, the team will be confident proceeding.
- Conduct Tests. Start with the barrier that worries everyone the most. If it fails right away, time and resources are saved—there's no need to keep testing that particular possibility. If it passes, move on to the next least likely condition. This keeps the process focused on the few things that truly matter.
- Choose. After each possibility's biggest risks are tested, the best choice typically emerges naturally—no lengthy debate needed. The team can commit to the option that passes its critical tests and shows the greatest promise of winning.
By emphasising "What would have to be true?" the group encourages open-minded exploration of multiple scenarios. Instead of clashing over initial beliefs, participants work to identify the data that would ease their doubts. They collaborate on designing tests, so no one's concerns are brushed aside. This builds genuine commitment. When testing narrows the field to a single robust option, the entire team is more willing to support and execute it.
Conclusion: The Endless pursuit of Winning
Strategy remains vital even in a volatile, uncertain, complex, and ambiguous environment, because it shortens the odds of winning. Without it, companies inevitably falter, and even the best product ideas lose ground over time. A robust strategy rests on answering five questions—defining a winning aspiration, choosing where to play, deciding how to win, identifying the necessary capabilities, and establishing management systems that reinforce those choices.
Six Strategy Traps:
- Doing it all: Failing to make clear choices or priorities.
- Don Quixote battles: attacking competitive “walled cities” or taking on the strongest competitor first, head-to-head. Remember, where to play is your choice. Pick somewhere you can have a chance to win.
- Multiple-front wars: Simultaneously attacking several competitors and spreading resources too thin.
- Something for everyone: Trying to serve every segment without excelling at any.
- Dreams with no action: Issuing lofty missions that never translate into concrete where-to-play and how-to-win choices.
- Program of the month: Settling for generic industry moves that look exactly like rivals’ efforts.
Six Telltale Signs of a Winning Strategy:
- Distinctive activity system unlike any competitor’s.
- Passionate customers who love your offering, with outsiders who don’t understand why.
- Competitors who remain profitable in other niches, so they don’t feel compelled to attack your core.
- Ample resources to invest, thanks to a strong margin advantage.
- Rivals focus on each other, not you, indicating you’re the toughest target.
- Customers look to you first for innovation and improvements, showing trust in your unique value.
All companies need to evolve their strategies—to improve, sharpen, and change to stay competitive and, ultimately, to win year after year. Ideally, companies should see strategy as a process rather than a result—adapting existing choices before business and financial results (which are always lagging indicators) start to turn down.
No strategy is permanent. Markets, technologies, and consumer preferences shift quickly, demanding constant evolution of a company’s choices. Yet a clear, well-grounded strategy—continuously updated—offers the best defence against uncertainty and ensures you consistently play to win.
All strategy entails risk. But operating in a slow-growing, fast-changing, intensely competitive world without a strategy to guide you is far riskier.