GUEST POST from Matthew E May

This is the third in a series of five DIY posts on holding a strategy sprint.

You now know how to prepare for a strategy sprint, and you’ve gathered the right people. You’re ready for the first full day of sprinting. Take a deep breath, you’ll need it!

Day 1 is all about grasping the current situation, understanding strategic choices, and framing go-forward possibilities. The goal of the first day is to arrive at a few different strategic possibilities to be developed over the next two days. The path to getting there has several steps, including:

• engage the Play-to-Win (P2W) strategic choice framework
• achieving clarity on the current strategy
• defining the core strategic problem
• reframing the problem as a choice between mutually exclusive options
• generating a multitude of strategic possibilities
• selecting the most promising possibilities to develop

Let’s take each step one at a time.

Step 1: Engage the P2W Framework (90 minutes)

It’s one thing to read about the cascade of five integrated strategic questions that comprise the P2W framework; it’s quite another to apply it. Devote the first half of the morning to getting comfortable with the framework. Three exercises help to do this:

Book Club. First, devote 15 minutes to discussing the reading material. This assumes some part of the pre-reading was completed, of course. What are the most compelling parts of the framework? What seems confusing? What opportunities do you see in our organization for thinking about strategy this way? This is nothing more than breaking the ice, and you won’t do anything with the input or output other than to warm the room.

Brand Love. Second, devote a total of 30 minutes to a small team exercise: “Pick a favorite company that you’re a loyal customer of. Based on your experience as a user or customer, come up with answers to the first three of the five questions in the P2W framework. What do you think their winning aspiration is? What’s their playing field? How do they win?” (Favorites include the likes of Netflix, Southwest Airlines, Zappos, Nordstrom, Google, Trader Joe’s, Apple, Amazon.) Teams usually spend a minute or so agreeing on a compelling example before diving in.

The first 20 minutes is breakout time. Each team then does a quick 1-minute report out. With short debrief this takes about 10 minutes, assuming no more than four small teams.

Competitive Cascade. Third, devote a total of 30 minutes to a large group exercise: answering all five questions of the P2W framework for a key competitor. This is usually a lively conversation. There are two reasons to do this exercise: 1. it engages people in the framework in a more real-world way, because now you’re talking about your business, albeit from a competitive perspective. 2. it reduces the time needed to draft your own current strategy cascade.

In less than two hours, the group will have engaged with the strategy cascade and begun to internalize it.

Take a 15 minute break, then move to Step 2.

Step 2: Draft the Current Strategy (90 minutes)

The group is now more at ease with the P2W framework, and you can turn your attention to the current strategy. This is more difficult than it sounds, for two reasons:

First, it’s hard to stay in the present. It’s natural and intuitive to talk about “what should be,” but you can’t take a new direction until you’re clear on the current one. Use these questions in this post to gain that clarity.

Second, everyone involved will have a different interpretation of the current strategy. The goal is developing a common understanding.

This is where outside facilitation can really help. A facilitator is a greenpea when it comes to the current strategy, and his or her pokes and prods can keep the group moving toward consensus on the “is now.”

Don’t seek perfection or comprehensiveness…you’re after the essence of the current strategy. In fact, you should be able to capture it on a single page.

Take a one hour lunch break, you’ve deserved it!

For steps 3 through 6, refer to “You Cannot Craft a New Strategy Until…” for an example of how to think about these steps.

Step 3: Define the Core Strategic Problem (45 minutes)

This is a crucial step, and one that people love to leap over straight to solutions. I learned, or rather had drummed into me, while immersed in the Toyota environment that the key to successful improvement in any effort depends almost entirely on the ability to identify the problem. I also learned that it’s often the hardest thing to do.

A couple things will make this a bit simpler, if not easier. First, split your resources, time and people. Second, leverage the six major sources of strategic problems and opportunities: industry structure and segmentation, channel value, customer value, relative capabilities, relative costs, and competitor reaction. Here’s what you do:

1. Diverge. Give small teams 30 minutes to discuss what they believe to be the most worrisome challenge with the current strategy. Is the structure of your industry such that new entrants make it tougher to make a profit? Has the growth of your company in the chosen segments slowed? Has your key offering lost value in the eyes of your partners or customers? You get the picture.

2. Converge. From the three or four possible problem statements (one from each team), spend 15 minutes coming to agreement on the most urgent and troublesome strategic issue. It doesn’t need to be more than a few words: “Slow growth in X segment.” “Lack of innovation.” “Weak capabilities relative to our key competitor.” “Brand irrelevance.”

Remember, you’re not trying to solve a problem. Yet. You’re trying to pinpoint it. You’re like a doctor seeing a patient. Your current strategy is the equivalent of a patient’s chart of vital signs. A doctor concludes that a patient has a strained muscle, you decide you have a strained capability.

Step 4: Reframe the Problem as a Choice (30 minutes)

NOW the group gets to talk about solutions. But in a disciplined way. And don’t be surprised when they struggle, because you’re going to put them in a bit of a box, a constraint: they must reframe the problem defined as a choice between two high-level options.

If teams get stuck on a second option (in most cases one option is fairly apparent), have them simply think about the absolute opposite of that option. You’re after an either/or pairing, not a both/and pairing. Again, refer to my earlier post for a walkthrough example.

Use the same diverge/converge method above, splitting the time into 20 minutes of divergence, and 10 of convergence.

Take a 15 minute break.

Step 5: Generate Several Strategic Possibilities (45 minutes)

This a pure ideation session, with the goal of producing as many where to play/how to win possibilities as you can. Go crazy, go wild, silence the voice of judgment for now. Tackle the first option, then the second. See if you can come up with at least a half dozen for each. Using the diverge-to-converge construct, split your time in two ways:

First, devote 20 minutes to each option. Second, split those 20-minute segments into two equal segments of 10 minutes, where the first segment is individual ideation, and the second is small team ideation that builds on the ideas produced individually.

You’re looking for brief expressions of where-to-play and how-to-win possibilities, not fully baked ideas. Remember that the status quo is always a possibility.

It’s funny, even though people want to jump ahead to solutions, it never fails to happen that when it comes time for solutions and ideas, people seem to be at a loss. Have ready some thought starters, such as, “What could we do to become the (enter market leader name here) of this space? What new playing fields could we occupy? What spaces can we vacate? How could we win in space (_)? What could we do differently in a given space?

The hallmark of a good set of possibilities is when one or more are appealing enough to make people question the status quo, and/or makes people uncomfortable because they question how feasible or safe the possibility is.

The last five minutes of this step is to simply make all the many possibilities by all the teams visible to everyone. Put each possibility on a 3X3 Post-It note. Put all those Post-It on a wall, white board, or table top, because in the next step you’re going to move them around.

Step 6: Select the Most Promising; Close (45 minutes)

Do a quick purge of identical possibilities. Then devote 15 minutes to each of two tasks:

1. Cluster. Group similar possibilities together thematically. For example, put all “expand” possibilities together, or all “narrow” possibilities together. Label the cluster with a theme that represents the essence of the possibilities in that cluster, e.g. “strengthen production capability.”

2. Cull. Narrow the possibilities to those that the group feels hold the most promise.

Use the final 15 minutes to compose teams, one per possibility. Reiterate that over the next two days, each team will develop a strategic cascade for that possibility, reverse engineer that cascade, and develop an initial experiment to test the strategy.

It’s been a full day, your brain hurts, so go relax!

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

This is the second in a series of five DIY posts on holding a strategy sprint.

The decision to hold a strategy sprint assumes that you’ve come to the conclusion that a new strategy is warranted, that new directions must be explored, and you’ve gotten to this point in a thoughtful and deliberate way. Something has been tugging at you for a while, keeping you up at night. Something isn’t working as well as it should, or as well as you think it should. (A sudden crisis is not the time for a strategy sprint.)

There are a few important items to consider in preparing for a successful strategy sprint. Basically, you’ve got to cover who, what, when, and where.

WHO

A strategy sprint team should be three to five people. If you’ve got more than five who must be involved, simply split the group into two sprint teams. As far as the number of teams goes, more than four becomes cumbersome and time-consuming. So set your capacity at twenty participants.

Now, who should be included? The short answer is those most accountable for strategy in the domain you’re addressing. If it’s overall enterprise strategy, you want the key “heads of state.” In many companies that means the senior executive team. If it’s a functional area, you want the key managers.

Beyond that, you want to compose sprint teams that are diverse in makeup, in terms of both intellect and expertise. If you’ve got a team of four, try to have one of each basic intellect:

1. Thoughtleader: an ideas person
2. Taskmaster: an process person
3. Peacekeeper: a people person
4. Playmaker: an action person

Having teams with these four basic inclinations, along with diverse areas of subject matter expertise (marketing, operations, technology, etc), make for the most prolific sprint teams, and less vulnerable to “group think.”

Make sure the people you select play well with others. A naysayer or disgruntled player, not to be confused with a useful devil’s advocate, might be someone to keep out of the room, but have “on call.”

On that note, there will always be an “extended team” at your disposal–people who do NOT need to be in the room–that you can call on for input. These might be specific knowledge area experts, partners, or even customers.

There’s one other person to consider: an outside facilitator. An outside facilitator is someone who has no vested interest in the strategy, but rather the process of strategic conversation itself. Ideally they have a working knowledge of strategy, ala the Roger Martin where-to-play/how-to-win framework in order to answer tough questions. They are strong meeting leaders, and have a nice quiver of tools and techniques to get things moving if they stall. They’re objective, and don’t share the mental biases of those owning strategy for your company. They also should have a healthy dose of provocateur in them, and have the courage to push the teams a bit beyond their comfort zone.

They should have enough of a context so that the questions they ask have some gravitas to them, and the easiest thing to do is arm them with background documentation on your current situation. They don’t need in-depth knowledge, just enough to be “dangerous.’

You don’t necessarily need to default to contracting an independent person from outside the company…look for people inside your organization with the requisite chops and credibility. Perhaps you’re lucky enough to be in an organizations has a pool of internal or retained skilled facilitators for important meetings. Or maybe you have a friend at another company. Maybe the right person is you, since you’re reading this!

WHAT

As a pre-meeting homework assignment, I strongly suggest have everyone read Playing To Win, by Roger Martin and A.G. Lafley, or at these articles by Martin/Lafley et al (click on title to download pdf):

• A Playbook For Strategy
• Strategic Choice Structuring

Materials-wise, there are a just a few items to gather:

1. One Play-to-Win canvas (54 x 36) for each team (download printable pdf HERE). Many companies have plotters that can output this wall map. If you don’t have a plotter, have a local print firm that handles blueprints and large architectural printing print them for you.
2. Good supply of various colored 3 x 3 Post-it notes
3. Sharpies
4. Dot stickers. Post-It brand dots work well.
5. Whiteboard space. Whatever your huddle space is, you need thinking space. If you don’t have whiteboards at your disposal, get a Post-It chartpad and easel for each team. And don’t forget appropriate markers.
6. Sustenance: breakfast, lunch, snacks for breaks, and plenty of refreshments.

WHEN & WHERE

You’re going to need three days, minimum. Ideally those days are consecutive. Something magic happens during multi-day immersive experiences…something along the lines of the old maxim that “when two minds come together, a third mind emerges”.

If you must, you can split Day 1 from Days 2 and 3, but don’t split 2 and 3!

If you find yourself saying, “I can’t afford three days no matter how you cut it,” then that explains why your current strategy may not be working. You haven’t made it a priority. (But maybe your competitors have.)

Clear calendars, and get a nice large conference room. Ideally, it’s an offsite location, away from the distractions and disruptions of running your daily work life. If that’s not possible or desirable based on the cultural norms and needs of your company, try to find a convenient and comfortable location conducive to focused thinking and productive collaboration without interruption.

You’re now ready to hold your strategy sprint!

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

(Part 1 of a 5-Part Series)

The word sprint means different things to different people. A runner thinks of it as a race, a mad dash of a few seconds. A software developer practicing “agile” thinks of it as a short, iterative cycle of work, often weeks or months, rather than seconds. An entrepreneur practicing “lean startup” methods thinks of it as minimally viable product development effort of a week or less.

They’re all right. What’s important are the common elements: speed, brevity, iteration, and, of course, winning.

But can the notion of a sprint have application in the world of business strategy? It’s a question I’ve been exploring in my practice. The short answer: yes.

Introducing: The Strategy Sprint

Strategy sprints are close cousins to something I became experienced during my tenure with Toyota, called jishuken, which loosely translates into something like, “independent study group.” Basically, small teams of senior managers come to together to collaboratively tackle an important or pressing theme in a compressed timeframe, with the outcome being a clear direction or solution. It’s intense work.

One of my favorite projects as a jishuken leader was working with the Los Angeles Police Department bomb squad under the auspices of the University of Toyota. Over the course of three days, a team comprised of bomb technicians, canine handlers, and assorted field officers completely redesigned the process for handling bomb scares to account for the new breed of explosives — IEDs (improvised explosive devices) — making their way into mainstream society. Within a few months it became the new standard.

Over the past few months I’ve been working with a number of clients to hone a strategy sprint process that combines jishuken intensity with the common elements of any sprint and completely replaces often long, laborious and left-brained traditional approach to strategy (strategic plans, SWOT analysis, et al).

I’ve tried everything from a half day to five days, and settled on what I find to be the optimal window, and one that is palatable for senior managers serious about crafting a winning strategy: three days, book-ended with some before and after work.

Before the sprint: Plan and Prepare

Select the group, form teams, issue homework assignments, and settle matters of logistics and materials.

Day 1: Grasp the Situation

Achieve clarity on the current strategy. Define the most pressing challenge with it. Reframe the issue as a choice between mutually exclusive options. Rapidly generate a multitude of possibilities, selecting a handful to work with over the next two days.

Day 2: Clarify the Essence

Define what winning means, along with the happy story that comes from a win. Explore attractive segments and competitive advantages, and settle on the heart and soul of strategy: answers to the key questions of “Where will we play?” and “How will we win?” using the visual aid of the Play-to-Win Canvas, a tool I developed with input from Roger Martin (coauthor, Playing to Win: How Strategy Really Works.)

Day 3: Support the Strategy

If Day 2 was “heart and soul,” day 3 is “hands and head.” Revisit the heart of strategy, then define the capabilities needed to produce a win, the kinds of management systems required to generate and sustain those capabilities. Then reverse engineer the logic of the entire strategy, using strategy’s magic question–what must be true?–and construct a quick experiment that can be used to rapidly test the veracity of the riskiest answer. Again, using the visual aid of the Play-to-Win Canvas.

After the sprint: Digest and Debrief

Armed with a handful of new strategies to test against a set of robust hypotheses, give everything some breathing room, a day or two to settle into the collective conscience of the group. Transpose the output of the three days into a series of one-page strategy briefs, one per strategy. You are now ready to test!

Over the next four posts, I’ll be sharing a DIY guide for running your own strategy sprint.

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

Your grand strategy seems airtight on paper. You’ve arrived at a winning aspiration. You’ve honed in on an open and attractive segment in which to play. You’ve identified the competitive advantages that will enable you to win in your chosen spaces. You’ve got the capabilities and systems to support your choices.

But as the saying goes, no battle plan survives first contact with the enemy. (Or, as Mike Tyson once quipped, “Everyone has a plan until they are punched in the face.”) Generally, that’s because multiple assumptions have been folded in to your strategy–unconscious leaps of faith you’ve made in your natural enthusiasm and optimistic outlook.

If not attended to–teased out, made transparent, and tested in the real world–these leaps may indeed become the very blind spots that will put to rest your best-laid plans.
That’s why we so often hear that making assumptions is a bad thing. (You know, the old quip: when you assume, you make an ass of u and me.) We don’t do a good job of assessing and addressing them.

But what we don’t know far outweighs what we do, so assumptions are unavoidable. It’s how you handle them and exploit them that makes for the true art of strategy in any realm: innovation, business models, etc.

Here’s the thing: your idea, solution, or strategy is just a collection of guesses until they’re tested. There is real power in making bold assumptions, because you can turn them into clear hypotheses, and then scientifically test them in a rapid, iterative way.

Done right, your eventual strategy will indeed survive first contact.

The key lies in your approach. In my experience, simply asking people to list their assumptions doesn’t work, for the simple reason that our assumptions are part of our mental models and biases–they’re so ingrained in our thinking and thus so hard to identify that it takes a tool to lend a bit of objectivity.

People tend to list “known” things for sake of ease and to avoid the risk of looking uncertain. But an assumption by definition is something unknown. And that’s scary…we fear the unknown, and we are reticent to bring it up and make it public.

The best technique I’ve found to alchemically turn assumptions into gold is one which I learned from master strategist Roger Martin a few years ago. It amounts to a single but powerful question: What must be true?

This, as Roger says, is “the most important question in strategy.” He’s been using it for twenty years, ever since a disappointing consulting engagement in which the client went against Roger’s advice, with disastrous results. It was enough to make Roger reflect on his consultative approach.

Then, during subsequent engagement in which he had a strong view of what the best strategic option was, he suddenly realized that it didn’t matter at all what he thought. He realized that what mattered was what his client thought, since they were the ones who were going to have to take action one way or the other, not Roger.

As Roger tells it:

“At an impasse, an idea popped into my head. Rather than have them talk about what they thought was true about the various options, I would ask them to specify what would have to be true for the option on the table to be a fantastic choice. The result was magical. Clashing views turned into collaboration to really understand the logic of the options. Rather than having people attempt to convince others of the merits of options, the options themselves did the convincing (or failed to do so). In this moment, the best role of the consultant became clear to me: don’t attempt to convince clients which choice is best; run a process that enables them to convince themselves.

“From there, I used the most important question in strategy— what would have to be true?—to build an entirely new methodology for thinking through choices. It became the heart of my consulting practice and is the only strategy process I use to this day.”

Here’s how it works, using a hypothetical example drawn from my passion for mountain biking, which is in the throes of a tidal of interest in a “tweeter”-sized wheel of 27.5 inches in diameter, which splits the difference between the aging standard of a 26-inch diameter and the popular 29-inch standard.

Let’s assume the winning aspiration for a bicycle manufacturer is to be the leader in 27.5-inch mountain bikes. Let’s further assume they have several strategic options, and have drafted a 5-question cascade for each.

For each of their strategic options, they should ask six key “What must be true?” questions, in this order:

1. What must be true about the size and attractiveness of our target segments?

(Example: The emerging 27.5-inch mountain bike tire segment will be big and profitable enough to support abandoning our current 26-inch line)

2. What must be true about what our end users value?

(Example: A mountain bike performance and handling sweet spot exists for a 27.5-inch bike that will attract bikers away from both smaller 26-inch and bigger 29-inch sizes.)

3. What must be true about what our channels value?

(Example: Cycling retailers will be attracted to the concept of an all-new kind of mountain bike that would spur cyclists to shift from traditional frames and tires, thus committing floor space to drive sales growth and higher margins.)

4. What must be true about our capabilities vs. our competitors’?

(Example: We can produce a 27.5-inch mountain bike superior to both 26- and 29-inch bikes. We can leverage our partnerships with component manufacturers to convince them to produce 27.5-inch specific parts.)

5. What must be true about our costs vs. our competitors’?

(Example: We can product a 27.5-inch bike that will sell without a price premium to existing top-of-the-line players, including our own lines.)

6. What must be true about how our competitors will react to our strategy?

(Example: Competing bicycle frame makers will hesitate to abandon their 26-inch lines, not risk the investment in 27.5, and wait to see market reaction, giving us first mover advantage and an innovative edge for at least two years.)

They now have six “best guesses.” Each of those guesses is in reality simply a hypothesis, which they can now test by getting out of the building, into the field, and into learning mode.

The next time you face a strategic choice, forego immediate action. Think through the “what must be true” questions. Test your assumptions. Understanding that you can’t know everything, don’t let the clear leaps of faith remain just that. Turn best guesses into educated guesses. THEN, rock your strategy.

My bet is you’ll win the game, if not change it completely.

That’s the power and magic of an assumption. It sheds light on the unknown. It lets you learn.

Let the magic begin!

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

You’ve got a winning aspiration, you know where you want to play and how you’ll win using the capabilities needed to pull off the win. But do you have a system that sustains all that?

This is a tough question, the fifth and final in the Roger Martin “Playing To Win” cascade. So permit me to take it out of the normal context of commerce. Let’s consider the world’s most popular game, soccer. And let’s consider one of the greatest coaches in the game, Sir Alex Ferguson, of Manchester United fame. According to Anita Elberse, writing in Harvard Business Review, “some call him the greatest coach in history,” in any any sport.

It’s been over a year since Ferguson retired, but watching Manchester United go down to Manchester City 0-2 last March in the English Premier League brought him to mind. With that loss, and without Ferguson, Manchester United was now back to exactly where it was in November 1986, when Ferguson was named manager: second to last.

Manchester United is one of the most successful and valuable franchises in sport. During his 26 year tenure, the club won 13 English league titles and 25 other domestic and international trophies. Ferguson’s overall title record is almost double that of the next-most-successful English club manager. And as Elberse points out, “Ferguson was far more than a coach. He played a central role in the United organization, managing not just the first team but the entire club.”

And Ferguson had a system, which revolved around a unique, or certainly unconventional, approach to talent development. “Upon his arrival at Manchester,” writes Elberse, “Ferguson set about creating a structure for the long term by modernizing United’s youth program. He established two “centers of excellence” for promising players as young as nine and recruited a number of scouts, urging them to bring him the top young talent. The best-known of his early signings was David Beckham.”

Here’s Ferguson in his own words:

From the moment I got to Manchester United, I thought of only one thing: building a football club. I wanted to build right from the bottom. That was in order to create fluency and a continuity of supply to the first team. With this approach, the players all grow up together, producing a bond that, in turn, creates a spirit.

Winning a game is only a short-term gain—you can lose the next game. Building a club brings stability and consistency. You don’t ever want to take your eyes off the first team, but our youth development efforts ended up leading to our many successes in the 1990s and early 2000s. The young players really became the spirit of the club.

Ferguson believed in constant refreshing of that talent, even in the midst of a winning season. Conventional wisdom in sport is “if it’s working, don’t mess with it.” Too, there’s a lot of superstition in sport when it comes to a winning combination. Ferguson went the other way.

According to Elberse, “His decisions were driven by a keen sense of where his team stood in the cycle of rebuilding and by a similarly keen sense of players’ life cycles—how much value the players were bringing to the team at any point in time. Managing the talent development process inevitably involved cutting players, including loyal veterans to whom Ferguson had a personal attachment.”

In other words, Ferguson took a portfolio management approach. “He is strategic, rational, and systematic,” writes Elberse. “In the past decade, during which Manchester United won the English league five times, the club spent less on incoming transfers than its rivals Chelsea, Manchester City, and Liverpool did. One reason was a continued commitment to young players: Those under 25 constituted a far higher share of United’s incoming transfers than of its competitors’. And because United was willing to sell players who still had good years ahead of them, it made more money from outgoing transfers than most of its rivals did—so the betting on promising talent could continue.”

Here’s Ferguson in his own words:

We identified three levels of players: those 30 and older, those roughly 23 to 30, and the younger ones coming in. The idea was that the younger players were developing and would meet the standards that the older ones had set. The goal was to evolve gradually, moving older players out and younger players in.

It was mainly about two things: First, who did we have coming through and where did we see them in three years’ time, and second, were there signs that existing players were getting older? The hardest thing is to let go of a player who has been a great guy—but all the evidence is on the field. If you see the change, the deterioration, you have to ask yourself what things are going to be like two years ahead.

Another element of Ferguson’s systematic approach is revealed in his approach to practice sessions.

Elberse says that “Ferguson’s teams had a knack for pulling out victories in the late stages of games. Our analysis of game results shows that over 10 recent seasons, United had a better record when tied at halftime and when tied with 15 minutes left to play than any other club in the English league. When their teams are behind late in the game, many managers will direct players to move forward, encouraging them to attack. Ferguson was both unusually aggressive and unusually systematic about his approach. He prepared his team to win. He had players regularly practice how they should play if a goal was needed with 10, five, or three minutes remaining.”

Here’s Ferguson in his own words:

We look at the training sessions as opportunities to learn and improve. Sometimes the players might think, ‘Here we go again,’ but it helps us win.

I am a gambler—a risk taker—and you can see that in how we played in the late stages of matches. If we were down at halftime, the message was simple: Don’t panic. Just concentrate on getting the task done. If we were still down—say, 1–2—with 15 minutes to go, I was ready to take more risks. I was perfectly happy to lose 1–3 if it meant we’d given ourselves a good chance to draw or to win. So in those last 15 minutes, we’d go for it. We’d put in an extra attacking player and worry less about defense. We knew that if we ended up winning 3–2, it would be a fantastic feeling. And if we lost 1–3, we’d been losing anyway.

Below is a short video of Sir Alex Ferguson talking about this element of his system:

Allow me to repeat my original question: You’ve got a winning aspiration, you know where you want to play and how you’ll win using the capabilities needed to pull off the win…but do you have a system that sustains all that?

Image credit: manutd.com

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

You’ve got a winning aspiration. You’ve chosen where to play, and how to win. Now: what capabilities must you have in place to enable you to win where you’ve chosen to play?

This is the fourth question in the cascade of five questions in Roger Martin’s “Playing To Win” strategic framework.

As Deming once said, “a goal without a method is nonsense.” Without the right capabilities, your strategic choice remains purely academic, and, in reality, nonsense.

The choices you make in answering this question bring your where-to-play and how-to-win choices to life. Capabilities are not competencies. Competencies are ante to the game, capabilities are the specific current and future activities that, when performed well, help you win in the way you’ve chosen.

There’s a dangerous tendency to simply list your strengths as the capabilities you need. There are two problems with that approach. First, your strengths may or may not be a competitive advantage. Second, they may not be relevant to those to whom you deliver value. (This is why the traditional SWOT analysis is essentially worthless in crafting a truly new strategy: strengths and weaknesses are only strengths and weakness in the context of a clad where-to-play and how-to-win. Yet, it’s a staple of most strategy efforts.)

Take the example of Burberry. Eight years ago, Burberry wasn’t doing all that well. It was a rather tired and aging British luxury brand based on the trench coat as its signature product.

Then in 2006, Angela Ahrendts, left Liz Claiborne to take the helm as CEO. (Yes, the same Angela Ahrendts who recently became Apple’s svp of retail and online stores.)

Upon her arrival, Ahrendts went about crafting a new Burberry strategy.

Her first moves were all about changing the Burberry brand’s where-to-play and how-to-win. She moved down in the demographic space to position Burberry as the place for younger affluent buyers interested in luxury goods. She aimed much younger than most other luxury goods manufacturers were at the time. She revamped the product line accordingly to appeal to that younger upscale buyer.

Ahrendts realized early on that Burberry need capabilities that they didn’t have at the time. Most young affluent buyers, she realized, preferred to engage not in the physical retail location as older buyers do, but rather online. Burberry had little online presence, and no ability to effectively communicate with the new segment.

She knew Burberry had to build those online capabilities from scratch, and made a gigantic investment to make those capabilities unique. It wasn’t long before Burberry was winning online luxury goods retailing awards (enough to make Apple sit up and take notice). Take a look at how Ahrendts delivered interim results via online video:

Ahrendts also knew Burberry fashion design was in dire need of an extreme makeover, one appealing to younger folks. She appointed a young up-and-coming designer, Christopher Bailey, to lead the charge, eventually moving in to the role of Chief Creative Officer. (Bailey is now CEO.)

Now, it’s a fairly radical move in any organization to essentially flip the org chart, but especially true in fashion, where seasoned senior designers rule the hierarchical roost. And following Ahrendts’s lead, Bailey created a rotating design counsel from which he was able to select young designers with fresh ideas, from all levels and locations from around the world, to be the strategic decision makers for one year only.

By democratizing design in this way, he was able to build the very unique capabilities Burberry needed to realize Ahrendts’s where-to-play and how-to-win choices. Those choices only meant something if she was able to invest in and build the capabilities to deliver to the strategy.

Lesson?

If you support a clear “where to play and how to win” choice with unique and inimitable capabilities, you may just transform your company. And if you do, don’t be surprised if Apple gives you a call.

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

Even if your “Where to Play” (see last post) is not particularly unique, there are always ways to win. Case in point: corner coffee shops, so common they’re found in just about every town and city on the planet. Nothing at all special or unusual about that space.

Who wins in that unremarkable market? Starbucks. Starbucks is the undisputed heavyweight champion of corner coffee shops.

The simple secret to winning in any given space is this: offer a better value equation than everyone else.

Now, there are many dimensions to value beyond quality, cost, and speed. In many of today’s market, those are simply ante to the game. But Starbucks plays a different game. Truth be told, they lose on quality, cost and speed. In fact, when I when to New Zealand, they asked me why I drank Starbucks coffee. To a native New Zealander, Starbucks burns their coffee, charges too much, and it takes too long. Who seeks out Starbucks in New Zealand? Tourists.

For Americans, and Americans abroad, Starbucks wins hands down. What Starbucks has done by understanding the psyche of the typical middle American (at nearly every age) is to create a value proposition that gets into the more emotional and thus transformational (read, winning) dimension of value: the intangibles.

Starbucks doesn’t sell coffee. They aren’t simply a convenient corner coffee shop. They are a “third place.” Something in between your home and office. A place that’s comfortable. A place with a unique experience that exhalts coffee to a far higher level than the typical corner coffee shop and in a far more novel way, a way that effectively produces a sort of daily ritual-forming caffeine cult.

You do not have to be a coffee drinker to appreciate the strategy. You’re not buying coffee at Starbucks. You couldn’t possibly be…no one in their right mind spends $4 on a cup of coffee. You’re buying a third place, a quick escape. You’re buying a personalized daily ritual. You’re buying a clique community. And you can buy it all over the world with consistency.

In fact, you have to speak an entirely different language in a Starbucks, one that they taught you. You’re paying for the Starbucks version of Rosetta Stone. It’s a point of pride with Starbucks clientele.

I remember when I was writing The Elegant Solution back in 2005 and studying Starbucks from the personal ingenuity angle, focusing on the “barista.” I stood at the end of the line and wrote down a couple dozen drinks with complicated, coded, and nuanced names…and they were no where to be found on the menu board.

And while this treads on the third question in Roger Martin’s cascade (What capabilities do we need?) which I’ll cover in a future post, a Starbucks barista does not view their job as making coffee. Here’s what one told me in an interview back in 2005:

“This is definitely coffee art. But if you think people are buying coffee, you’re wrong. There’s something going on here…the same people come in every day, even though they have plenty of options. After a while, you get to know people. You talk to them, you learn about them, maybe what they do, or what their kids’ names are. You want to know more. There’s a little bond built. You start to figure out that they look forward to coming here for reasons other than the buzz. They like the familiarity…they like knowing you know their name, that you remember their favorite drink. Our team is like a little family, and they like that. We have fun, and they like that. Energizes them, lifts them. You can see it. There’s a kind of funky trust thing going on. You know how you talk to the bartender or your hair stylist? That sort of thing. It’s funny, you get a certain sense of pride working here that you don’t get other places. I know, I’ve worked in them. And that makes you want to do your job the best you can. More so, even. Make it better if you can. I’m just part-time, I’m in school part-time, I want to be a journalist. But I’ve learned a lot about people being here. It’s going to make me a better writer, interviewer, I think. Not everyone feels this way, but I feel like I’m providing really busy people a nice start to a hectic day in a safe little getaway. We’re picking people up, or perking them up. [smiles] Pun intended. It’s not just a coffee shop, and it’s not about the coffee.”

Lesson: your where-to-play can be ordinary and even fixed, but a how-to-win that is extraordinary compared to your competitors will enable you to win.

Expecting to win by offering essentially what your competitors are offering in essentially the same way and in essentially the same space is the business version of the insanity definition.

It simply does not work. It never has and it never will.

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

The question of where to play, strategically speaking, is deceptively simple. Most companies don’t give it enough deep thought and consideration. My friend Roger Martin would say, in fact, that most companies adopt a mindset of “our ‘where to play’ is where God ordained us to play.”

In other words, they act as if the space they occupy in the competitive playing field is somehow carved in stone, and can’t be changed, ala: “this is where we play, it’s where we’ve always played.”

That kind of thinking can be a death knell. Think newspapers. “We are a newspaper. Always have been, always will be.” The Washington Post or Boston Globe are at this moment kicking themselves for thinking that way.

“Your where-to-play is not fixed,” argues Roger. “It should always be adjusted to accommodate different situations, places, and spaces.”

In other words, strategy is as dynamic as your competitive playing field. You might be focusing on a ground game today, but tomorrow may demand an air approach. “Some may say that’s tactics,” says Roger. “But with the speed of change today it’s a meaningless distinction.”

Take the case of Intuit. Scott Cook founded the company with a singular purpose in mind: provide people with personal financial planning software. He called it Quicken. Quicken was product that put Scott Cook and Intuit on the map. (Note: I do not use the product.)

Intuit for years played exclusively in the personal financial planning software consumer market space.

After Quicken had been in the market for a bit, complaints began to come into the customer service and support call center about the software. Over time a distinct pattern emerged, to the tune of “we like Quicken, except it has no accounts receivable or payable capability.”

Customer service reps would typically advise the caller that they were using Quicken for the wrong thing. Quicken was for personal finance, and you don’t need AR or AP functionality for personal finance.

At some point the pattern became prevalent enough to prompt the Jerry Seinfeld question: “Who. Are. These. People?!”

Answer: Very small business owners. Businesses that could not afford huge, elaborate, and expensive accounting software systems. They wanted something a simple as Quicken, but focused on running a small company.

And so Quickbooks was born to occupy a vacant space in the financial software market…the business, not consumer, space.

Quickbooks is the winner in the space, and five times the revenue of Quicken. As Roger tells it, “Intuit would have been a tiny player had it kept its where-to-play as ‘software only for individuals.'”

Lesson: Play with the “where to play?” question so that you can win in new and different (i.e. innovative) ways.

“It’s a discipline not many companies have,” concludes Roger.

But where to play is only half the heart of strategy. You have to make a choice on the question of “how to win?” in a given where-to-play.

Stay tuned for more on that!

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

A winning strategy absolutely must begin with a winning aspiration. Too doctrinaire? Allow me to explain the premise the way I learned it from Roger Martin, one of the best strategists on the planet.

The operative word is “winning,” for the simple reason that if you’re not winning, you live in fear of the competitor in your space that is. If they’re winning and you’re just participating, they can use the greater resources that derive from winning to beat you up. The only place in competitive endeavors with any degree of safety is that of the winner. If you’re not winning or attempting to unseat the winner, you’re simply playing a game that will leave you bruised and battered with only marginal gain to show for it.

Take the story of the 2008 Chevy Malibu. (Former GM CEO Rick Waggoner hired Roger Martin on January 1, 2006, to help the then-senior management team–Bob Lutz, Fritz Henderson, Larry Burns, Troy Clark–with a turnaround strategy.)

The 2007 launch of the 2008 Chevy Malibu was to be a key strategic move for GM. Chevy is GM’s biggest brand, and the Malibu plays in the biggest dollar volume product segment in the US car market. The previous version, the 2007 Malibu, was by no means a winner, selling just 60,000 units at retail that year.

Roger asked the team in the Fall of 2006 a key question: “What is our aspiration for this launch? What do we really want the 2008 Malibu to do for GM?”

Answer: “120,000 units.”

Seems like a winning aspiration, right? It’s a big aspiration to double your retail volume in one year. In no way insignificant.
But this is where the art of strategy really plays out.

“The Malibu competes against the Toyota Camry and Honda Accord, right?” asked Roger. “How many Camries and Accords were sold at retail this year?”

Answer: “560,000 Camries. 440,000 Accords.”

“So let me get this straight,” Roger began. “Our aspiration is to go from selling 1/10 as many as the category winner to selling 1/5 as many? Do I have that right?”

Silence. Then, grumbles…”not how we think about it” responses from the management team.

“Well, that’s how I think about it,” replied Roger. “The Camry is bang-on direct competitor and your highest aspiration is get to a fifth of their volume with as big or bigger dealer network.”

That is not winning. That is lowering the bar to declare victory.

“But, ok,” Roger continued. “You’re going to have to get 60,000 new customers. How does the planned Malibu stack up against the Camry?” (Camry had just launched its upgrade, so the specs were available.)

Answer: “We actually don’t really know.”

Now, to have a sense of strategy, you cannot craft a winning one in the context of just yourself. “This vehicle is going to be much better than the previous vehicle” rather than “better than the competitor’s” is all well and good, but strategically tricky, unless of course you’re the current winner. Which the Malibu wasn’t. (In other words, a “do better” strategy would work for Camry, but no one else.)

“I don’t think you can count on an incremental 60,000 units without some valid third parties saying nice things about the Malibu,” Roger explained. “You won’t even meet your current aspiration if bad reviews come in.”

Roger convinced the team to hire an independent third party to evaluate the Malibu prototype against the Camry, using all the objective measures typically reviewed by the Edmunds, Car & Driver, and Consumer Reports of the world.

The test report came back with an answer to Roger’s “how we stack up?” question: a few criteria were on par with the Camry, but on nine key criteria, it was a loser against the Camry.

Roger made the point that selling 120,000 units against the headwinds of mediocre reviews essentially saying “not bad, but no Camry” was a losing strategy.

The team agreed. In response, they spent $300 million to retool the Malibu so that it beat Camry against those criteria. GM ran three consecutive engineering shifts a day (24/7 engineering!) for the seven months they had remaining before production had to start.

They sacked the engine program. They put thicker glass in. They tuned the new engine to be as fuel efficient as the Camry (vs the one mile per gallon less that they had planned to go to market with!).

Media response: surprise and delight.

Retail response: Malibu sold at a 250,000 a year pace…until the market crash in the summer of 2009. And even after the crash and comeback, the Malibu matched the Camry on monthly sales. The payback on the $300 million investment was, in Roger’s words, “ridiculously high.”

Lesson: if you don’t have winning aspiration, you won’t do the things you need to do in order to win.

Sounds simple, but if a ginormous company run by very smart people can spend a gazillion dollars going to market with what sounds good but is in reality a losing strategy, anyone can.

The sine qua non of strategy is to have a winning aspiration.

What’s yours?

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

GUEST POST from Matthew E May

I developed the Play-to-Win Canvas, a large wall map, to help teams explore strategic possibilities. (Click HERE to download a full size PDF, or HERE for a personal A3 size, both sharable under a Creative Commons license.)

So, you’ve decided you need to shift strategy. You’ve drafted your current strategy using the Roger Martin Playing to Win five-question strategic question cascade (What’s Our Winning Aspiration? Where do we play? How do we win? What capabilities do we need? What systems are required?) You’ve defined the most worrisome problem or strategic issue, and you’ve reframed it as a choice between at least two mutually exclusive options. You’ve expanded each choice and brainstormed initial where-to-play/how-to-win combinations. You’ve clustered them by theme. You’ve culled them so that you’re down to three or four thematic possibilities.

Now it’s time to generate a strategic cascade for each of those possibilities. And this is where the canvas helps. By watching and working with teams over the past two years, and picking Roger Martin’s brain, it became very clear to me why producing a new winning strategy is difficult: people like to lock and load on a given direction far too early in the process. They don’t challenge the status quo enough. They don’t push their thinking.

In other words, there’s a great temptation to take a single initial strategic possibility and develop a full strategy around it. Wrong move. You need to basically start over, with that possibility as simply the point of departure.

So, for example, and to continue with our hypothetical company STAR FITNESS TRAINING (see this post), they have identified a strategic issue, and have three initial where-to-play/how-to-win possibilities they believe are worth exploring:

1. expand to all of Southern California through franchising
2. expand into less affluent client segment by hiring, training, and certifying new training associates, and
3. offering exercise DVD products.

So far so good, but the whole reason I developed the Play-to-Win canvas is because I see how tempting it is to cherry-pick one of the three, get the heads in the room nodding in agreement, and go from there. If you do that, all you’ve really done is to shortchange the art of possibility by two-thirds! (Actually, more, if you include the current strategy as a possibility).

DON’T.

For each of the three new possibilities, you want to start from the top: What’s our winning aspiration? Where will we play? How will we win? What capabilities are required? What management systems must we have?

I have found it very difficult for a strategic team to create robust cascades for more than one possibility, so I like to split the larger group up into smaller exploratory units, each devoting their entire attention to one possibility.

Here’s the good news: the canvas is self-guided, and self-contained. It has definitions, prompts, and tips. It even guides you in teasing out assumptions (“What would have to be true for these choices be successful?”) and crafting an experiment to test those assumptions.

Once the canvas has been completed (and this could easily take days) for each of the strategic possibilities, you can stand back and decide which one you’d like to start with in terms of testing the strategy. (Hint: Do NOT test out all possible strategies at the same time. Start with the one everyone is leaning toward.)

Remember, the Play-to-Win Canvas is just a tool for fleshing out strategic choices. It’s an artifact of your best thinking. A starting point. A strategic story.

Not a bad deal for free!

Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.