Strategy as an Iterative Process
Strategy is an endless pursuit of winning, not a destination you reach once
Strategy as an Iterative Process reframes strategic planning from a linear, one-time activity into an ongoing cycle of making, testing, and refining choices. The five choices in the Strategy Choice Cascade are not completed sequentially and checked off. Instead, they form a dynamic feedback loop where all moving parts influence one another and must be taken into account together.
No strategy lasts forever. All companies need to evolve their strategies to improve, sharpen, and change to stay competitive. The ideal is to see strategy as a process rather than a result, adapting existing choices before business and financial results begin to decline. Financial results are always lagging indicators, so waiting for them to deteriorate before revisiting strategy means waiting too long.
The iterative nature of strategy means starting with a prototype winning aspiration rather than a perfect one, then refining it as where-to-play, how-to-win, capabilities, and management systems choices take shape. A company must understand its existing core capabilities when deciding where to play and how to win, but it may also need to invest in new capabilities to support forward-looking choices.
The three tools of the strategic playbook, the choice cascade, the strategy logic flow, and the reverse engineering process, work together in a complex and winding path that requires circling back, revisiting, and revising. This is the endless pursuit of winning.
- Strategy is a process rather than a result
- No strategy lasts forever: all companies need to evolve their strategies
- Adapt existing choices before business results start to decline, since financial results are lagging indicators
- The five strategic choices form a dynamic feedback loop, not a linear sequence
- Start with a prototype and refine iteratively rather than seeking perfection before acting
- A lack of strategy will kill you, maybe not right away, but eventually
- Operating without strategy in a volatile, uncertain, complex, and ambiguous world is the riskiest choice of all
- Even companies with all signs of a winning strategy should not rest
- 1. Sketch a Prototype StrategyBegin with an initial set of choices across all five boxes of the cascade. Start at the top with a winning aspiration, but do not dwell on perfecting it. Sketch a prototype with the understanding that you will return to refine it. Then move to where to play and how to win, the real work of strategy.Pro tipDo not let the pursuit of a perfect strategy prevent you from having any strategy. A good strategy today beats a perfect strategy that never gets completed.WarningDo not treat your initial choices as final. They are a starting point for iteration, not a finished product.
- 2. Test and Refine Choices Through Feedback LoopsUse the dynamic feedback loop between all five choices to refine your strategy. As you define capabilities, you may discover that your where-to-play choices need adjustment. As you build management systems, you may find that your how-to-win approach needs refinement. Let each choice inform and improve the others through iterative back-and-forth.Pro tipA lot of iterative back-and-forth is required between the choices. Do not try to lock down one box before considering the others.WarningDo not assume the cascade flows in only one direction. Choices at the bottom influence and refine choices at the top.
- 3. Build Systems for Ongoing Strategic ReviewDesign management systems that support continuous strategic evolution. Include strategy dialogues, innovation reviews, brand equity assessments, operating plan discussions, and talent development reviews. Each system should be regularly assessed and updated to remain effective as strategy evolves.Pro tipMake strategy a living document through regular review systems rather than an annual planning exercise that gathers dust.WarningDo not wait for financial results to deteriorate before revisiting strategy. By the time results decline, you are already behind.
- 4. Monitor for Signs of Strategic Health and DecayWatch for the six telltale signs of a winning strategy: a distinctive activity system, customers who love you while noncustomers cannot understand why, competitors who profit without attacking you, more resources than competitors, competitors who attack each other rather than you, and customers who look to you first for innovations. Also watch for the six strategy traps that signal trouble.Pro tipEven the presence of all six positive signs does not mean you can stop adapting. The competitive environment is constantly changing.WarningDo not confuse current success with a permanent winning position. No competitive advantage lasts forever without continuous renewal.
From the year 2000 onward, every one of P&G's management systems was changed significantly: strategy dialogues, innovation program reviews, brand equity reviews, budget discussions, and talent assessments were all redesigned so they became more effective at supporting the evolving strategy. The company treated these systems as tools for continuous strategic refinement rather than static administrative processes.
After the initial success of Olay Total Effects, the team did not rest on its strategy. It followed up with Olay Regenerist at a higher price point and better active ingredient, then Olay Definity, then Olay Pro-X at fifty dollars. The team organized innovation so that one team worked on current products while another designed the next generation, ensuring continuous strategic evolution.
The iterative nature of strategy emerged from Lafley and Martin's decade of strategic work at P&G between 2000 and 2009. They observed that strategy was never a one-and-done exercise. P&G's management systems, including strategy dialogues, innovation reviews, brand equity reviews, and talent assessments, were all redesigned to support continuous strategic refinement. The conclusion chapter of Playing to Win emphasizes that even companies showing all six telltale signs of a winning strategy should not rest, because the competitive environment is a VUCA world that demands continuous adaptation.