How Will We Win? Building Competitive Advantage in Product Strategy
The Third Strategic Question
In Playing to Win, A.G. Lafley and Roger L. Martin identify "How will we win?" as the third critical question in strategic planning. This question requires organizations to define their unique value proposition and determine how they will create sustainable competitive advantages in their chosen markets.
Defining Competitive Advantage
According to Lafley and Martin, winning requires a clear understanding of how you will create unique value for customers that competitors cannot easily replicate. This is not about being slightly better—it's about creating a meaningful difference that customers value.
Sources of Competitive Advantage
1. Cost Leadership
Winning through lower costs requires operational excellence, scale advantages, or innovative cost structures. This approach works when customers are price-sensitive and you can maintain cost advantages over time.
2. Differentiation
Winning through differentiation means offering unique features, quality, service, or experiences that customers value. This requires deep understanding of customer needs and the ability to deliver superior value.
3. Focus Strategy
Winning through focus means serving a specific market segment better than competitors. This approach combines cost leadership and differentiation within a narrow market segment.
4. Innovation
Winning through innovation means creating new products, services, or business models that disrupt existing markets or create new ones. This requires strong R&D capabilities and a culture of experimentation.
Examples from Playing to Win
Olay's Winning Strategy
Olay won by transforming from a beauty brand to a science-backed skincare brand. They invested in research, developed proprietary formulations, and positioned themselves as experts in anti-aging skincare. This differentiation strategy allowed Olay to command premium prices and build brand loyalty.
Bounty's Value Proposition
Bounty won by focusing on superior absorbency and strength. Rather than competing on price, Bounty emphasized product quality and performance, positioning itself as the premium paper towel brand that customers choose when they need the best.
Gillette's Innovation Strategy
Gillette maintained market leadership through continuous innovation in shaving technology. Each new product iteration (Mach3, Fusion, etc.) provided incremental improvements that justified premium pricing and reinforced brand leadership.
Application in Product Development
For Product Managers
Product managers must define how their products will win by:
- Identifying unique value propositions
- Understanding what customers value most
- Determining how to differentiate from competitors
- Building features that create sustainable advantages
For Engineering Teams
Engineering teams can create competitive advantages through:
- Technical excellence and performance
- Superior user experience
- Innovative technology solutions
- Scalability and reliability
- Developer experience and ecosystem
Building Sustainable Advantages
Lafley and Martin emphasize that winning strategies require advantages that are:
- Valuable: Customers must value the difference
- Rare: Competitors must not easily replicate it
- Difficult to Imitate: The advantage must be protected by capabilities or resources
- Organizationally Supported: The organization must be able to execute on the advantage
Common Mistakes
- Me-Too Strategies: Trying to win by copying competitors
- Feature Parity: Competing on features rather than unique value
- Price Competition: Competing primarily on price without cost advantages
- Unclear Value Proposition: Not clearly articulating how you will win
Best Practices
- Clearly define your unique value proposition
- Understand what customers value most
- Build advantages that are difficult to replicate
- Align your winning strategy with your capabilities
- Continuously innovate to maintain advantages
- Measure and track competitive performance
Conclusion
The question "How will we win?" is central to developing effective strategies. As Lafley and Martin demonstrate in Playing to Win, winning requires a clear understanding of how you will create unique value that customers want and competitors cannot easily replicate. By defining explicit winning strategies, organizations can focus their efforts, allocate resources effectively, and build sustainable competitive advantages.
Reference
Lafley, A.G., & Martin, R.L. (2013). Playing to Win: How Strategy Really Works. Harvard Business Review Press.