How to make smarter decisions (Part 2)
One of the key takeaways from “Playing to Win - How Strategy Really Works” by AG Lafley and Roger Martin is determining “where to play.” The book describes this choice as including:
- Geography. In what countries or regions will you seek to compete?
- Product type. What kinds of goods and services will you offer?
- Consumer segment. What groups of consumers will you target? In which price tier? Which consumer needs will be met?
- Distribution channel. How will you reach your customers? What channels will you use?
- Vertical stage of production. In what stages of production will you engage? Where along the value chain? How broadly or narrowly?
So how does this relate to innovation? How does this leverage the same principles?
As Laffley describes the process the P&G team went through with Bounty, and how it decided to play in three distinct areas, the connection was immediate.
At P&G, where-to-play choices start with the consumer: Who is she? What does the consumer want and need? To win with Mom, P&G invests heavily in truly understanding her - through observation, through home visits, through a significant investment in uncovering unmet and unexpressed needs. Only through a concerted effort to understand the consumer, her needs, and the way in which P&G can best serve those needs is it possible to effectively determine where to play - which business to enter or leave, which products to sell, which markets to prioritize, and so on. As current CEO Bob McDonald explains, "We don't give lip service to consumer understanding. We dig deep. We immerse ourselves in people's day-to-day lives. We work hard to find the tensions that we can help resolve. From those tensions come insights that lead to big ideas."
Discovering deep customer insight is a key exercise not only to these big strategy concepts but to breakthrough ideas. Your team can regularly do this work so you're consistently bringing on big ideas and fresh perspectives that have significant business impact.
This process of Discovery is a rich learning journey. We generally recommend this type of work take place in the physical space where a shared experience is designed for the team. This includes "digging deep" as McDonald explains, which could include customer labs and learning excursions. It also includes providing discomfort and confusion designed to push the team's thinking toward the big ideas.
The ultimate goal is to gain those deep insights that can be leveraged for tangible business growth.
We often hear people say we want to be innovative like P&G - we think answering tough questions about your customers is a great place to begin!