Playing To Win
Strategy for Organizations Without Competition
Playing to Win When There is No One to Beat
Readers send me many questions about whether the Playing to Win tools can be applied in various non-profit contexts. I wrote earlier on the subject in the 10th piece in this series (of now 236 pieces). I am returning to this topic with respect to a particular kind of non-profit — government agencies — in this Playing to Win/Practitioner Insights (PTW/PI) piece called Strategy for Organizations without Competition: Playing to Win When There is No One to Beat. And as always, you can find all the previous PTW/PI here.
Background
The latest question (from Memory — his name, not my brain) reinforced a theme of many previous questions: “I have read your articles and found your frameworks for profit-making organization and social/nonprofit organizations extremely useful and clear. I am curious. How would you adapt your strategy principles for government agencies, such as revenue collection agencies, defense organizations, or regulatory agencies?”
I talked about Social Service Organizations (SSO) in the piece referred to above. But I have found that readers find the application of strategy easier to conceptualize when the SSO has direct competition, like Tennis Canada with other tennis federations, or Rotman School with other business schools.
That piece argued that strategy for SSOs is more similar to than it is different from for-profits. That having been said, strategy is most similar to for-profits that operate in a two-sided market, like Google Search in which the beneficiaries of the offering (searchers) don’t pay for the costs involved, while the advertisers on the other side of the two-sided market pay for the costs (and a lot more). This structure is similar for SSOs. For example, the beneficiaries of the work of the World Wildlife Fund are endangered animals and the funders are people who want to see animals protected. Sometimes funding is mixed. The direct beneficiaries of Rotman education — students — pay some of the cost and the government and donors subsidize the rest.
The Two-Part Inapplicability Argument
The question for this class of organizations — which I will call Non-Competitive Social Service Organizations (NCSSOs) — is often framed as an appeal for me to confirm that for these organizations, Playing to Win is inapplicable based on two rationales — neither of which I buy.
Winning
The first rationale is that NCSSOs — like the government agencies mentioned in the question above — don’t have competition against which they attempt to win and since Playing to Win is so obviously and centrally about winning, it can’t be applicable to a context in which there is no competition against which to win.
I don’t buy this argument.
In Playing to Win, I don’t have the normal conception of winning. I am not interested in others losing in some zero-sum game, which I have written about previously in this series. I am primarily interested in a strategy that creates the most value for the beneficiaries. If you aren’t creating the maximum possible value with the tools at your disposal, you aren’t winning. If you have (directly) paying customers, you want the value you deliver (which is reflected in the price) to be far in excess of the cost to provide it. If non-beneficiary funders are paying, you want the value delivered to their target beneficiaries to be far in excess of their funding. Thus, when taxpayers fund a government agency, it should strive to develop a strategy that provides beneficiary value far in excess of the costs.
If, as an SSO or NCSSO, you do so, you will be given more resources/tools with which to work. As of 1998, Rotman created mediocre value with the $13M/year it had to spend. Because our subsequent strategy delivered much more value, by 2013, we had $130M/year to spend — which enabled us to provide even more value in an upward spiral.
Tight Mandate
The second objection to NCSSO Playing to Win strategy is that government agencies have extremely tight and constraining mandates. The legislation tells you what you need to do and the politicians enforce that. You can’t do strategy. All you can and should do is execute against the mandate (which, of course, makes me want to puke).
It is a sad, glass-half-empty view — which becomes self-fulfilling. You ‘just execute’ and create minimal value, while your masters forever tighten the screws and cut your budget. Of course, your political masters create a box in which you have to play. But your job is to create a strategy that delivers so much value that the strictures are loosened — or even tossed out.
I will give examples of bold strategy in each of the government agency categories mentioned by Memory — plus a bonus category: policing.
- Revenue Collection
My friend and occasional colleague, Tony Golsby-Smith, works at the intersection of design and strategy. For almost a decade from the early 1990s to the early 2000s, he worked with a revenue collection agency — Australian Tax Office (ATO) — on redesigning its strategy. The ATO’s implicit strategy had long been that any problem could be solved with more detailed filing requirements and procedures, so much so that taxpayers hated the system.
Thanks to Golsby-Smith’s help, the ATO strategy shifted from doubling down on more enforcement to designing to make the taxpayer experience more intuitive and pleasant — i.e. making it easier for taxpayers to comply. The strategy shift dramatically increased taxpayer satisfaction and ATO collection efficiency.
2. Defense Organizations
The US Department of Defense (US-DoD) was humiliated in Vietnam. It should have been able to crush a ragtag bunch of Viet Cong guerillas. But eventually, the US exited, having accomplished nothing while losing the lives of 58K American soldiers.
The humiliation precipitated a fundamental rethink of strategy, which in due course produced an entirely new strategy, launched in 1982: AirLand Battle Doctrine. It featured a completely altered Where-to-Play/How-to-Win (WTP/HTW) that coordinated air, sea and land forces in new ways to produce more effective collective action. The new doctrine produced a decisive victory in the 1991 “100-hour” Desert Storm war to free Kuwait from its invasion by Iraq.
3. Regulatory Agencies
I tried to get the Canadian Radio and Television Commission (CRTC) to shift its strategy to produce greater value — but didn’t succeed. The policy objective from the Canadian government was to get more Canadians watching Canadian-produced primetime television, a goal viewed as good culturally for the country and helpful in growing a vibrant Canadian television content industry. The chosen WTP was in input regulation — CRTC mandated that 50% of prime-time hours must be Canadian content. The HTW was that Canadian viewers would be exposed to lots of Canadian content, ensuring demand for it that would support the Canadian content industry.
Unfortunately, the required 50% share of hours generated a mere 10% of prime-time viewership. The horribly low viewership across the Canadian shows resulted in low advertising revenues meaning that the broadcasters could only spend a measly amount per hour of Canadian content because it needed to produce such a huge number of hours to fill the requirement for 50% of hours. And the broadcasters had to spend a disproportionately high share of their resources on licensing American shows for the 50% of non-Canadian hours that produced 90% of their revenue.
My recommended strategy was for the CRTC to switch its WTP to output regulation. Mandate that the broadcasters generate (say) 15% viewership of Canadian content within (say) three years — a 50% increase in the desired output — and be fined for coming up short. That way, Canadian content producers could spend much more per hour of Canadian content, resulting in fewer but better Canadian shows, which would have greater chance succeeding abroad (as with Schitt’s Creek). And Canada would have more watching of Canadian shows by Canadians.
Of course, it was attacked as anti-Canadian television production because Canadian television producers loved to produce lots of crap — and still do! That is always the danger with radical strategies.
4. Policing
A fourth example is policing — which is again a government agency with a very fixed mandate: police crime in the jurisdiction in question. Until 1990, it was done across America with largely the same WTP/HTW, which was largely reactive and not terribly effective, especially in America’s big cities.
In 1990, Bill Bratton came to New York City with a radically different WTP/HTW. His WTP was to crush geographically concentrated crime based on the ‘broken windows’ theory. His HTW was to use data to identify areas of criminal activity and to deploy overwhelming force to crush crime there, leaving criminals with no safe space, hence reducing overall incidence of crime. His Must-Have Capabilities included much more intensive use of information technology by skilled technologists. And his Enabling Management Systems included processes and procedures to quickly deploy overwhelming force to precisely targeted geographies.
In relatively short order, his new strategy reduced crime by 50% in New York City. He then went to Los Angeles and reduced crime by 50% there as well, proving that his New York success was no fluke. Sadly, many big city mayors are not opposed to persistently high crime rates and don’t deploy this proven strategy.
How to Do Government Agency Strategy
There is enormous latitude in how a government agency deploys its available resources, as each of the four examples above illustrates. Sure, legislation and politicians constrain actions. But no context of which I am aware in the for-profit world is strategy completely unconstrained. In fact, I define strategy as making choices under uncertainty, competition and constraints. The issue is whether there is latitude in WTP/HTW — and I would argue that there is plenty.
In strategy, more is the same than is different between for-profit and NCSSOs. The biggest difference is that in NCSSOs, you don’t focus on competitors. You focus on value: how to create the most value for your funders, which generally means creating high levels of value for the target beneficiaries. Aim to create value far in excess of resources provided. That is what successful for-profit companies do. The proof of that is when a public company has a very high market-value to book-value ratio. That is proof that it has created value for its funders (the shareholders) far in excess of the investments made by those funders.
Start (as I always do) with your current WTP/HTW. Characterize how you currently create the value that you generate. Don’t romanticize. Be honest with yourselves.
Then think differently about WTP. For example, at ATO, it invested in easing not enforcing compliance. At US-DoD, it focused not on beefing up the branches of the military but rather coordinating them differently. At CRTC, I encouraged it to think about switching from regulating inputs to regulating outputs. For Bratton, he focused on eliminating broken windows, not cleaning up the resultant crime.
And match it with a powerful HTW. At ATO it was if we make it easy, taxpayers will be happier and will comply to a greater extent. At US-DoD, coordination will amplify our advantage, not fractionate it. At CRTC, we can simultaneously get more Canadian content viewership AND create a more productive pattern of industry investment. With Bratton, we don’t need to be stuck applying all our resources to reacting to crime; we can crush it proactively.
For government agencies, you can use all the tools I laid out in Part One and Part Two of How I Do Strategy.
Practitioner Insights
My general advice is that when someone says this is different than that, be sure to ask yourself, in what ways it is this is the same as that. And when someone says this is the same as that, be sure to ask yourself, in what ways it is this is the different than that. You will always get a more sophisticated view when you take the stance that this and that are never completely the same or different.
While strategy for government agencies neither entirely different nor absolutely the same, treat it as more same than different. For that reason, use the same Playing to Win toolbox for government agency strategy, with some nuances to the application. Focus on creating the greatest excess of value delivered versus investment made rather than on beating competitors. And always view government agencies as having a two-sided market structure, which means you need to pay attention to both sides of the market — government funder and targeted beneficiary.
Finally, and probably most importantly, go for breakthrough strategic creativity as you would in any for-profit context. The politicians/legislation/ mandate won’t permit it is a classic disempowering excuse. It is not dissimilar to the capital markets won’t allow us excuse in the for-profit sector. They are both excuses for mediocre managers to pursue mediocre strategies. Life is too short to waste it aspiring to mediocrity! If you work in or advise a government agency, it is your job to aim high in strategy.
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As a reminder, I am doing a PTW/PI podcast series with friend Tiffani Bova. The twelfth in the series will be on LinkedIn here on Wednesday, August 20th at 12 noon EST and 9am PST. I look forward to seeing you there.
