Roll over the image for more information on the key components of Capabilities-Driven Strategy. Way to Play
A company’s way to play is an approach to creating value for its customers. A well-defined way to play is broad enough to allow flexibility and growth, but narrow enough to focus strategy and decision making.
It may involve being an innovator, a value player, an experience provider, and so forth. More than any other single factor, the way to play distinguishes a company from its competitors.
For instance, Walmart, the largest retail chain in the world, has taken its leading position with a precise and powerful way to play: being a big-box provider of everything from groceries to electronics to houseplants at “everyday low prices,” without special sales or discounts. Right to Win
The right to win is a company’s ability to enter or compete with the confidence to succeed and create value. It belongs to coherent companies, those that focus on what they do best in making every decision across every business and that align their way to play with their capabilities system and their product and service fit.
Walmart’s right to win is obvious: It has a well-defined way to play, an unbeatable system of capabilities that reinforce one another, and a portfolio of products and services that thrive within that system. Moreover, its success story is well known: It has been the largest retail chain in the world for many years. It has more than 3,500 stores, more than 300 product categories on its shelves, more than two million employees, and about a third of the U.S. population visits its stores each week. This scale famously allows it to dictate terms to just about any of its suppliers. Capabilities System
A company’s primary source of advantage is a system of three to six mutually reinforcing capabilities that together allow it to fulfill its way to play. A capability is a key strength of your business that customers value and competitors can’t beat. It’s not a generic activity, but a specific intersection of people, knowledge, IT, tools, and processes where your organization consistently out-performs competitors and that delivers a central aspect of your way to play.
Walmart’s capabilities system includes:
- efficient supply chain management, aggressive vendor management, expert point-of-sale data analytics, superior logistics and working-capital management
- mastery of real estate selection and acquisition
- sophisticated retail conception and design
Product & Service Fit
A company’s products and services are its most visible activities, both to its customers and to the outside world. However, too few companies create a product and service portfolio that aligns with their strategy.
Instead, most companies compose portfolios based on short-term financial performance and shoehorn a strategy to fit around that portfolio.
Every product and service that Walmart sells aligns with its way to play. Walmart does not sell big-ticket items like large furniture and appliances, where it has no cost advantage, nor does it sell items such as recorded music with explicit lyrics that run counter to its customers’ values. |
