How do you figure out where to play and how to win in business? What are the factors that can stop you from choosing the right playing field?
Knowing where to play and how to win in business involves looking at geography, the products you are offering, and the consumers that will be interested in your product. This will help you choose the best playing field for winning. Factors like lack of demographic focus, lack of innovation, and overreliance on spending can hinder a business from choosing the right playing field.
Read on to learn how entrepreneurs can figure out where to play and how to win.
The Nature of Choices
Every choice to do something is also a choice not to do something else. When the apple seller decides to target grocery stores, she also decides not to target orchard-goers directly. Sometimes, the best decisions can be the ones where you don’t pull the trigger on a new location or market. Often, businesses expand too quickly and can’t fulfill needs as well as they used to.
Likewise, it’s also important to remember that choices are not forever, and choices about where to play can change if the status quo is not working. If companies are frustrated with a market they are in, they can sell off—for example, GE sold NBC because they wanted to move away from the entertainment business.
Knowing Where to Play and How to Win
There are a variety of playing-field-related choices. Consider how a business owner who wants to sell apples would approach the following questions:
- Geography: Where are you competing?
- Should the apple seller buy an orchard locally or in the next town over?
- Product: What are you offering your consumer?
- Should she plant new trees to diversify her selection? Should she make apple pies to sell as well?
- Consumers: Who are you targeting?
- Should she start by selling to just family and friends or try to find a distribution deal?
- Distribution: What strategy will you use to deliver to your consumers?
- Should she open up her orchard for picking or just sell apples wholesale to grocery stores?
- Production: How much of the production of your product will you be responsible for?
- Should she hire workers to help with the picking and packaging? How many?
Small businesses, like this apple grower, have fewer questions than larger ones—for example, larger businesses might also have questions about which distribution companies are best in different parts of the country, or about whether to take business international.
Some questions about where to play and how to win are more important than others. Their urgency depends on many things—industry, the size of the company, how long a company has been around, and so on. A startup might reasonably be more concerned about their product because they need to develop a good one before they can be successful in any market. Meanwhile, a company that has been around for a long time but is struggling might think more about engaging a new target audience because they believe their product is good but is no longer working in their current market.
To figure out where to play and how to win, P&G, which is a large company, considers the consumer first. They invest a lot of money in figuring out what their customers want. In doing so, they can figure out what sort of customers are worth their time and money to pursue. Their secondary concern is distribution—they need to find retail locations and distribution services in which they can capably compete.
Also, to know where to play and how to win, consider who you are competing against. Some competitors have a stranglehold over certain markets and are really good at what they do, so success against them would be much more difficult than in an underdeveloped niche with fewer good competitors. However, if a company can bring unique value to a market that’s already crowded, they can rise to the top. Just remember that the goal is not just to compete but to win.
P&G Case Study: Bounty
At P&G in the U.S. in the 70s, 80s, and 90s, “the quicker picker-upper” was a great tagline for Bounty, which was an extra-absorbent paper towel. It became a leading brand. However, when the company went global, the expansion wasn’t strategic enough—the brand didn’t expand with the express purpose of winning every market they expanded into—and Bounty was struggling by the early 2000s.
In these emerging international markets, consumers weren’t interested in buying paper towels or other home care products because they were so used to using washable towels and thought the paper towels were a waste. P&G couldn’t target niche markets that were interested, like an up-and-coming urban professional class in India, because the manufacturing and distribution costs would be too high. In the process of identifying where to play and how to win, P&G decided to focus solely on the North American market that would help them maintain a strategic advantage.
Then, with where they would market and sell settled, P&G moved on to what they would market and sell. What you’re selling, even within the category of home care, can put you in vastly different markets.
Bounty found that there was a group of customers that cared about the strength and the absorbancy of their paper towels and loved Bounty. However, there was another group that wanted their paper towels to feel and act more like cloth. This group didn’t like Bounty as much as the core group. Finally, there was a group that cared about price more than other factors.
So P&G made a new product, Bounty Extra Soft, for the people who wanted a cloth-type experience. The price point, though, remained a challenge for them. They didn’t want to make their paper towels worse and cheaper, so they created Bounty Basic, which was still better than the value brands, but also 25% cheaper than the original Bounty.
But Bounty Basic is still more expensive than some of the cheapest brands. While they wanted to play on more fields, P&G made the decision not to play on the ultra-value one.
Avoiding Playing Field Temptations
There are three big temptations to avoid when considering where to play and how to win:
Temptation #1: Not choosing at all: All companies need to be specific about their demographic choices, because trying to be different things to different people is a recipe for disaster. It’s very difficult to compete for the attention of a young American man and an aging French woman at the same time. So, based on your company’s capabilities, decide what specific age groups, geographies, or channels (for example, mass merchandise vs. luxury) you want to cater to.
You may think that some big, successful companies market to everyone, everywhere, and wonder why you can’t do the same thing. However, even huge companies choose specific playing fields. Consider Apple—even though it’s a giant company with worldwide distribution, it only gets 2 percent of its revenue from China. This is due to Apple choosing not to play in China to the same extent it does in other places. Also consider their product—it is always high quality and relatively expensive, so it doesn’t cater to low-income buyers.
Temptation #2: Spending your way out of a bad situation: You can’t just spend and hope that everything works out. Companies will often acquire other companies that are doing a better job than they are in their industry. This is an issue for several reasons:
- The acquired companies are often expensive.
- The acquiring company wants to get its money’s worth and has different priorities than the company it acquires. Consequently, the parent company often has the acquired company compete in new arenas that the acquiring company wants to take over. However, there’s no guarantee of success in this—companies that do well in one arena have no inherent advantage in any other arena.
Instead of buying your way out, fix what’s going on in your own company and refocus your own efforts.
Temptation #3: Believing that choices are final or made for you: Some companies think there are certain places where they have to compete. For instance, they believe that they are stuck in whatever business model they have adopted and can’t pivot. Clearly, though, this is not true in practice. Companies can pivot out of old arenas and into new ones if they work hard enough. Take Apple, for example—at first, they marketed themselves as high-end technology for the creative class. However, they realized that they weren’t stuck in this business model or this arena, and started making cheaper products and delivering services like iTunes.
P&G’s Places to Play
You can do much of the best work in this step of the cascade by simply figuring out new arenas of competition. For example, P&G struggled for a long time in the home cleaning sector because its household cleaning brand Comet was old and not that useful for the modern home, and their market share was declining. Rather than trying to make Comet better, P&G researched what people today need in their homes. This led them to launch Swiffer, a different kind of home cleaner that shook the market.
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Like what you just read? Read the rest of the world's best book summary and analysis of AG Lafley's "Playing To Win" at Shortform .
Here's what you'll find in our full Playing To Win summary :
- Why the cascade strategy will help you become victorious in your chosen field of play
- Why you should make every choice with the purpose of not just competing, but winning
- How to develop a system of decision-making for your company