roger martin - playing to win in the public sector

PLAYING TO WIN: In the Public Sector

Implement Consulting Group Copenhagen, Denmark September 24, 2015 Twitter: @rogerlmartin

Copyright © 2013 Roger L. Martin

STRATEGY IS ABOUT CHOICES

To win, a company must choose to do some things and not others

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STRATEGY IS THE ANSWER TO 5 QUESTIONS

What is our winning aspiration?

Where will we play?

How will we win?

What capabilities must we have?

What management systems are required?

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THE HEART OF STRATEGY

What is our winning aspiration?

Where will we play?

How will we win?

What capabilities must we have?

What management systems are required?

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THE OLAY EXAMPLE

Image courtesy of P&G 5


OLAY STRATEGY CHOICES CIRCA 1995

How will we win?

What management systems are

required?

What is our winning

aspiration?

What capabilities

must we have?

Where will we play?

• Low-price skin-care products (cleanser, moisturizer, beauty bar, body wash)

• Customers in the 50+ segment • Sold through discount retailers, grocery

and drug stores

• Leverage scale behind an array of products, widely available

• “Classic” brand positioning

• Product-based innovation • Strong retail relationships

• Measures of market share, in-store presence, in-stock positions

• Product R&D systems

• To play in the global skin-care category

• To turn from a shrinking position to a growing one, improving from $750 million in sales

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STRATEGY CHOICE MAKING

Problem Reframe the Problem as a

Strategic Choice

Possibility 1

Possibility 2

Possibility 3

Possibility 4

Possibility 5

Barriers Tests Decide

What Would Have to Be True?


FRAME CHOICE

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What is the Problem We are Trying to Solve • We think that the beauty business is underdeveloped at P&G and could be an engine

of growth • But, skin care is the biggest ($50 billion globally) beauty care business and we don’t

have a credible position in skin care • Hence we can’t really be an important global player in beauty care without a much

enhanced skin care business • Therefore, the problem we are trying to solve is to create a winning position in skin

care to underpin and enable a winning global beauty business Frame Choice We could grow one of our existing skin care/cosmetics brands (Oil of Olay, SK-II, Cover Girl) into a leading skin care brand

Or… We could acquire one of the world’s leading skin care brands


GENERATING POSSIBILITIES

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Brainstorm Possibilities • Shift to a new, credible skin-care brand

• Acquire an existing leading brand • Create a CoverGirl skincare line • Grow SK-II into the mid-prestige market

• Extend Olay to teens and young women (anti-blemish) • Extend to new channels (i.e. department stores) • Extend to beauty adjacencies (shampoo, cosmetics, fragrance)

• Transform Olay’s market position

• Target our current customers (women 50+) with powerful new anti-wrinkle formulations

• Go after new customers (women 35+) with new product offerings specifically targeting their needs (multiple early signs of aging)

Broaden Olay

Go Beyond Olay

Reinvent Olay


OLAY MASSTIGE STRATEGY POSSIBILITY

How will we win?


required?

What is our winning

aspiration?

What capabilities

must we have?

Where will we play?

• Sell through mass channels (best customers)

• Younger women just noticing the first signs of aging

• Move upmarket in product, price and promotion

• Establish “masstige” channel presence

• Innovation (product, distribution, packaging)

• Consumer understanding

• Go-to-market approaches • Partnering

• Partnering systems • Channel and consumer

metrics

• Win convincingly in skin-care segment (market leadership)

• Build a pillar for the beauty-care business

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MAKING CHOICES IN ORGANIZATIONS

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What is true?

What would

have to be

true?


REVERSE ENGINEERING THE OLAY CONDITIONS

Industry Analysis

Segmentation A sufficiently large number of women want to “fight the seven signs of aging”

Customer Value Analysis

Channel Mass retailers will embrace the idea of creating a masstige experience to attract prestige consumers

Analysis of Relative Position

Capabilities P&G can create prestige-like positioning in the mass channel P&G can build necessary retailer partnerships

Competitor Analysis

Industry Structure The emerging masstige segment will be as structurally attractive as the current mass-market segment

End-Consumer A pricing sweet spot exists between mass and prestige that is attractive to both

Costs P&G can create a cost structure that enables it to hit the pricing sweet spot

Prediction Prestige competitors will not try to follow Mass competitors will find it too hard to follow

Olay “Masstige” Option:

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IDENTIFYING THE BARRIERS TO CHOICE

Industry Analysis

Segmentation

Customer Value Analysis

Channel 2nd: Mass retailers will embrace the idea of creating a masstige experience to attract prestige consumers

Analysis of Relative Position

Capabilities 3rd: P&G can create prestige-like positioning in the mass channel

Competitor Analysis

Industry Structure End-Consumer 1st: A pricing sweet spot exists between mass and prestige that is attractive to both

Costs

Prediction

Olay “Masstige” Option:

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TESTING THE BARRIERS TO CHOICE

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Barrier #1 – Customer Value: End Consumer - The customer will value an efficacious new formula enough to pay a price

premium that sits just under prestige pricing

Concern: The customer may well value our new products and value proposition, but at what price? Should the price be at premium that sit closer to current mass competitors ($12.99), at a price just below the entry prestige competitors ($18.99) or in between $15.99.

Guerilla-style test: Objective: To get a sense of how this segment of consumers feel about different pricing tiers and products Test: Conduct ethnographic interviews with consumers who shop in mass and prestige channels for skin-care products (Olay and competitors). Ask the consumers to share stories about beauty, skin-care and the shopping experience. Probe and look for insights on brand and pricing. Result: Gain first-level insights into how women perceive price and value propositions when it comes to their own beauty-care experiences.

Small-scale test: Objective: To identify reactions to different price positions Test: Create simulated shopping experiences using existing P&G technology. Ask select consumers to virtually shop one of three beauty aisles (each with different price points for Olay. Across the sample, measure weighted purchase intent for Olay versus other brands Result: Determine which Olay pricing structure yields greatest intent to purchase in a simulated shopping experience, enabling extrapolations to in-store outcomes.

Definitive test: Objective: To test gain deeper insights into real consumer behavior in the face of different price points Test: Test the new Olay formulation in three different but carefully calibrated markets. Measure real sales figures across the three markets. Result: Determine which price position delivers highest purchase and repurchase over 3 months.


OLAY STRATEGY CHOICES

How will we win?


required?

What is our winning

aspiration?

What capabilities

must we have?

Where will we play?

• Sell through mass channels (best customers)

• Younger women just noticing the first signs of aging

• Move upmarket in product, price and promotion

• Establish “masstige” channel presence

• Innovation (product, distribution, packaging)

• Consumer understanding

• Go-to-market approaches • Partnering

• Partnering systems • Channel and consumer

metrics

• Win convincingly in skin-care segment (market leadership)

• Build a pillar for the beauty-care business

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THANK YOU Twitter: @rogerlmartin

Check out the PTW Toolkit @ WWW.HBR.ORG/TOOLS/PTW

roger martin - playing to win in the public sector

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