Playing To Win
The Danger of Locking & Loading
The Strategy Choice Cascade is a System, not a Sequence
Ok, I have to do this. Two Zooms last week sent me over the edge. There is a fundamental and widespread misinterpretation of Playing to Win (PTW) strategy that I feel I need to address head on. And I am doing that in this Playing to Win/Practitioner Insights (PTW/PI) piece called The Danger of Locking & Loading: The Strategy Choice Cascade is a System, not a Sequence. All previous PTW/PI can be found here.
The Two Zooms
The first was with the Chief Product Officer of one of the world’s ten most important tech companies who described himself as a longstanding PTW fan. The second — the very next day — was with a Rotman School grad from my time as Dean who heads strategy in a global health products company, who also described himself as a big PTW fan and user.
They both described the same challenge/roadblock/frustration with using PTW to develop their strategy. Interestingly, their interpretation of PTW meant using the Strategy Choice Cascade (SCC), pictured above left — which covers the content of strategy — but not using the Strategic Choice Structuring Process (SCSP) pictured above right — which deals with the process of how a strategy is created. Perhaps they don’t remember (or haven’t read) Chapter Eight of the Playing to Win book or pieces in this series (for example) which discuss the SCSP.
They, like so many others, look at the five boxes on the left and see it as a linear sequence, and start working through it. I can understand why because the boxes run from upper left to lower right with arrows guiding in that sequential direction. But the arrows running lower right to upper left are there for a purpose too!
In any event, they start with Winning Aspiration (WA) by getting the senior leadership team together to work on defining and locking & loading on it. They are happy to have completed that important first step. Then they turn their minds to Where to Play (WTP). They typically consider a variety of alternatives and then decide what is the most appealing WTP — and lock & load on that. Unfortunately, when it is done this way, the typical choice is the WTP that is most attractive for all competitors (the highest margin, fastest growing WTP).
Then they turn to How to Win (HTW). And often — as was particularly the case with the Rotman grad above — they get flummoxed. There don’t seem to be any good ideas for HTW. They lament that the PTW process was working so well — what had suddenly gone wrong?
They are repeating a sequence that I have seen over and over, and over again: the lock & load problem.
The Lock & Load Problem
The SCC is a system, not a linear sequence. If we go back to my earlier rugged landscape piece, most strategy landscapes are a messy array of peaks and valleys with smaller hills obscuring the taller peaks — which are (metaphorically) the attractive competitive positions. Imagine yourself somewhere on that rugged terrain surrounded by hills and mountains of varying heights with the intention of getting to the top of one of the (say) two or three highest peaks.
Then imagine locking & loading on a WA as being the equivalent of deciding to march in the direction of the 90°quadrant from due north to due east — and you will only explore for a tall peak in that quadrant. That inadvertently cut off the possibility of you finding a tall peak/attractive position in 270° or three-quarters of the map.
Then imagine cutting the 90° by (say) one third and continuing to search only in 30° of the quadrant — which is the equivalent of locking & loading on a WTP after locking & loading on a WA. By this time, you have cut off over 90% of the territory that could contain the tall peaks. You won’t even search for them, let alone find them.
This is why many PTW aficionados get stymied when they get to the third box — HTW. Metaphorically, they are searching for a tall peak/ great HTW answer within the confines of a tiny area. And there just may be no such great answer there — in fact it is almost certain that there won’t be.
They inadvertently design their failure — all while doing hard work. It is a bit like walking into a jail cell, locking yourself in, throwing the key out of the cell, and then angrily shaking the bars and yelling for someone to let you out.
Fixing the Problem
Do not get in a room and attempt to decide on and lock & load on your WA. It is a recipe for failure. I know it will feel weird, but most of strategy is useless, so you are going to have to get used to weird.
It is perfectly fine to discuss the things you care about. How we want to treat customers? What kind of place do we want to be for employees? How do we want to make the world a better place? In what business sectors are we particularly interested? How might we want to honor our company past? These initial thoughts provide a great context for diving into the SCC. Just don’t lock & load on them yet.
Then generate a full possibility across the five boxes of the SCC. I start with intriguing WTP/HTW combinations. Even though the WA box is upper-left, I don’t start with it unless somebody at the client strongly insists on doing so. Rather, I ask what the appropriate WA for the WTP/HTW possibility would be. For the inception of Vanguard, the WTP/HTW combination was index mutual funds (even though they didn’t yet exist) and low-cost position based on the elimination of key cost items (e.g. investment management and marketing). The matching WA was to create a category and then be the biggest and best in it.
Then I go to Must-Have Capabilities (MHC) and Enabling Management Systems (EMS) to understand what capabilities and systems are necessary to bring alive the WTP/HTW combination. For Vanguard, it entailed building scalable capabilities in client services and systems for managing costs to get so big and so efficient that no competitor could ever catch up, reinforcing its HTW.
I toggle back and forth across the five boxes until I achieve coherence by which the five elements fit with and reinforce each other.
Then, as directed by the SCSP, I don’t stop there but rather create multiple possibilities — each with a unique WA and WTP, not with identical ones. I do this to have multiple possibilities to compete with one another to be the strategic choice. Coming up with a single SCC is not the application of PTW.
Rotman Case Example
As I always say, I don’t tell others to do something that I don’t do myself, and I used the above approach when I became Dean of the Rotman School at University of Toronto and tasked with taking a mediocre school and making it great.
I began by creating multiple freestanding possibilities of which I will describe just two in the interests of brevity.
For one possibility the WA was to become known globally as one of the greatest finance schools on the planet. The WTP was a quite standard MBA. The HTW was to build a great finance faculty (it was our most prominent at the time) and create a powerful synergistic tie with nearby Bay Street (Toronto’s mini version of Wall Street). The key MHC were high levels of co-creation and tight relationships with the Bay Street firms. The key EMS were the process for recruiting top tier finance faculty and developing an effective system for placing students disproportionately into Bay Street (and in due course, Wall Street) firms.
For another possibility, the WA was to create a unique-to-the-world business program that taught students A New Way to Think. The WTP was an offering that we described as more of a Master of Business Design not a Master of Business Administration — a new space in the business education environment. The HTW was to create and teach unique content in integrative thinking and business design. The key MHC was in unique curriculum design — creating and delivering new-to-the-world courses that students would not find at any other business school. The key EMS was in recruiting students from a broader pool of backgrounds (many from creative jobs and/or education) than a traditional business school.
Note that the WA and WTP of these two possibilities were dramatically different (as were those for the other possibilities not discussed here) opening up more options for HTW rather than boxing me in.
I chose the A New Way to Think possibility and with it we rose to prominence and unseated the school, Ivey, that had been #1 in Canada for half a century. Spooked, leadership of Ivey approached me with a proposal to merge the two schools and have me run the combined entity. To decide whether to embrace or rebuff the approach, I needed to return to the SCC and decide whether I could come up with a more compelling strategy for the combined entity.
The WA would be to become the dominant Canadian business school in size and stature. The WTP would be to house the entire first year class at the other school’s campus — in a smaller, more student-friendly city — and the second year in Toronto — where the jobs and action are. The HTW would be to have economies of scale that made it the dominant business school with a combined alumni base that far outstripped any other school.
With two dramatically different possibilities, I could assess which was more compelling. You can make your own judgment but mine was that the combination strategy wasn’t compelling enough and we took a pass. I liked our strategy better.
Several years later, the Deans of the best school in the east (Montreal’s McGill) and the best school in the west (Vancouver’s UBC) approached me to combine the three schools and have me run the combined entity. The WA would be to become the true all-Canadian business school, the national champion favored by Canadian business and federal government. The WTP was to run the best MBA in each of Canada’s three consequential business cities (Toronto, Montreal, Vancouver). The HTW was to become the only business school that made sense for businesses across Canada to partner with and invest in because of the huge scale difference between the combined schools and the next biggest school (probably 4X)
I didn’t find that possibility compelling either, rejected it, and continued the quest to build a truly differentiated globally relevant Canadian business school. But my initial strategy choice and the subsequent choices demonstrate that you need to consider differing WA and WTP — along with different HTW/MHC/EMS — to get to an optimal strategy.
Practitioner Insight
I know this is hard. You have probably been taught some things as irrefutably true and necessary in strategy: start with a SWOT analysis (a very bad idea), then do something that sounds like a WA — whether you call it a purpose or vision or mission or aspiration, then create a ‘strategy,’ and if it done using PTW, choose your WTP, then HTW, then MHC, and then EMS, and finally create an execution plan.
I wish for everybody out there that this approach would work, then I wouldn’t have to bother you. But it doesn’t; it just doesn’t.
That is why I created both the SCC and SCSP. The former operates as a system of five interrelated choices — contemplated separately but made simultaneously. The latter entails creating multiple possibilities between which to hold a competition.
My advice on using the SCC is to first contemplate the WTP/HTW pair — as a pair — then check against WA, then check against MHC and EMS — I call the latter the reality check on strategy. Sometimes you will realize that you have to dump the WTP/HTW pair because there is no set of WA/MHC/EMS choices that fit with and reinforce the WTP/HTW pair. Other times you will be able to tweak the various choices to get to a coherent set.
With respect to the SCSP, that coherent set becomes one of the possibilities to consider. But it is only one. You need multiple possibilities to make a great strategy choice. And those possibilities need to have different WA and WTP. If the possibilities are all forked off the same WA and WTP, you won’t have sufficient variety in the possibilities to generate a great strategy choice.
But never, ever lock & load on one of the five boxes in the SCC before contemplating the other four. And I recommend that discipline to you. If you do otherwise and lock & load sequentially, as well as contemplate only one possibility, you are not using Playing to Win. You are using something foreign to me.
