Playing To Win
Strategy is Singular
One Entity, One Strategy
I had a recent client conversation about the Objectives, Goals, Strategies and Measurements tool — typically referred to as OGSM. It harkened back to a reader question (Lars) about my antipathy toward the plural of the word strategy. So, I decided to combine these thoughts into my 5th Year III Playing to Win Practitioner Insights (PTW/PI) piece called Strategy is not Plural: One Entity, One Strategy. You can find the previous 115 PTW/PI here.
The OGSM Tool
This is a standard portrayal of the Objectives, Goals, Strategies and Measurements tool, clipped from the source below:
The OGSM tool is believed to have originated in the post-war Japanese business sector and thereafter was adopted (as was Total Quality) by US companies, the most prominent user of which was Procter & Gamble (P&G). Because I have worked with P&G so long and written a book with former CEO AG Lafley (Playing to Win), many people think that I had something to do with creating OGSM and/or installing it at P&G. There isn’t one scintilla of truth in either. I had nothing to do with its creation nor anything to do with its installation at P&G. It was already reasonably engrained at the company when I started consulting there in the mid-1980s.
Moreover, I was never and still am not a fan of OGSM as the strategy tool it is considered to be and worked hard at P&G (and elsewhere) to make its usage compatible with strategy. I have no objections to the Goals and Objectives portions of the OGSM. In my Strategy Choice Cascade, I refer to this as Winning Aspiration and have only one category, not two. But I am fine with however people want to name it. As long as the Goals and Objectives involve winning competitively, I am just fine. I am equally on side with Measurements, which are always an integral part of Management Systems in my Strategy Choice Cascade.
That leaves the highly problematic letter S for Strategies. It is plural because in the normal use of the OGSM tool, this section is a list of initiatives in which the company plans to engage — build this factory, enter that market, digitally transform, improve quality, build talent, and so on. These are all classical elements of a plan, and as I have been on record as saying (at last count to 1.5 million viewers) A Plan is not a Strategy. Typically, all the so-called ‘Strategies’ in an OGSM seem a quite sensible, if not entirely laudable list of initiatives. But as I have argued before in this series, a laudable list of initiatives does not necessarily produce a worthwhile strategy.
Strategy is Singular
Strategy is not a list. It is a singular thing — an integrated set of choices that identifies a place to play and a theory for how to win there, that is backed by capabilities that pass the can’t/won’t test and management systems that build and maintain those capabilities.
There are many initiatives that naturally arise out of the making of an integrated set of choices. Typically, the strategy choice will necessitate building capabilities that the company doesn’t currently possess but must have for the strategy to be realistic and successful. Consequently, I am not against planning. But planning a set of initiatives should be seen as a complement to strategy, not a substitute for it. Planning should follow strategy, not replace the fundamental strategy task.
In the mid-1980s, when Monitor Company was hired as P&G’s first-ever strategy consulting firm, we found that it didn’t have a strategy discipline. It was, and continues to be, a spectacularly successful company. And it made some fantastic strategic decisions in its storied history — from cutting out the distributors to go directly in the formative years of ‘cash & carry’ retailing, creating the soap opera as a means of communicating with consumers in the early days of television, inventing brand management, pioneering consumer research techniques, and many more. However, it didn’t have a consistent strategy discipline across categories, over time. It did have an extremely strong planning discipline — as strong as I have seen anywhere. And the OGSM was a central component of that planning system.
It took 20 years of hard slogging and lots of leadership by AG, which properly is widely recognized, but also Tom Laco, Erik Nelson and Wolfgang Berndt, each of whom played important but less celebrated roles, to get OGSMs to feature an integrated set of Where-to-Play, How-to-Win, and Must-Have Capabilities choices in the S box. In reality, it is now an Objectives, Goals, Strategy and Measurements statement and a beneficial tool for strategy development.
Reader Lars posed a good question (and I love questions from readers) about an apparent contradiction between my antipathy toward the plural of strategy and my promotion of business unit, functional, and geographic strategy. Is the right answer one strategy or many strategies? Good question indeed. The answer is both!
The rule is: one entity, one strategy. For a company that sells one product/service in one geography, one strategy will suffice. But the minute it sells multiple offerings and/or in multiple markets, it will have multiple entities, each of which needs a strategy.
If we stick to P&G as an example, P&G needs to have a strategy. But Beauty Care, and each of the other four Sector Business Units, needs to have a strategy. And Hair Care, and each of the other Categories within Beauty Care, needs to have a strategy. And Pantene, and each of the other Hair Care brands, needs to have a strategy. And all of them most certainly do have one.
But in addition, Asia-Pacific and each of the other regions needs a strategy. And Japan, and each of the other Asia-Pacific countries needs a strategy. And Sales needs a strategy, and the Walmart Customer Team needs a strategy.
Regardless of the company, each entity within it has important Where-to-Play/How-to-Win choices to make. And executives across these entities make strategy choices whether those making them believe so or not because strategy is what you do, not what you say.
For example, if your Human Resources function makes the decision to have industry-leading pension benefits, it has made a choice to attract an older workforce. If marketing spends time and effort on planning and delivering promotional pricing programs across the year for its retailers, it has made a choice to play more intensively and successfully with Hi-Lo retailers than with Every Day Low Price (EDLP) retailers — which was the case for P&G prior to 1990 but the opposite after.
The imperative for and reality that strategy choices be made in numerous entities across the modern company creates a key challenge for it. It needs to knit all those individual strategy choices together into a whole in which the strategy parts fit together and reinforce one another. Generally, it is done badly, which is a key reason why so many large companies don’t achieve competitive advantage based on their size and instead, face pressure to break themselves apart into multiple smaller, more manageable companies.
The core skill required throughout the company is Strategic Choice Chartering — which is the critical task of providing guidance for those managers reporting to you as to what strategy choice they need to be responsible for making, and making in a way that fits with and reinforces your choice. It is the job of the Chief Strategy Officer of the company to ensure that the strategy choices get made and to coordinate across the entities that need to do so.
A key enabler of this is something that far too few companies do and about which I have written before. I want to reinforce it here because I don’t think enough companies understand its importance. That is to install and enforce a single language of strategy across the company. Strategy is too misunderstood to further muddy the waters by having multiple language systems for it. It is the strategy scourge of most large modern corporations.
Of course, many say there is only corporate strategy and the rest is execution. That is a quaint but delusional and debilitating view of company life.
Whatever entity of which you are in charge has a strategy. If you is all you are in charge of, than to still need to have one — a personal Playing to Win strategy. You need to have a clear theory of on what you spend your time (Where-to-Play) and how you are going to do so with greatest positive effect (How-to-Win). If you are in charge of a brand or a factory or a region or an entire business, you need to have one. You will be successful to the extent that your strategy reinforces and fits with the ones above and around you. If those above and around you can’t tell you their strategy, then to be successful, you will have to help them formulate theirs because you can’t fit with and reinforce a mess.
Remember that your strategy is not plural. It is an integrated set of choices that identifies a place to play and a theory for how to win there, that is backed by capabilities that pass the can’t/won’t test and management systems that build and maintain those capabilities. If someone tells you that ‘x is one of their strategies,’ you know that they don’t know what strategy is and they need your help to figure out a useful one.