A.G. Lafley’s view on Strategy
We spoke to Lafley a few months ago after the release of his book, "Playing To Win," about why some executives and companies fail at strategy.
He argues that business fail when they don't make difficult choices about where and how they can win particular markets and put the full weight of the business behind them.
P&G's current restructuring and cost cutting program is not going quick enough for investors. During his time at P&G, Lafley cut more jobs than any previous CEO, sold off the company's hugely valuable food brands, and carried out a $57 billion acquisition of Gillette. With Lafley, strategy isn't about small choices.
Here are some of his key insights:
On when things go wrong
"When we made mistakes, when we had our failures, when we weren't delivering results that we were capable, almost there was almost always one of two problems. Either we had lost our connection with our consumer and what they wanted, needed, and valued, or our strategy needed to be changed because something had changed in the marketplace and we hadn't responded."
Companies go halfway and don't fully develop a strategy
"This is probably most common at Fortune 500 companies. They do part of the strategy job, but they don't do the whole thing. What do I mean by that? They have a vision or a mission, they might go out and do industry, company and competitor analysis, they might even put together an annual plan and budget. Those are parts of strategy, or they're the output of strategy but they're not strategy."
So what's the solution? According to Lafley, it's about making difficult and specific choices, and putting the entire weight of a business behind them.
"Strategy is five choices," Lafley said. "What is winning; where am I going to play to win; how am I going to win where I play; where are my core competencies that are going to enable me to win where I play; and what management systems and measures are going to...
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