Where to Play / How to Win
The heart of strategy is choosing your playing field and defining how you will win on it
Where to Play and How to Win are the two most critical questions in strategy formulation. They are tightly bound together and form the very heart of strategy. Where to play narrows the competitive field by choosing which markets, customers, channels, product categories, and vertical stages you will compete in. How to win defines what will enable you to create unique value and sustainably deliver it in a way distinct from competitors.
These two choices must always be considered together because no how-to-win approach works for every where-to-play choice. In great strategies, the two fit together to make the organization stronger. A fine-dining restaurant chain and a casual dining chain both serve Italian food, but their where-to-play choices demand fundamentally different how-to-win approaches.
The where-to-play choice is shaped by asking what is core to the organization: core brands, geographies, channels, technologies, and consumers. The how-to-win choice requires identifying a competitive advantage that is both doable and decisive for the specific firm. Michael Porter identified two fundamental ways to win: cost leadership and differentiation. The key is that how-to-win choices must be suited to the specific context and highly difficult for competitors to copy.
The Strategy Logic Flow provides four analytical dimensions for making these choices: industry structure, customer value, relative position, and competitive reaction.
- Where to play and how to win must always be considered together as paired choices
- No how-to-win is perfect or appropriate for all where-to-play choices
- Strategy starts with what is core: core brands, geographies, channels, technologies, and consumers
- How-to-win choices should be suited to the specific context and highly difficult for competitors to copy
- The choice must be both doable and decisive for your specific organization
- Where to play is your choice: pick somewhere you can have a chance to win
- You can sometimes change the competitive context to fit your chosen strategy
- 1. Analyze Your Industry StructureAssess the industry landscape to understand distinct segments by geography, consumer preference, distribution channel, and other dimensions. Determine which segmentation scheme makes the most sense and evaluate the structural attractiveness of each segment using factors like buyer power, supplier power, threat of new entrants, substitutes, and competitive rivalry.Pro tipUse the Strategy Logic Flow framework to systematically analyze industry, customers, relative position, and competitive reaction before committing to choices.WarningDo not rely on a single analytical tool. No tool alone considers the full strategic landscape.
- 2. Understand Customer and Consumer ValueDetermine what your channel customers and end consumers truly value. Go beyond conventional wisdom to uncover unarticulated needs. Understand where consumers are underserved and where there are opportunities to create new segments or redefine existing ones.Pro tipLook for emerging consumer segments that competitors have overlooked. The Olay team discovered that women aged thirty-five-plus were an underserved point of entry for anti-aging products.WarningDo not assume that the most obvious or largest consumer segment is the most attractive one.
- 3. Define Where to PlayMake explicit choices about your competitive playing field: which geographies, demographic segments, product categories, channels, and vertical stages. Narrow your focus to areas where your capabilities can be decisive. Consider whether to grow from the core, extend into adjacent areas, or expand into new markets.Pro tipDefine where to play in terms of what you will not do as much as what you will do. Every where-to-play choice implies a set of markets and segments you are choosing to forgo.WarningAttempting to play everywhere at once is not a strategy. No company can be all things to all people and still win.
- 4. Define How to WinDetermine what will create unique value for customers in your chosen playing field. Identify your specific competitive advantage by assessing your relative position against competitors. Consider whether you will win through cost leadership, differentiation, or a combination suited to your context. Ensure your how-to-win choices reinforce your where-to-play choices.Pro tipDo not dismiss the possibility that you can change the competitive context to fit your choices. Red Hat gave software away for free to achieve dominant market share and then earned revenue from services.WarningSimply because a how-to-win approach works for a competitor does not mean it will work for you. Your choices must be doable and decisive in your specific context.
- 5. Assess Competitive ReactionConsider what competitors will do in response to your chosen course of action. Evaluate whether competitors are likely to imitate, attack, or ignore your strategy. The best strategies leave competitors with good alternatives that keep them from needing to attack your core position.Pro tipOne sign of a winning strategy is that competitors attack one another rather than you, because you look like the hardest target to attack.WarningDo not start wars on multiple fronts with multiple competitors at the same time. No company can do everything well.
Olay chose to play in a new masstige segment in mass retail channels rather than moving to prestige department stores. The how-to-win choices were crafted to fit this specific playing field: genuinely superior anti-aging formulations, prestige-quality packaging, strategic pricing at 18.99 dollars that attracted both mass and prestige shoppers, and partnerships with mass retailers to create an elevated in-store experience. The where-to-play and how-to-win choices reinforced each other and played to P&G's strengths.
Red Hat wanted to serve corporate customers with open-source enterprise software. The how-to-win required dominant market share because corporate IT departments preferred buying from market leaders. In a fragmented Linux market, Red Hat changed the competitive context by giving software away for free to achieve dominance, then built a service revenue model around that market position.
The Where to Play and How to Win framework was central to P&G's strategic transformation. The concepts draw on Michael Porter's foundational work on competitive strategy and competitive advantage. At P&G, the framework was used to make critical choices about which categories, geographies, and consumer segments to prioritize, and what specific competitive advantages to build. The Olay brand transformation exemplifies the power of these paired choices, as the team created an entirely new masstige segment by matching a specific where-to-play choice with a tailored how-to-win approach.