Playing To Win

The Strategic Leverage of Where-to-Play

Enabling Your How-to-Win

Roger Martin
8 min readJan 29, 2024


Source: Roger L. Martin, 2024

I feel compelled to write about the importance of Where-to-Play (WTP). I keep seeing instances of extremes in the thinking on the subject. On one hand, it is fundamentally seen as being about diversification — often unrelated. A the other extreme, it is seen as preordained and immutable. In my view, neither view is helpful. So, I decided to provide an alternative view in this Playing to Win/Practitioner Insights (PTW/PI) piece, The Strategic Leverage of Where-to-Play: Enabling Your How-to-Win.

The Standard Views

The first prevalent view on WTP — that it is all about diversification — is quite explicit. The first reaction of executives when I talk about WTP is that I am referring to diversification. That is, playing in a place that is different than and not included in its current WTP. There is almost always real excitement about that prospect because the thoughts go immediately to more attractive places to play. That is, places with higher market growth rates, places with higher margins, places with more value-added, or, in the perfect world, all three together!

The other commonly held view on WTP — that it is preordained and immutable — is mainly implicit. I don’t see executives talking explicitly about this view, but it is clear in their actions. I saw it in the (now-largely-defunct) newspaper industry: our business is gathering news, printing it on paper, selling via subscriptions and newsstands, and selling advertising. I have seen it in the auto industry: to be a ‘major OEM,’ we need to have a vehicle in each major box — e.g., mid-sized sedan, luxury SUV, full-sized pickup truck, etc. I saw it in department stores: we need to have a full assortment of merchandise in every category that our competition carries, and we must have stores in the same kind of locations as our competitors (i.e., same kinds of streets and same kinds of malls). I see it in banks: we need to be in personal, commercial, corporate, in savings, checking, credit cards, mortgages, car loans, mutual funds, etc. The overpowering view, whether explicitly stated or implicitly acted upon, is that our WTP is what it means to be in this industry. Anything else is unbecoming, illicit, infeasible or some such prohibition/inhibition.

The Problem with the Diversification Definition

The view of WTP as about diversification can be a helpful perspective. I was a board member for almost the entire transformation of Thomson (later Thomson Reuters) from a company in the newspapers, textbooks, North Sea oil and European travel businesses to one in exclusively must-have, subscription-based, online information for professionals. It can be done, and I know from personal experience that it was helpful in that case to think about WTP expansively.

But most of the time, thinking about WTP as in entirely new spaces is a recipe for abject failure, whether it is AT&T with Time Warner, Microsoft with Nokia, Google with Motorola Mobility, HP with Autonomy, News Corp with My Space, Quaker Oats with Snapple, or even Daimler with Chrysler. Some combination of high growth, high margins, higher value-added was the siren’s call of the enablers (generally strategy consultants and investment bankers) that could not be resisted. Somebody should have lashed the diversification-mad executives to the mast!

The fundamental problem is that high growth means that everyone and their cousin tries to enter the market in question. Higher gross margins are there because the fixed costs of doing business are far higher and net margins and/or return on capital are often no higher or in fact lower. And more value-added? Honestly, the right question is: who the hell cares?

Another shortcoming of attempting to improve your WTP by diversifying into a new WTP is that it doesn’t address the inherent problems or challenges in your current WTP that caused you to explore new WTPs. The most common form of this is to diversify into another business to ‘dampen the cyclicality of our current business,’ as often happens with commodity producers. As I always point out to executives with this mindset, it doesn’t reduce the cyclicality of your existing business one iota. It just adds a new business to your portfolio — in which you are likely to fail — and leaves the existing cyclicality in place exactly as it was. Whatever the absolute dollar cost of cyclicality before the diversification is exactly the same after the diversification.

That having been said, I have given my cautionary advice on the topic of diversification in Chapter 14 of my latest book, A New Way to Think, so I won’t go on further on this part of the topic here. I will go into more detail in perhaps the more nefarious problem — treating your WTP as preordained and immutable.

The Problem with Treating Your WTP as Preordained and Immutable

The other view — to treat your existing WTP as ordained by a higher power — is like competing with one hand tied behind your back. While it is possible to have exactly the same WTP as competitors and figure out a different HTW, it is truly hard. It happens infrequently. The best way to build a compelling and valuable HTW is to have a unique WTP. It doesn’t have to be entirely non-overlapping with competitors, just unique along some dimensions.

One look at the Top 100 market cap companies in the world reinforces this. You will find very few companies on the list with a WTP that is identical or even very similar to another company (or companies) on the list. To be sure, there are a few: the troika of JPMC, BofA, and Wells Fargo; and the duo of Visa and Mastercard. But that is only five of the one hundred.

One might cite Coca Cola and PepsiCo as another counterfactual. But PepsiCo has nearly 30% of its revenue in Frito Lay, a completely non-overlapping WTP. Or one might argue that the eleven (yes — eleven) big pharma companies (Eli Lilly, Novo Nordisk, J&J, Merck, AbbVie, Roche, Novartis, AstraZeneca, Abbott, Amgen, and Pfizer) in the Top 100 have identical WTPs. But if you look at the 27 therapeutic areas that they collectively list as focus areas, only five have four or more companies focusing on the area. In 22 of the areas, there are three or fewer of the big players operating. And even in the overlapping therapeutic areas, generally defined, there are different subsegments. Do I think there is no overlap? Of course not. But no single company has complete overlap with another. Do I think there are some bloodbaths in some therapeutic areas, like oncology and cardiovascular? Yes, but not across the entire sector. That is why there are eleven of them in the Top 100.

Arguably 95% of the 100 most valuable companies in the world have a unique WTP choice — which I would argue is critical to them being on the list. Economists don’t like that — at all. Economists love overlapping WTP, as illustrated in the left diagram above. It gets them closer to their holy grail, ‘perfect competition,’ in which customers see the competitors as largely interchangeable and, because of that, can force the competitors to compete down prices to a level that results in barely sustainable profitability. Economics love, love, love that — but it sure isn’t a recipe for getting into the Top 100 market value companies.

A big issue is that while you are busily overlapping with the WTPs of your competitors, somebody will figure out a cleverer WTP. eBay said: let’s not do all of that newspaper crap, let’s just compete in classified advertising. Ford said: sedans aren’t necessary as the world shifts to loving the SUV form factor. Price Club (which merged later with Costco to become the behemoth we know today) said: let’s let the department store and mass merchandisers carry every item a shopper could possibly want while we will carry only the fast-turning ones (Originally, it carried only items that turned once a month and marked them up 10% and its competitors averaged one turn per quarter and marked them up 40% — so customers shopped for the fast-turning items in Price Club/Costco and all the slow-turning ones in the competition, an awesome beggar-thy-neighbor strategy as the store-average inventory turns in the competition plummeted.) Capital One said: how about we just do credit cards (and succeeded wonderfully, though then migrated towards its competitors by broadening its WTP to be bank-like, a shift I don’t love).

The WTP Imperative

The WTP imperative is to spread — the illustration above on the right. Any amount of spread is good. Get as far from overlap as you can with your WTP — like eBay, Ford, Costco and Capital One. Logic chips, not memory chips for Intel. Graphic chips not regular logic chips for Nvidia. Small towns for Walmart — until they were big enough to go into the cities and exterminate Sears and Kmart. Smartphones AND smartphone components for Samsung. Frito Lay for PepsiCo. Prepaid subscribers for T-Mobile. The entire spectrum of luxury goods for LVMH. Only index funds for Vanguard.

The gift you receive when you achieve uniqueness in your WTP is that it opens up different kinds of HTWs than the industry standard. Vanguard could become the low-cost player by not having the costs associated with investment managers. Walmart grew to scale in small towns and then used its model to enter larger metros and destroy the incumbents. Samsung achieved the low-cost position in the Android-based smartphone business by selling smartphone components to everybody else in the business to achieve a huge scale advantage. Intel and Nvidia focused on differentiating in what they did best and uniquely.

The success stories are not primarily diversification in the classic sense — though it is in the case of PepsiCo and Frito Lay (I.e., diversification beyond beverages). Most involve picking a more specific WTP largely within the confines of the existing industry norms for WTP. But by picking a distinctive WTP, the company in question can come up with a HTW that works only for that WTP.

One highly beneficial result is that the WTP/HTW combination doesn’t drive immediate matching. Often competitors are perfectly happy with their existing WTP and typically stick with it, often not even noticing the new WTP/HTW combination until it is far too late — as was the case for Walmart, Vanguard, Costco, T-Mobile, and many others. The phenomenon often occurs in the case of new entrants like Amazon and Tesla who pick WTPs that the incumbents think are not very promising — until it is too late.

Practitioner Insights

Always think of WTP as malleable and nuanced. Small shifts in WTP can open up big HTW possibilities. If you are struggling with HTW — as companies regularly do — don’t pull your hair out trying to find a HTW in your current WTP. There may well not be one. Instead, start playing with your WTP — and I mean playing. Get playful as you explore possibilities. Narrow it from industry standard — like Vanguard, Walmart, Costco, Intel and Nvidia. And broaden it — like Samsung, PepsiCo and LVMH. Don’t imagine that you have to make a gigantic shift in WTP. Any spread will help you open up unique WTP possibilities.

It is scary because it is choiceful. It is making a real strategic choice — because the opposite isn’t stupid; the opposite is the WTP that others have chosen. That is why most executives are nervous about doing it — and the vast majority just plain don’t. That is why there is so much overlap out there in the WTPs of modestly performing companies.

But it is important to keep in mind that if you can’t find a HTW in your current WTP, you are going to expire. Maybe it won’t be today or tomorrow or this year — but eventually.

So, start playing with your WTP. Come up with three to five different WTP modifications for which you can find a HTW pairing. Then think them through and choose the one for which the most compelling case can be made!



Roger Martin

Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in world. He is also former Dean of the Rotman School.