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PLAYING TO WIN - The Vision Council to Win... · PDF filePlaying to Play Playing to Win ....

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  • PLAYING TO WIN

    Vision Council Executive Summit

    Palm Beach, Florida

    January 23, 2015

    Twitter: @rogerlmartin

  • Copyright 2013 Roger L. Martin

    STRATEGY IS ABOUT CHOICES

    To win, a company must choose to do some things and not others

    2

  • Copyright 2013 Roger L. Martin

    STRATEGY IS THE ANSWER TO 5 QUESTIONS

    What is our winning aspiration?

    Where will we play?

    How will we win?

    What capabilities must we have?

    What management systems are required?

    3

  • WHAT IS OUR WINNING ASPIRATION?

    General Motors 2013 4

  • WHAT IS OUR WINNING ASPIRATION?

    General Motors 2013 5 Playing to Play Playing to Win

  • WHERE WILL WE PLAY?

    Image courtesy of Intuit 6

  • Copyright 2013 Roger L. Martin

    STRATEGICALLY DISTINCT SEGMENTS

    Individual Customers

    The Industry

    Segments

    Develop Competitive Strategy

    Based on an Understanding of

    Individual Customers?

    or...

    Develop Competitive Strategy

    Based on Generalizations about

    The Industry?

    or...

    Develop Competitive Strategy Around

    Clusters of Customers About Which

    We Can Make Generalizations?

    7

  • HOW WILL WE WIN?

    A Starbucks storefront at night. Starbucks Coffee Company 8

  • Copyright 2013 Roger L. Martin

    THE TWO FUNDAMENTAL WAYS TO WIN

    Low Cost

    Differentiation

    Sustainable

    Competitive

    Advantage

    9

  • Copyright 2013 Roger L. Martin

    ALTERNATIVE WINNING VALUE EQUATIONS

    Margin

    Cost

    Value

    Average

    Competitor

    Cost Leader Differentiator

  • Copyright 2013 Roger L. Martin

    LOW COST STRATEGY: SOUTHWEST AIRLINES

    How will we

    win?

    What

    management

    systems are

    required?

    What is our

    winning

    aspiration?

    What

    capabilities

    must we

    have?

    Where will we

    play?

    America

    Short haul routes

    Secondary cities

    or airports

    Economy class only

    Lowest costs in the

    industry

    Frequent reliable

    departures

    Very low ticket prices

    Limited passenger

    services

    Fast gate turnaround

    Cost management

    Route planning and

    design

    Internet booking

    expertise

    Employee selection

    and motivation

    Cost management

    systems

    Employee compensation

    systems

    Route profitability analysis

    Highest employee

    satisfaction,

    highest customer

    satisfaction airline

    in America

    Highest profit

    airline in America

    11

  • Copyright 2013 Roger L. Martin

    DIFFERENTIATION STRATEGY: PROGRESSIVE INSURANCE

    How will we

    win?

    What

    management

    systems are

    required?

    What is our

    winning

    aspiration?

    What

    capabilities

    must we

    have?

    Where will we

    play?

    Non-standard drivers

    Nationwide

    Direct and independent

    agents

    Underwriting and

    claims

    Proprietary pricing

    expertise

    Rapid accident

    scene response

    Express Quote

    service

    High agent service

    Liquid portfolio

    Response fleet

    management

    Pricing database

    building and

    analysis

    Agent acquisition

    and training

    Pricing management

    Liquid investment

    management

    Fleet responsiveness

    systems

    Provide non-

    standard drivers

    a high quality

    solution

    Dominate the

    non-standard

    segment

    12

  • WHAT CAPABILITIES MUST WE HAVE?

    Burberry Flagship Store, London 13

  • Copyright 2013 Roger L. Martin

    STRATEGIC CHOICES AT P&G

    How will we

    win?

    What

    management

    systems are

    required?

    What is our

    winning

    aspiration?

    What

    capabilities

    must we

    have?

    Where will we

    play?

    Grow from the core, focusing on big brands,

    markets and customers

    Lead in laundry & home care, beauty and

    personal care

    Position to lead long-term in emerging markets

    Build highly

    differentiated

    brands backed by

    global scale and

    ubiquitous

    distribution?

    Consumer understanding

    Innovation

    Brand building

    Go-to-market ability

    Scale

    OGSM

    Operating TSR measures

    Leadership Development

    Meaningfully

    improve the lives

    of the worlds

    consumers

    Deliver consistent

    4-6% top-line and

    double-digit

    bottom-line growth

    14

  • Copyright 2013 Roger L. Martin

    P&G ACTIVITY SYSTEM

    Globally

    Distributed

    R&D

    Agency

    Relation-

    ships

    Global

    Business

    Services

    Connect

    +

    Develop

    Design

    Global

    Purchasing

    Customer

    Teams

    GBU/MDO

    Structure Shopper

    Marketing

    Leadership

    Culture

    Brand-

    building

    framework

    Consumer

    Research

    Consumer-

    driven

    measurement

    systems Consumer Understanding

    Scale

    Go-to-Market Capabilities

    Innovation

    Brand Building

    15

  • Copyright 2013 Roger L. Martin

    SOUTHWEST AIRLINES ACTIVITY SYSTEM

    Automatic

    Ticketing

    Machines

    Standardized

    fleet of 737

    aircraft

    15-Minute

    Gate Turns

    High Aircraft Utilization

    Limited Passenger

    Service

    Frequent, Reliable

    Departures

    Short-Haul, Point-to-Point

    Routes Between Med-Sized Cities and Secondary

    Airports

    No

    connections

    with other

    airlines

    Lean, Highly Productive

    Ground and Gate Crews

    Very Low Ticket Prices

    No

    baggage

    transfers

    No meals

    High

    employee

    stock

    ownership

    Flexible

    union

    contracts

    No seat

    assignments

    Southwest, the low-fare

    airline

    Limited

    use of travel

    agents

    High employee

    compensation

    16

  • Copyright 2013 Roger L. Martin

    PROGRESSIVE INSURANCE ACTIVITY SYSTEM

    Immediate

    Response

    Program

    Office

    on Wheels

    30-Year

    Database

    Complex

    Rating

    Scheme

    14,000

    Customized

    Prices

    Educate

    Independent

    Agents

    Rely on

    Word-of-Mouth

    Referrals

    Steep

    Incentives to

    Make 4%

    Profits

    Hire Only

    Non-Insurance

    Personnel

    Fastest Claim

    Response and

    Settlement

    Make Profits on

    Premiums

    Service

    Orientation

    Smartest

    Pricing

    Liquid

    Investment

    Portfolio

    Express

    Quote

    Service

    Train,

    Empower

    Adjusters

    17

  • WHAT MANAGEMENT SYSTEMS ARE REQUIRED?

    Four Seasons Hotel, Silicon Valley 18

  • Copyright 2013 Roger L. Martin

    NESTED CHOICE CASCADES

    How to Win

    Management

    Systems

    Winning

    Aspiration

    Capabilities

    Where to

    Play

    Corporate Level

    Cascade

    Strategic Group

    Cascade

    Individual Business

    Cascade

    How to Win

    Management

    Systems

    Winning

    Aspiration

    Capabilities

    Where to

    Play

    How to Win

    Management

    Systems

    Winning

    Aspiration

    Capabilities

    Where to

    Play

    19

  • REINFORCING CHOICES

    Image courtesy of P&G 20

  • Copyright 2013 Roger L. Martin

    OLAY STRATEGY CHOICES CIRCA 1995

    How will we

    win?

    What

    management

    systems are

    required?

    What is our

    winning

    aspiration?

    What

    capabilities

    must we

    have?

    Where will we

    play?

    Low-price skin-care products (cleanser,

    moisturizer, beauty bar, body wash)

    Customers in the 50+ segment

    Sold through discount retailers, grocery

    and drug stores

    Leverage scale behind an array

    of products, widely available

    Classic brand positioning

    Product-based innovation

    Strong retail relationships

    Measures of market share,

    in-store presence, in-stock

    positions

    Product R&D systems

    To play in the global

    skin-care category

    To turn from a shrinking

    position to a growing

    one, improving from

    $750 million in sales

    21

  • Copyright 2013 Roger L. Martin

    OLAY STRATEGY CHOICES

    How will we

    win?

    What

    management

    systems are

    required?

    What is our

    winning

    aspiration?

    What

    capabilities

    must we

    have?

    Where will we

    play?

    Sell through mass

    channels (best customers)

    Younger women

    just noticing the first signs

    of aging

    Move upmarket in

    product, price and

    promotion

    Establish masstige

    channel

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