On the Inseparability of Where-to-Play and How-to-Win
Why Thinking about them Independently will Wreck your Strategy
This 13th Playing to Win/Practitioner Insights (PTW/PI) is a bit of a rant about a particular misuse of the Strategy Choice Cascade that is driving me a bit batty. In response, this PTW/PI is on the inseparability of Where-to-Play (WTP) and How-to-Win (HTW).
The Pervasive Sequencing Error
In the past couple of months, I have watched three separate PTW-loving organizations make the same fundamental error in the application of the Strategy Choice Cascade. The first was a national sports organization, the second a publicly traded biotech company, and the third a global consumer products company. In the first two cases, PTW enthusiasts came to me at the start of the process for informal advice as the creator of the strategy framework they had decided to use. In the third, my client asked me to review mid-course progress on a strategy project being performed for it by one of the world’s leading strategy consulting firms. These happened in such rapid succession that I decided I had to write about the phenomenon.
In each case, the project was laid out by way of modules of work leading up to workshops with the board of directors or the senior management team. In all three cases, there was research and analysis leading up to a workshop on WTP followed by another tranche of study leading up to a workshop on HTW. That is, there was full consideration first of WTP before the consideration of HTW.
I understand why this happens. The Strategy Choice Cascade visually flows from the upper left to the bottom right, which puts WTP ahead of HTW in the sequence of five questions. It is clear to me, 25 years after creating the model, that the visual cues are more powerful than I imagined at the time. Those cues signal: “Answer WTP first and then turn your mind to HTW.”
Unfortunately, that drives a fundamental error in the application of the model. No matter how many times I caution against the error, it keeps happening. I sometimes wonder whether I should have put the two questions in a single box. But I don’t think so. They are logically separate questions. Putting them together wouldn’t solve the problem. There would, I believe, still be the tendency to consider them sequentially because that is the easiest thing to do. It simplifies the thinking. And it is consistent with the compartmentalization of modern business, by which business problems are chopped into narrow slices to tackle them and then assembled as if the pieces will fit together to make a whole. So, it probably feels natural.
The Matched Pair
But it is a terrible way to make progress toward a strategy. WTP and HTW are an inseparably matched pair. Considering them separately does not create productive progress toward a strategy. This is because there is no inherently good (or bad) WTP. People tend to think that a WTP is attractive because it is big, or it is fast-growing, or it features high-margins or low levels of competition. China is often thought of as a highly attractive geographic WTP. But lots of companies, even the leading global ride-hailing company Uber, found it to be the opposite of attractive for them. Two of the world’s five most powerful companies, Google and Microsoft, both thought that the smartphone business was an exciting WTP — a fast-growing, technologically-sophisticated product, that was one of the biggest product markets in the world with billions of global users — and both acquired major smartphone businesses (from Motorola in 2012 and Nokia in 2014, respectively). But despite being tech giants, neither had a HTW for the smartphone business and within a couple of years, both were forced to exit with their tails between their legs and multi-billion-dollar write-offs. Paper companies are forever moving to higher-value-added grades of paper thinking those are great WTPs because prices there are higher, only to find that the higher prices are matched by even higher costs to serve against entrenched competitors. No WTP has merit without an accompanying HTW — and there is no exception to this rule.
The worst thing to do is to lock and load on a single WTP before moving to the HTW stage. This happens surprisingly often in my experience. I get emails from people saying: “Roger, we have done our Winning Aspiration and chosen our WTP, but now we are terribly stuck on our HTW. What advice do you have for getting unstuck on HTW?” My answer is always to toss out the WTP and restart working on both WTP and HTW because if you are down to a single WTP, there likely isn’t a HTW for you that matches that particular WTP. If my personal career WTP was to be a National Basketball Association (NBA) player, there would be no available HTW for me other than to grow another 8 inches and replace my slow-twitch muscles with quick-twitch ones. So, like me, they are stuck for a reason. They have narrowed down WTP so far that there just isn’t a HTW to be found.
The next worst and probably most common approach is the generation of a list of WTP possibilities that then gets prioritized at a WTP workshop. In my experience, the list is typically very long — because in the absence of consideration of HTW, almost any WTP appears interesting. And if you combine this inclination with the modern fetish for ‘going for quantity’ in brainstorming, you get a really long list!
Such lists are unhelpful for strategy because the WTPs are purely theoretical without a paired HTW and since there are a lot of them, it is hard for the team doing the strategy work to focus its brainpower on possibilities that really matter — i.e., those for which a compelling HTW can be found.
With a long list of WTP possibilities in hand, the vast majority of which are irrelevant, the HTW workshop tends to be an exercise in going drone-like through the WTP possibilities and coming up with the best way to play in each. Again, my experience is that because the HTW task is diffused in this way, the team rarely comes up with a fabulous HTW to pair with one of the WTP possibilities because it never focuses enough on the finding that ideal pair. It is not as though it doesn’t ever happen. It is just far less likely.
The Better Way
Though the thought process is more daunting, the better way is to look for WTP/HTW pairs. When a potential WTP possibility comes to mind, immediately ask: is there a HTW that would make this a winning combination? And if not, could the WTP be tweaked to make for a better pair? If not, then discard the WTP entirely and move on. Don’t add it to a list of useless WTP options. It is this process of back and forth between WTP ideas and potential HTW matches that creates something real and powerful at the heart of strategy: the WTP/HTW matched pair.
It is an iterative process. The search needs to be patient because the prize is great: a HTW that is perfectly suited to its WTP; a WTP that by its limitations makes the HTW the strongest it can be. The Southwest Airlines WTP of short haul flights between secondary airports, featuring a single class of service enabled the HTW of the lowest cost airline in America. Longer hauls and multiple classes of service would have been a WTP that would have weakened the HTW — making the overall pair weaker. The Four Seasons WTP of hotel management (not hotel development and ownership) in the luxury space enabled the HTW of a distinctive form of service delivered in medium-sized hotels. A broader WTP would have damaged the power of the HTW.
The separation of this naturally matched pair simply makes the creation of strategy less effective with no other benefit than the thinking process is easier — hardly a worthwhile tradeoff.
Never forget that WTP and HTW are an inseparably matched pair — and are the heart of strategy. Any decoupling of them will make your strategy weaker — so don’t, even if it feels easier. Tackle the challenge of creating a matched pair. And never makes lists of potential WTPs. Consider the HTW for every WTP before moving on to the consideration of another WTP.
Consider your Winning Aspiration. But don’t hold onto it tightly until you have created a linkage with your WTP/HTW pair. Toggle back and forth to forge a match between your Winning Aspiration and your WTP/HTW pair. No Winning Aspiration has any merit if it can’t be matched with a WTP/HTW pair. And then do the reality check to ensure that you can build the Capabilities and the Management Systems to bring alive the WPT/HTW pair. And if you can’t, go back and tweak the WTP/HTW pair until you can. That is how you build a great strategy centered on an inseparable WTP/HTW matched pair.