A Close Look at Lafley and Martin’s Five-Step Strategy Model

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Introduction

Companies often compete with other companies to survive and succeed. Strategy is required when there is huge competition. The goal of your competitor will be same as yours – winning in the market. This is one of the reasons why one should think carefully about how to get ahead. At this point, a winning strategy is very important. If your strategy is wrong, you are likely to fall behind your competitors. Once you are behind your rivals, it becomes more difficult to recover your position. In this article, we will discuss about Lafley and Martin's Five-Step Strategy Model that you can use for the advancement your organization and to earn a competitive edge.

About Lafley and Martin's Five-Step Strategy Model

A.G. Lafley, former CEO of Procter & Gamble and Roger Martin, former Dean at Rotman School of Management devised The Five-Step Strategy Model which was published in their book 'Playing to Win' in 2013. The model is built on five integrated choices which can be understood as reinforcing cascade. This model is known to help organizations make effective strategic choices.

About the 5-Step Formula to Make business Decisions

Strategy can be created using a simple framework and can be understood as the answer to the below 5 questions regardless of the size, context and type of organization.

  • What should be the winning aspiration?
  • Where you are going to play?
  • How you are going to win?
  • What capabilities you should build?
  • What management systems are needed?

Answering the above questions need deep knowledge of business as well as what is going on in the current market. Organizations should look for options to integrate the 5-step framework into their business effortlessly. Some organizations avoid this strategy because it becomes difficult for them to make real choices.

How to Integrate Lafley and Martin's Five-Steps into Your Business?

Strategy is a choice and one should not make any mistake about it. It is the set of choices about what you should do and what you should not do. Let us look at the 5-steps in detail and analyze how these steps can be integrated into the strategy of your organization. The answers to these questions are fundamental choices that every leader should make for a successful business strategy.

  • What should be the winning aspiration?

Companies have ambitions that are framed as vision and mission. This kind of corporate artifacts may not be helpful to the strategy, but lack context. Moreover, they show the picture of a happy future and make no contribution to competition. In order to become successful, organizations should look for ways to win at a particular place in a particular way. This transforms happy future into winning aspirations.

If you are not trying to win, you are just participating and wasting the time of your customers and money of your investors. Companies should define its purpose strategically and decide what winning strategies lead to a rewarding future. Winning aspirations vary from one industry to the other. Organizations should conceptualize what winning means to them. For example, in the case of a market research department, winning could mean becoming the best service provider for customers. It can be more than simply serving the requirements of internal customers.

  • Where you are going to play?

This question determines with which customers, in which markets, which product categories and channels, the organization should compete. By answering these questions, one can make set of choices that form the core of the competitive field. Organizations can broaden or narrow the choices and decide where to play. Different demographic segments are there for competition and organizations can compete across multiple categories, services and product lines. These choices can represent the strategic play for an organization.

To make this much clear, we can take example of P&G. P&G is a huge MNC with a resolve to venture into multiple places at once. In order to win, it chose to build from its core strengths from core brands and geographies. It invested in retail channels and customers as well as mass merchandisers. Geographically, it expanded into emerging markets where the demand for consumer goods is more. It is estimated that the economic growth in these markets will increase by four times over the next several decades.

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The choice where to venture into is a careful consideration. One cannot play and win everywhere. If you narrow down the channels, demographics and geographies, you can get the best possible results.

  • How you are going to win?

The answer to this question is connected with the former question. It entirely depends on the choice you make. Once you have decided regarding how you can create unique value and how your organization can deliver it in long term for better results. People think strategy as a very complex thing. The purpose of Lafley and Martin's Five-Step Strategy Model is to make the strategy simple and interesting.

By making the right choice at right place, organizations can play a winning game. You can have an effective strategy by making the choices in an enjoyable way. Martin says – “If everything is about choices, what are the few choices that do really matter?” In reality, the 5-step Strategy Model is the pattern that people can use to see the big picture.

  • What capabilities you should build?

Capabilities can be said as the map of activities that underpin choices like – ‘where to play’ and ‘how to win’. No strategy will succeed without capabilities. To build capabilities, one should discuss and refine their activity system. Try to capture the important activities to decide ‘where to play’ and ‘how to win’. Be honest about the state of your capabilities and what is needed to retain the capabilities.

  • What management systems are needed?

Strategies should be properly measured and efficiently executed by the people. It is important for organizations to know who they need, how to integrate them and how they can realize if the strategy is really succeeding. This strategy helped Lafley to completely change his company. Though Lafley and Martin had a profitable business, they didn’t consider themselves as long-term winners.

Conclusion

All the above questions played a very important role in choosing the areas in which P&G could win. In short, Lafley and Martin's Five-Step Strategy Model is robust enough to make a million dollar business decision.

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