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A.G. Lafley and Roger L. Martin HBR Press - FEB 2013
A Book Review
Market strategy consultant E-mail: email@example.com
About the authors
One more strategy book is out in the market. But this book is the one which will be liked from strategy consultants , business leaders to business school students because it has made “Strategy” simple and without Jargon through real life examples and practical insights. It’s more do-it-yourself book for managers and leaders who find strategy intimidating. From a practitioner perspective the book is very balanced. It has the balance of real world successful implementation of strategy in a corporate setting backed by the academic rigor and consulting background of the authors.
The book provides
• insights on how the strategy was implemented at P&G with insights of the authors former Procter & Gamble CEO Lafley • along with how strategy works from consulting and academic experience of Roger Martin’s work at Monitor and who is currently the dean of Rotman School of Management.
Strategy is all about winning
The authors assert that the essence of strategy is about winning and to achieve success leaders and organizations need to make tough choices. The authors provide frameworks which are simple, basic and practical. The pose and ask questions that separate true strategy from mission, vision, or planning.
They say that a winning strategy comes from deeply substantive hard thinking, and The authors provide real life examples from P&G on how the strategy has been implemented over a period. The books talks about how P&G developed or positioned its well-known brands in the global market.
Strategy is a set of Tactics
The authors argue that Strategy is a set of tactics. Winning through distinctive choices should be always-and-forever job of the top management in a company. If management continues to search for unique where-to-play and how-to-win choices that set the company apart, they should be able to further the success of the company. These two decisions — in what areas will the company compete, and on what basis will it do so — are the critical one-two punch to generate strategic advantage. According to the authors these two decisions, can't be considered independently or sequentially. In a great strategy, your where-to-play and how-to-win choices fit together and reinforce one another.
But the good news is that if we change the way we think about the problem of strategy versus execution, we can change the outcome.
What really matters is winning
The authors explain that many leaders tend to approach strategy in one of the following ineffective ways: (1) define strategy as a vision, (2) define strategy as a plan, (3) deny that long-term (or even medium-term) strategy is possible, (4) define strategy as the optimization of the status quo, or (5) define strategy as following best practices. The authors argue that what really matters is winning, and in book they provide five choices, a framework, and a process, for what is needed to win. The authors rightly argue that a set of good choices positions a firm for competitive advantage. The say that choice must be sufficiently compelling to generate management commitment to the choice in an engaged and energitic way.
Strategy = choice
The authors believe strategy can be defined and created using a simple framework that entails answering five questions — the same five questions, no matter the type, size or context of the organization. Lafley and Martin are blunt about what strategy is: "Strategy = choice." It's a set of choices on five issues: the business's winning aspiration; where to play; how to win; needed capabilities; needed management systems. It's a set of hard choices on five issues: The business's winning aspiration; What are company’s aspiration/goals in the short term, medium and long term of the company? Where to play; In which markets does the company want to focus on? In which market’s it doesn’t want to be in ? How to win; How has the company planned its strategy? Needed capabilities; Does it have the capabilities, resources and management systems for executing its strategy? The capabilities include deep consumer understanding, Innovation, Brand building, Go-to-market ability and ability to scale. Needed management systems. How they have been successful in executing their milestones?
Reinforcing choice cascade The five strategy questions and the relationship between them have been presented by the authors in a framework as a reinforcing ‘choice cascade’ where the choices at the top of the cascade setting the context for those below, and choices at the bottom influencing and refining the choices above. The authors argue that making the way through the choice cascade isn’t a one-way, linear process. Rather they say that, strategy is an iterative process in which all of the moving parts influence one another and should be taken into account together. The authors argue that Strategy as a Choice Cascade model is a better approach than the currently favourite mainstream strategy-execution approach. In the strategy and execution approach development of strategy and execution are in two different silos and the success of both strategy and execution together cannot be vouched for. In the Choice Cascade model those at the top of the company make the broader, more abstract choices involving larger, long-term investments, whereas the employees toward the bottom make more concrete, day-to-day decisions that directly influence customer service and satisfaction. This approach the authors feel is better than the strategyexecution model.
Challenge for organizations - Choice Cascade model – Indian context
The book poses a serious challenge for organizations who feel that by answering the five strategy questions they have mastered strategy making process. In reality the toughest part is to understand the interplay between all the moving parts of the reinforcing ‘choice cascade’ and set their strategy looking at the big picture. In the Indian context, where the boss is always right and is look up to and not to questioned implementing the choice cascade model will not be easy as bosses micro-manage the choices and decisions of even their sub-ordinate staff.
Strategy = choice - Few Indian examples
I will quote few relevant examples from the Indian context : Where to play : Rajiv Bajaj of Bajaj Motors choice of focus on “Motor Cycles” and not entering the scooter market in India. This has led to the company’s high EBIDTA margins compared to the competition. In short, where to play represents the set of choices that narrow the competitive field and Bajaj has been very clear in its choice. How to win : Unique value proposition and competitive advantage of Cognizant – “Three in a box” framework. This framework has helped the company outperform the fierce competition in the global IT services market. Needed capabilities : Tata Nano’s had a innovative product in the Indian Passenger Car market. Tata Motors failed to answer the following questions. Who is the customer for the product ? What is its positioning in the market ? How will the product be delivered ?. Tata motors failed in executing its strategy – because of issues related to marketing and distribution. In fact in it is a failure of not understanding the interplay between all the moving parts of the reinforcing ‘choice cascade’ at the organization .
Structuring strategic choices
The authors also provide a process and a framework for structuring strategic choices including strategic logic flow framework and reverse engineering the current strategy. The authors indicate that support staff provide the top management with key data and information - results, past experience, etc. Members of the top management team then select key facts from the pool of available data and apply logic to that data in order to draw the inferences necessary to make a choice. The goal of a choice-structuring process is to produce sound strategic choices that lead to successful action. They define the attributes of a high quality choices and present the "strategic logic flow" framework, designed to direct thinking to the key analyses that forms any strategy. In the “reverse engineering" methodology, the organization implementing the strategy will analyze the conditions that represent the greatest barriers first, so that other conditions will not have to be explored if the prior barrier is not overcome.
The authors have provided a framework for organizations which looks simple. But making choices are not and success is not easy. Choices call for commitment which is not easy in an business environment which is sluggish. Also management need to make up choices based on real data and not on hunch. The book provides a framework for making informed and successful strategic choices in an organization and the book is a good read for practitioners, academicians, industry and students.