The Last Video You Need to Watch on Strategy

1. 0:00 – 4:50

   Why “strategy” is usually just planning (and why that fails)

   1. AGAakash Gupta0:00

      Why do people have such a hard time with strategy?

   2. RMRoger Martin0:02

      Most people are taught strategy is planning, putting together a comprehensive and sensible list of initiatives and then going doing them. And the reason is, it's not strategy, it's planning, and you cannot plan your way to success. If the strategy for your product sucks, there's no real where to play and there's no real how to win. Suddenly, as if the shotgun goes on, or the starter pistol goes on and all of them are on the plane in like five minutes.

   3. AGAakash Gupta0:30

      Get more data, right? Like work with Cursor, work with GitHub Copilot, get the most coding data, get the most writing data.

   4. RMRoger Martin0:37

      Are your theories always gonna be right? No. The customer to say, "I'm gonna pull money out of my pocket and give it to you instead of somebody else."

   5. AGAakash Gupta0:47

      Can you walk us through how they made a bold where to play and how to win choice that others couldn't copy? Roger Martin is a global authority on strategy, the co-author of Playing to Win, and a former dean at the Rotman School of Management. He's advised Fortune 500 titans like Procter & Gamble, Lego, and Ford, and his 12 plus books have redefined how leaders approach strategy, myself included. So in today's episode, I'm honored to have him. We are going to cover everything you need to know to create a winning strategy. For my money, this is one of the most important skills for PMs and builders, so I hope you'll enjoy it as much as I did. Really quickly, I think a crazy stat is that more than 50% of you listening are not subscribed. If you can subscribe on YouTube, follow on Apple or Spotify podcasts, my commitment to you is that we'll continue to make this content better and better. And now on to today's episode. I'm super excited about this episode. Roger, I feel like you are one of the most important voices on strategy out there, and for product builders, for product managers, strategy is perhaps the most important skill. After 16 years in product management, that is the one thing that I saw really differentiating good from great is understanding strategy. And so today I wanna give people a masterclass in strategy. And I've heard you say most leaders aren't actually creating strategy, they're budgeting with extra steps. What do you mean by that?

   6. RMRoger Martin2:22

      Uh, that's cl- close to that. They're, uh, doing budgets with prose is, is what I say. So they're just putting together a financial plan and then their strategy, like notionally according to them, is that, is that they explain the budget with, with some prose and, and you know, that's, that's not a, a strategy. Uh, and, uh, the, the key thing about strategy that you have to understand as a s- as a strategy and, and, uh, Aakash, I'm sure you-- every good product manager you know does this, is strategy compels customers to take the desired action. So you do a bunch of things that cause the customer to say, "I'm gonna pull money out of my pocket and give it to you instead of somebody else." Um, when you put together a list of initiatives or a list of budget items or a list of projects and somehow think that's enough, um, there's a chance it might be. [chuckles] They might accidentally fit together and reinforce each other in a w- in a way that causes customers to, to say, "I'm gonna give you my business. I'm not gonna give it to somebody else." But generally they don't. They're-- And so strategy, at least 90% of strategy out in the world, if not 95% of strategy out in the world, is a list of laudable, uh, uh, initiatives. If you read down the list, build this factory, hire this many salespeople, install an ERP, you know, uh, kind of whatever, it's, uh, you could say, "Well, none of those are stupid." But if they don't fit together in a way that causes customers to say, "Oh, the offering from those people is better than all these other offerings," then you don't have a strategy. And so my pitch is to, to say, don't start with a list of initiatives. Start with the question of, you know, what are you trying to accomplish or what do you want customers to do? Uh, where are you gonna play therefore, and how are you gonna, uh, win while doing that? And the initiatives will fall out of that. The initiatives aren't the input to a strategic plan, they're the output of a strategy.

2. 4:50 – 6:13

   Roadmaps vs. strategy: the product manager’s trap

   1. AGAakash Gupta4:50

      And I think product managers are especially liable to fall into this trap because we're builders. We live and thrive off roadmaps. We've gotta create that list of initiatives, that list of roadmaps. We want it to be so hyper tactical that teams can feel it. That has to come as an output.

   2. RMRoger Martin5:06

      Yes.

   3. AGAakash Gupta5:06

      So what does the inputs look like? What are the steps that come before?

   4. RMRoger Martin5:10

      Yeah. Well, and you're right. If I c- if we can just go to product managers for, for a while now, uh, and then this is especially the case in Silicon Valley. I do a lot of work in Silicon Valley and, and in some sense, um, product managers are often treated as the silver bullet, the magic silver bullet. "I gotta get a good product manager, and they will, and they will make a success out of, out of this." And what the people saying that don't really understand is actually they need a strategist, right? And, and the great product managers are strategists, but, but they don't-- That, that's often not even acknowledged in companies. It's just, uh, "If I get a good product manager," they don't really know what one looks like other than they've succeeded, right? Um, so, so what, what are the, what are the inputs? Well, the, the inputs are a f- for starters, a framework in your head that says-What would cause a customer to, to be compelled to, to take the action, uh, we would wish? And

3. 6:13 – 10:38

   The “Playing to Win” five-question strategy framework

   1. RMRoger Martin6:13

      I've come, come to the conclusion that it means having answers to five questions, and that those five question answers fit together with one and reinforce each other to create that sense of a compelling, uh, reason for a customer to buy from you. And the questions are, what's our winning aspiration? So what are we trying to win at? And why is winning so important, uh, to me? Some people think, "Oh, Roger, you're so zero-sum game," you know, "Isn't that, isn't that so old-fashioned?" No. The best way to win is to cause, cause competitors to decide to win somewhere else, right?

   2. AGAakash Gupta6:51

      Mm.

   3. RMRoger Martin6:51

      Right? That, that's the best, and Sun Tzu said this way ago. The be- the best, the best way to, to win is to not fight. Um, and, and if you're compelling enough in, in what you're doing, other companies will say, "Well, I don't want to do exactly that, uh, because they're really good at it, and that'll just be a bloody war. That's no fun." So you gotta have a aspiration for being the best at what? Best at in a certain place, that's your where to play. That's the choice. So on this particular playing field, or if you're militaristic, battlefield, um, that's where we're gonna play, and we're not gonna play anywhere else. There. And then you have to answer the how to win. What is my theory by... that tells me I will be better than any other player on that particular field? So if the particular field is a particular set of customers who want a particular product or service or offerings in a particular geography, right? On that playing field, we have a way of producing more value for those customers, right, than anybody else, therefore will win there. But you can't stop there. Often people stop there with strategy, uh, and I say... A- and then they blame it on, "Oh, we had bad execution." No, it's because they didn't answer the other two questions, which is, what are the must-have capabilities? If we're gonna win in the way we've chosen to win, in the place we've chosen to play, what capabilities do we have to have, right, that other competitors either can't build or won't build? Sometimes it's a won't, right? Right? Amazon's success is based on a won't, right? In the early days of Amazon, if Walmart had said, "This online thing, that is super-duper important," and would've spent, you know, $100 billion, say, in, in a short period of time, they could've crushed little Amazon like a bug, like a tiny little cockroach, right? But they didn't. Why not? Well, it was an irritating thing and a scary thought to think that your 4,500 stores that you'd spent hundreds of billions, uh, building were, mm, not gonna be as useful as they, as they, they used to be, right? So you say, "Maybe this thing won't really take off. Like, maybe that's not actually what customers want. Let's hope. Let's hope." So that was a won't. They didn't build the capabilities necessary to challenge how you were gonna win where you chose to play online retailing. Uh, a- and, and the rest is history. Then the final question of the five, so it's what's your winning aspiration? Where are you gonna play? How are you gonna win? What are the must-have c- uh, capabilities? And then what are the enabling management systems? How are you gonna build and maintain those capabilities on an ongoing basis to win where we've chosen to play to meet the winning aspiration? And I repeat that a couple times to say, to say they have to fit together and reinforce one another. You need a strategy that, that has those answers fitting together and reinforcing the where to play, right, is perfect for your how to win, and your how to win is perfect for your, your, uh, your where to play. Uh, and if you do that, um, you can compel those customers in your where to play to give you, uh, their hard-earned, uh, cash, uh, and not somebody else.

4. 10:38 – 12:35

   Sponsor break: WorkOS & Amplitude

   1. AGAakash Gupta10:38

      This episode is brought to you by WorkOS. If you're building a SaaS app, at some point, your customers will start asking for enterprise features like SAML authentication and SCIM provisioning. That's where WorkOS comes in, making it fast and painless to add enterprise features to your app. Their APIs are easy to understand so that you can ship quickly and get back to building other features. Today, hundreds of companies are already powered by WorkOS, including ones you probably know like Vercel, Webflow, and Loom. WorkOS also recently acquired Warrant, the fine-grained authorization service. Warrant's product is based on a groundbreaking authorization system called Zanzibar, which was originally designed for Google to power Google Docs and YouTube. This enables fast authorization checks at enormous scale while maintaining a flexible model that can be adapted to even the most complex use cases. If you're currently looking to build role-based access control or other enterprise features like single sign-on SCIM or user management, you should consider WorkOS. It's a drop-in replacement for Auth0 and supports up to one million monthly active users for free. Check it out at workos.com/akash to learn more. That's workos.com/akash. Today's episode is brought to you by Amplitude. Building great digital products is hard. You know that better than anyone. Getting teams aligned, measuring what matters, and scaling your product strategy isn't easy. But what if you had a clear framework to guide your next steps? That's exactly what Amplitude built. They studied the best product teams to understand what really drives impact.And turn those insights into the digital experience maturity assessment. In two minutes, you'll be able to see where your team stands and what you can improve to build better products faster. Click the link in the caption to take the free assessment and get a clear path to product growth. So that's the core framework. If people have read "Playing to Win," they've, they're very well familiar with these five questions.

   2. RMRoger Martin12:33

      Yes.

5. 12:35 – 14:38

   What business school gets wrong about teaching strategy

   1. AGAakash Gupta12:35

      You've said that business schools aren't teaching this the right way. I myself worked an MBA, spent, I don't know, $200,000 in costs plus, I don't know, half a million dollars in sacrificed income to go there.

   2. RMRoger Martin12:47

      Yeah.

   3. AGAakash Gupta12:47

      So about three-quarters of a million dollars to do it. What didn't they teach me with that three-quarters of a million dollars that I spent?

   4. RMRoger Martin12:54

      Well, the acade- when did you graduate?

   5. AGAakash Gupta12:59

      Uh, 2017.

   6. RMRoger Martin13:01

      Yeah, yeah. So in the last 30 years, the business school world has gotten obsessed with something called the resource-based view of the firm. Uh, and it basically says, uh, you know, how you win is by, by, uh, having, uh, kind of these must-have res- uh, resources. Um, it's, it's just did you learn the resource-based view of the firm? 'Cause that's what's generally taught. You can't get a job in a top 50. You, you had a top three, uh, bus- business school, but you can't get a job in a top 50 business school in America, uh, if you don't bow down and pay homage to the resource-based view of the firm. The problem is nobody uses it out in the world. I've been consulting for 44 years now, uh, and I've only seen the resource-based view of the firm used once. Once. Uh, and it was by a junior Ford person who said, "I learned this at business school. Uh, could this be applicable?" And that's the only time I've heard it used. So it's gotten kind of theoretical and, and unhelpfully so, and so, uh, and so you're taught, and again, I think you can look back at your strategy courses, you were taught a bunch of tools, right? You were taught game theory, right? And you were, you were taught resource-based view of the firm. You might've been taught five forces from Mike, Mike Porter. You might've been taught blue ocean str- strategies. You're, you're taught a bunch of analytical tools, uh, as if that'll make you a strategist. But, you know, I don't, I don't see it doing that.

6. 14:38 – 16:17

   How to learn strategy: diagnose what companies actually do

   1. AGAakash Gupta14:38

      So if you were constructing a curriculum for someone to learn strategy, what would be the things they needed to learn?

   2. RMRoger Martin14:44

      I, I mean, I, I literally would, would, uh, teach, uh, Playing to Win and, and use, as you probably know, I have this Playing to Win Practitioner Insight series that's been going for four and a half years now, and so there's 230 or so, uh, articles in that that make up about six books, and they're on how to practice strategy. And I would, I would just teach them, uh, teach them that, um, and get them to work on strategy, uh, uh, you know, assignments. Uh, take this company and ask what is its strategy now? And, and, and, uh, and don't believe what they say in their strategy documents, 'cause strategy is what you do, not what you say. That's one of my principles. And so, so I, I'd, I'd say based on observing what that company is doing, what's their strategy? And tell me what it is in, in those five boxes, because everybody's got one. Uh, and how would you make it better?

   3. AGAakash Gupta15:47

      So let's do that maybe together. Like, if the case study going deep on companies across the five questions is what's gonna get people going, go ahead and pause this podcast or pause this video because we're about to talk about Anthropic and reveal the answer. But I want you to go through the mental exercise first.

   4. RMRoger Martin16:04

      But I'm gonna give you the answer.

   5. AGAakash Gupta16:06

      And then-

   6. RMRoger Martin16:07

      I gave you the question

   7. AGAakash Gupta16:07

      ... we'll hear from Roger how he might analyze Anthropic. So go ahead and hit pause, guys. And now let's hit play. Roger, tell us a little bit more. How would you analyze Anthropic?

7. 16:17 – 22:24

   Case study: Anthropic—can it win in “general LLM” without traffic?

   1. RMRoger Martin16:17

      Well, I, for, for me, I would be, uh, saying the quest- asking the question, okay, in the world of general, uh, LLM, LLM AI, let's just call it LLM, um, which you appear to be, have decided to play in. Your, it appears your where to play is not, uh, some vertical like, uh, like I'm, I'm an investor in, in a bunch of AI companies, so one is Blue J Legal, and it's in the vertical of, of, uh, uh, um, AI legal. I, I'm an investor in another one, Well- Wilson, it has AI in, uh, in for investments. So, so no, An- Anthropic is going up against ChatGPT, you know, uh, Google, uh, Ge- Gemini, et cetera, in the, uh, in general. So their where to play is in, in, uh, general LLM. Um, how you're gonna win, it seems unclear, uh, uh, to, to me. A bunch of its competitors are figuring out how to drive traffic to their AI with content, right? And so was it a absolute shock and surprise to me that X and X AI, uh, merged? No. That's a method of driving traffic to your LLM and therefore populating it with more data. Well, same with, same with, uh, Google, same with, uh, with, uh, Apple, same with, uh, Amazon. So it a- would appear that the theory of how to win is a little more sort of, it's part- partially this is going to be more human-friendlyWhich may be the case. I actually like Claude. I, I, I, I, uh, I, I use Claude for what it's worth. Um, um, and so then what, what capabilities are you depending on? It's presumably, um, we have the capability to make a most more humanistic, uh, kind of LLM. Um, and it's hardest from the outside to discern management systems. Sometimes you can, and I'm not sure there is anything to, to say on there. So for me, I, I go back to it and, and ask myself the question: what is the probability of Anthropic winning in general AI without a source of traffic, um, that will drive people to it when you're up against still better funding. They're well-funded, but still better funded, deep-pocketed competitors in the general AI, uh, general LLM AI, uh, uh, space. A- and so if I were, if I were at, at Anthropic, I would be saying, "Can I win in the big box?" If the big box is sort of general horizontal LLM AI, I'm up against folks with deeper pockets, with traffic. How am I gonna win in that battle? How am I gonna create an economic win? And for me, I'd be searching for ways to be narrower, to say, in this type of use, in this territory of knowledge, whatever, and it's, that's hard to tell, um, I am going to be better. Somebody else might end up being, and somebodies else might be, end up being bigger, um, but I'm going to be better. It's not unlike Blue J Legal, um, who is not attempting to, to, uh, outperform ChatGPT or any- anybody else, but ChatGPT is the, the, the f- you know, the, the favorite these, these days in everything, in knowledge, in being able to supply answers. It's attempting to do that in a narrow range of things pertaining to the law, where if you've got a user who cares deeply about that, right, they will value the fact that they don't have to deal with all sorts of other extraneous stuff, and their large language model will contain the stuff that is pertinent to their question and nothing else, and deeper stuff, uh, in that area than anywhere else. Now, is Blue J Legal ever gonna be worth $100 billion, $500 billion, a trillion dollars? No. Um, but I bet it's gonna be worth a decent amount, um, and that might be better than spending tens of billions of dollars attempting to build a LLM AI horizontal business where you'll never figure out how to monetize it because there are other people who have advantage. So that's, that's how I would at least think through, uh, Anthropic. Uh, it's, it's gotta figure out a where to play where there is a plausible how to win. For me, Blue J Legal has got a where to play that has a very

8. 22:24 – 26:57

   Westlaw vs Google: why narrower plays can still be huge businesses

   1. RMRoger Martin22:24

      pl- plausible how to win. In fact, it's, it is winning arguably, uh, in that narrow, uh, the, uh, narrow field. It gets back to, it get back to my... I was on the board of, of Thomson Reuters, uh, for many, uh, for many years, for 14 years. Um, and the best business in that fine company is Westlaw, uh, which provides legal search, uh, for mainly, it's mainly for US litigators, uh, is what it is. Um, and it's a multi-billion dollar business, super profitable. Um, and one of the concerns, and, and, and they ar- they arose out of being a, a, uh, law book publisher. So if you went into any legal library in North America, uh, uh, you would see a wh- a whole bunch of Westlaw, uh, books in the library. And they were smart enough, uh, in the '90s to say, "Hmm, you know, this is gonna go online," and instead of having a librarian go and pull out books and, and try and find the, the relevant, uh, cases, um, uh, and their-- And the reason people like their law books is they had a system, a numbering system that helped you figure out what the cases were about, and they would write a little head note on each case that allowed you to very quickly figure out what it's about. So the law librarians would go in there, follow the numbering system and, uh, uh, and come up with, with, uh, uh, with what cases their partner who they were working for, uh, needed. Some clever person in the '90s said, "You know what? We'll be able to put this all online. All of that stuff can be digitized and put online, and then you can... The law, the, the, uh, legal partner can search for him or herself, not ask the librarian to go and go in this, this thing." And they're brilliant, and they did itOkay. But then along came something called Google, right? And the question was, why would law firms pay big bucks, I mean, the subscription fees are big bucks, to Westlaw when they can do legal search on Google for free? The answer, as it turned out, and because it's been stable, stable business against Google, Google's, Google would love to have that, uh, that couple billion dollars of high margin revenue. But it turns out that, uh, when you do the same search on Google as you do on Westlaw, right? On Google, you come up with the 500 cases that maybe you should be reading and, and potentially referencing, and on Westlaw, you come up with seven that you really need to. And that difference between 500 or whatever it is, 200, 400, 500 and 7 amounts to so many hours of, of the, uh, the lawyer's time that they'll pay, they'll pay that fee for it. So who's the more powerful company, Google or Thomson Reuters' Westlaw sub? Google. Over a couple trilli- trillion bucks, because their where to play is huge. It's search. That's big. But, uh, I think if you wanted to buy Westlaw from, from, uh, Thomson Reuters, I suspect they'd charge you $25 or $30 billion for it. That's nice because they have a where to play with a matched how to win, which is we've got this database of cases that go back 100 years. We've got a proprietary numbering system. We've got 1,500 lawyers who every year, uh, create headnotes for them and, and that is of great value to, uh, uh, to customers. So that's... I would be thinking about the same thing for Anthropic. Do you wanna have a small probability of, of becoming a, a whatever, a trillion-dollar company or a high probability of becoming a $100 billion company?

   2. AGAakash Gupta26:51

      Yeah. I would say I went through the five steps myself as well, so I'd love to hear-

   3. RMRoger Martin26:56

      Yeah. Yeah, yeah

9. 26:57 – 30:20

   Aakash’s Anthropic strategy: enterprise APIs, coding/writing, and trade-offs

   1. AGAakash Gupta26:57

      ... how you, my reaction to these for Anthropic. So for me, I think their winning aspiration here, um, is right to make AI helpful and harmless at scale. As you said, they're playing-

   2. RMRoger Martin27:08

      Yep

   3. AGAakash Gupta27:08

      ... in the foundational model space. Their where to play, here's where I differ a little bit. So I looked at-

   4. RMRoger Martin27:12

      Yep

   5. AGAakash Gupta27:12

      ... their data for 2024, and I compared the revenue of OpenAI and Anthropic in 2024.

   6. RMRoger Martin27:19

      Yep.

   7. AGAakash Gupta27:20

      Anthropic had a billion dollars in revenue, 70% came from their APIs. OpenAI had $3.5 billion in revenue, 70% came from consumers.

   8. RMRoger Martin27:31

      Yep.

   9. AGAakash Gupta27:31

      So what I'm seeing is that OpenAI is definitely winning amongst consumers. If you look at Google search trends, they're at 100. Anthropic or Claude is at two, so it's like a 50x difference on the consumer side. But on the enterprise side, I'm seeing some clear areas where potentially Anthropic could play. So I'm thinking about-

   10. RMRoger Martin27:51

       Perfect

   11. AGAakash Gupta27:51

       ... on the API side for enterprise, basically creating enterprise-grade AI assistance. So I talk to VPs of product all the time, and they always say, "Yeah, product managers, they tend to prefer the Sonnet 3.7," kind of like you- [chuckles]

   12. RMRoger Martin28:04

       Yeah

   13. AGAakash Gupta28:04

       ... "to the ChatGPT o3-mini high."

   14. RMRoger Martin28:07

       Yeah.

   15. AGAakash Gupta28:07

       And so subjectively, product managers are preferring that, so... And then the other area I'm seeing it is in coding, which is, uh, it's powering Cursor, Bolt, Replit, Lovable, all these AI prototyping startups that are coming up. So for me, it kind of seems like it's like writing and coding from the API could potentially be its where to play. And so then-

   16. RMRoger Martin28:26

       Love it

   17. AGAakash Gupta28:27

       ... how to win is, like, get more data, right? Like work with Cursor, work with GitHub Copilot, get the most coding data, get the most writing data, and then also get the best talent. So we see them hiring a lot of ex-OpenAI people or directly poaching the best from OpenAI and Google. And I guess to the must-have capabilities then, they have this idea of constitutional AI, right? Where they have a constitution of ethical principles. So that's one, and then I think they have this really long context window. So basically you can, you can have way more tokens in Claude versus ChatGPT. And then I guess the final component, like supporting systems, I'm thinking about is like a really good research product feedback loop with the additional data you have, the safety, 'cause we keep emphasizing that. And then I think probably the best thing for them versus, let's say, a ChatGPT, 'cause they're, ChatGPT is releasing all the time, is maybe a slower rollout because we're trying to be enterprise grade.

   18. RMRoger Martin29:22

       Yeah.

   19. AGAakash Gupta29:22

       So that's how I thought about it.

   20. RMRoger Martin29:23

       I love it. I love it. I mean, uh, when I said I'm not sure what the where to play should be, but it should be narrower, you've picked, you've picked a narrower, and narrower is not bad. You pick a narrower where to play where they have a plausible chance to be great and, and, and why? It's because, it's because there are, there are trade-offs their competitors would have to make to at- to attack them, right? So if actually having slower release cycles or longer release cycles so that it's really enterprise grade releases, right? But the competitor, ChatGPT and others, wants fast cycle time, and we'll fix the bugs as we, as we go, no problem, right? That's something that there's a trade-off. If you wanna keep your customer, uh, um, uh, your consumer base happy-Right?

10. 30:20 – 35:23

    Sponsor break: Linear (product planning + execution in one system)

    1. AGAakash Gupta30:20

       Hey, let me take a quick break to talk about something that's completely changed my product management workflow, Linear. As a PM, I was drowning in tools, one for planning, another for issue tracking, roadmaps and sheets, and jumping between Slack, Intercom, and app reviews just to piece together customer feedback. Sound familiar? I was spending more time keeping systems in sync than actually building product. Every time development kicked off, my carefully crafted plans would immediately need updating. I was the human API between all our teams constantly chasing updates and translating between tools. That's why I love Linear. I can capture customer feedback, shape product ideas collaboratively, quarterback cross-functional teams, and monitor development progress in one place. It cuts through the maze of disconnected systems that were complicating my life. Product teams at OpenAI, Vercel, Brex, and Cash App all use Linear. If you're tired of spending your days keeping different tools and teams in sync, check out Linear at linear.app/partners/aakash. That's linear.app/partners/aakash.

    2. RMRoger Martin31:12

       You're, you're gonna piss off enterprise. That's the perfect situation, right? The perfect situation. What is that in capabilities? It's not a can't. ChatGPT could do that. They could slow their cycles. It's a what. It's a won't, and won't is often very powerful. Won't happens when there are mixed motives, when you have to give up something you really don't want to give up, right, in order to follow, uh, a c- a competitor. And that was, you know, that's, that's like Tesla, right? Uh, uh, you know, the, the, the big auto OEMs had a huge advantage on Tesla in almost everything Tesla started to do, right? How to build at scale, all of that kind of stuff. But they said, "No, we don't like that because we don't know how to make a buck at it, and we know how to make lots of money at ICE. Let's hope this thing doesn't happen," right? That's a won't. So what your, your strategy, which I like, for what it's worth, I like, is, is protected by a won't, I think. Uh, and that's, and that's, that's what you gotta look for in, in, in strategy. Can my ca- capabilities be protected by a won't? When they figure out I'm doing well and making money, will they still say, "Oh, I don't think I wanna do that because here's, here's, uh, kinda how it'll, uh, how it'll hurt, uh, my, my... the core of my business"?

    3. AGAakash Gupta32:45

       That is so powerful, that you really wanna create those won'ts, and it sounds like to do won'ts, then you need to really deeply understand the strategy of your competition.

    4. RMRoger Martin32:55

       Oh, yeah. And you need to deeply understand the customers. You, you, you exhibited that. Like, as a strategist, you exhibited that. It's like, "Oh, here's what the enterprise people want, and it's different than what these other people want," right? That's, that's, that's understanding your customers well enough to understand a where that somebody who doesn't understand them as well won't think is a where, right? Like if, if, if people have in their mind the only customers of LLM AI are individuals, right? They won't think of your where 'cause they don't believe your where exists. But you've looked at the space enough to say, "Oh, no, no, no, no, no, no. There's two very different wheres." And oh, how are they different, uh, Akash? Oh, well, one wants enterprise grade. That means slower, uh, releases that are more buttoned down by the time, uh, by the time you do it. It means more partnerships with other organizations. It means collecting data for your LLM differently. Like you then spooled up a whole bunch of things that, that helped you understand a different space, which then opens itself up to a different how. You know, when your where choices... What I find in strategy is when your where choices are the same, it gets exponentially harder to have a distinctive how, right? It's, it's easier. Just, just think of your own situation. The, the one you, the, the one you presented. By going to that where, you suddenly saw some hows. You wouldn't have seen those hows if you would've had the same where because those hows didn't exist, right? Um, so that's, that's why I, I always tell people who wanna do Playing to Win strategy is that where to play, how to win has to be a matched pair. Don't make a long list of potential where to plays and then a long list of how to wins and then sort of think, uh, "Let's pick one of each, one from column A and one from column B." No. You should think about pairs. I could have this where to play, how to win, or this other where to play, how to win, or this other where to play, how to win. They're pairs. Uh, and you, you in your, in your, uh, kind of, uh, nice, short, concise strategy story identified a pair, not how to wins and where to plays that were sort of independent of, uh, of one another. So good work.

11. 35:23 – 41:23

    Planning cycles: initiative lists create comfort; strategy requires bets

    1. AGAakash Gupta35:23

       So they all have to be connected, and I think one of the things that gets in the way of all that connectivity for product managers and product leaders in particular, is we get these very small windows to do strategy work. We're so obsessed with execution and features. Everybody's asking us about the next feature we're gonna release, but luckily we get either an annual planning or a half-year planning cycle. But in your work, you've really identified that, and emphasized that there's a big difference between planning and strategy. So what do people get wrong in these planning cycles?

    2. RMRoger Martin35:57

       Well, they, they, they just, they just make lists of stuff. And, uh, like if the strategy for your product sucks, there's no real where to play and there's no real how to win. I, I couldn't care less if you execute it well. You have a list of initiatives, and you do all of them because at the end of the year you'll say, "Wow, that wasWe worked so hard this year. We had 37 initiatives all mapped out on some big Gantt chart and, and, uh, look at that. Ta-da, we did them all. But we didn't sell anything. That's, that's not because you didn't complete the Gantt chart, you didn't complete all the initiatives on time, on budget. It's because people and customers said, "Eh, couldn't care less about your, your, uh, your product. And in fact, there's a, there's a better one, and actually it costs a little bit less, and it's a lot better." So, so that's, that's the problem with planning. Planning says we're gonna do these st- things, right? Isn't that what planning is about? We're gonna do these things.

    3. AGAakash Gupta37:03

       Yeah.

    4. RMRoger Martin37:03

       That's what a problem-

    5. AGAakash Gupta37:04

       This is our roadmap.

    6. RMRoger Martin37:05

       Strategy says we're gonna seek this output, this outcome. Uh, and you gotta, you gotta be focused first on that because without a theory of how you are going to produce the outcome in question, without that theory and a good theory, uh, for that, like your anthropic, I like your anthropic theory. Uh, unless you have a good theory for that, it doesn't matter a whit whether you do a bunch of sensible-sounding initiatives. In fact, chances are it would be better for you if you laid on a beach for a year and closed up, uh, shop, 'cause you're gonna close up shop 'cause you didn't sell anything despite working like a dog. Just go lay on a beach or, uh, you know, polish your resume. Um, that's, that's the difference. And, and the tricky thing, right, is plans make people feel very comfortable. They know what they're supposed to do, and they come into work and say, "I'm gonna knock this off the list," and they can tell their boss, "Look, you know, I knocked this off the list. This was my OKR, and I, and I, uh, and I did it, and you should pat me on the back now." Right? Um, so it's v- very much more comfortable. Strategy says we gotta make some, we gotta make some bets. And because we think Akash has got this right about the APIs for the corporate market and the, and the, and the partnerships, we're gonna spend our time on, on making the corporations, you know, gleefully happy and are, and figuring out how to have the best partners. Um, and we're not gonna spend a bunch of time on this other stuff, and we're not gonna do releases every week, uh, to make these con- consumers happy, and we're not gonna advertise on network TV to c- to, uh, uh, to consumers. Um, that takes some guts, right? Because it says we're gonna take our resources and bet them behind this theory of winning.

    7. AGAakash Gupta39:16

       So it sounds like if you're one of those product leaders in a planning cycle, the very first thing you wanna do is put away all your roadmaps and your planning documents and first review the company strategy itself.

    8. RMRoger Martin39:29

       Mm-hmm.

    9. AGAakash Gupta39:29

       And say, "Do I agree with this? What are the implications for my product strategy? Where are we playing? How are we gonna win? What are the needed capabilities? How would I make sure that those all have connections?" So it's basically flipping it, where people will create the list of initiatives and then create the pros. Instead, create the thinking, the pros first, get a lot of agreement and alignment on that, and then let the initiatives naturally fall out. Is that the right way to approach planning?

    10. RMRoger Martin39:56

        Yes. And guess what? You'll have fewer fights about the initiatives, right? Like if you think about most planning processes, like everybody sits around the table and they've got their own favorite initiative, and they're like, uh, and, and then, then the CFO is sitting there or, or the finance person on your team is sitting there, "We don't have that much money, so we can't do yours, Akash, and, and that guy's or gal's over there." And, and you have these big f- you know, fights about, about it because, because you want it on the list because you wanna do that thing, right? Uh, and, and, uh, if instead you have a strategy, it's pretty obvious. You can just ask, "Does that initiative contribute to compelling the customer to act the way we are, we believe they will act in the context of this strategy?" And the answer, I, I can promise you the answer is, is typically quite clear. It's like, "Why would, why would we do that? You know, X, uh, and that other one, oh, no, no, no, no, that, that, and that we gotta get done in the first quarter 'cause we gotta get this sort of momentum going on that. So, so yeah, yeah, yeah, yeah. That one, that one, that one goes right away. That one could wait. It's important, but it could wait a little bit." It all falls more easily into place because it, it can be hung, if you will, on the theory. And some things when they're, you try and hang them on the theory, they fall off because there's no hook that, uh, that hangs them there.

12. 41:23 – 43:22

    What to do when strategy is ‘above your pay grade’—and how to escalate well

    1. AGAakash Gupta41:23

       Is there an element of this where if you are too low in the organization, like if you are truly working with the developers on some small feature, that you can't really rework the strategy, and it's really important for you then to understand what strategic choices other people have made and maybe feed back into their decisions?

    2. RMRoger Martin41:44

       Yeah. No. Uh, but the real choice in that case is, uh, how soon am I gonna quit? No, man, seriously, right? Uh, like, uh, the... If I were, if I were in that s- in that situation, I would, I would present the case to say, "Here's why anything we attempt to do here is screwed. Uh, here's why. Here's what I would change, but that's not, it's above my pay grade. But I would tell you this is what I would change, because otherwise this is the charge of the light brigade, uh, and we're all gonna get mowed down. Uh, and so-I'm giving you this opportunity, uh, and, uh, if not, I get it. You know, you're, you're my boss. You're more senior than me. I may not be seeing something that you, you see, although you say, "Hey, you know, explain to me how I've got it wrong." And, and typically they won't be able to because they're silly. Uh, and, and then the very best thing you can do for your career is leave in the next five minutes a- and go to a place where, where y- you've got a chance, where you've got a chance to have a, a, a good outcome.

    3. AGAakash Gupta43:01

       So I think that the examples really helped me, at least when I was reading and analyzing and listening to a lot of your content. And one of the examples I love how you describe is Southwest. And I think-

    4. RMRoger Martin43:11

       Mm-hmm

    5. AGAakash Gupta43:11

       ... if people had trouble with our Anthropic example, they might be able to grok the Southwest example. So can you walk us through how they made a bold where to play and how to win choice that others couldn't copy?

13. 43:22 – 53:57

    Southwest Airlines: a tightly integrated where-to-play/how-to-win system

    1. RMRoger Martin43:22

       Yeah. Yeah. So, so Southwest Airlines, uh, took shape in the, in the early '70s. Uh, uh, Herb Kelleher, the legendary, uh, CEO, he had a couple partners, but he's the guy who ended up being the legendary CEO. And, and, um, uh, and he observes the airline industry and says, "Gee, they spend a lot of time on the ground, and it seems to me the only time you make money is when your plane is in the air, right? Uh, and so what, what could happen if we set up a system designed to have our planes in the air all the freaking time? Um, a- and they're on the ground most of the time. Um, I think we can beat up on them." And he said, "Well, what, what keeps them on the ground for longer periods of time?" Well, they have a hub-and-spoke system, right, where they fly all the planes into a hub, and they have to wait for the last plane to get in and then fly them, fly, uh, fly them all back out. So they're kind of waiting around for the last, uh, for the last plane. They have a whole bunch of kinds of planes, um, and that means adjusting the gates every time a different plane comes in, and that take, that takes, uh, extra time. They have advanced seat selection, so it takes people a lot longer to get into their-

    2. AGAakash Gupta44:58

       Mm-hmm

    3. RMRoger Martin44:58

       ... uh, seats. They have interline baggage, uh, kind of, uh, uh, programs where they'll take bags that somebody flew, uh, you know, a United flight into, into Chicago and flew an American flight out. American's got to get the bag from, uh, United. Takes a lot of time, causes, causes, uh, uh, delays too. So why don't we, why don't we do the following? Why don't we say we're gonna only fly point to point? Our planes are just gonna go back and forth and back and forth between, between points. They don't wait for anybody at all. How, how's about we just have one kind of plane? How's about 737s, narrow body? How's about we don't have any, uh, advanced seat selection, and we have a system for getting people on and off the planes, uh, that much faster? Um, and while we're at it, there are o- a bunch of other costs that'll have, that'll... Sorry, and that, and that'll get us 15-minute gate turns. Our competition often has an hour, two-hour gate turns. We'll have 15-minute gate turns. Our planes are on the ground for 15 minutes at a ti- at a time and flying the rest of the time, making us, making us money. Then he did a whole bunch of other things. He said, "You know, travel agents get paid too, uh, too much, 7% right off the top. Let's encourage people to book on the internet. How about that for a concept?" Now, when they were doing it, that was actually, actually quite unique, uh, but it's shown they're correct, right? And the travel agency business has gone to hell in a handbasket because people just go on Expedia and, uh, or, or Canoe or who- whatever and, and, um, and book, book themselves. How's about we, we fly short, short-haul flights where we don't actually have to serve food, so catering the airplane, that also helps get the 15-minute turns. There is no such thing as catering the, uh, uh, the airplane. Um, and our where to play is gonna be as a replacement for Greyhound. We'll have really frequent departures. They'll be really cheap. It won't cost that much more than a Greyhound bus and get, get you there faster and, and, and more conveniently. And, and, uh, they started with, uh, you know, three cities, uh, uh, Houston, Dallas, Austin in, uh, uh, in Texas. Uh, that's why they're Southwest. They only were in the Southwest, and slowly but surely used that model to expand across, uh, the country. And all the big airlines simply couldn't stop them. There was nothing they could do to stop them. They would get a certain percentage. Oh, and by the way, we're gonna fly into secondary airports where the, where the congestion is, is, uh, it's much less. Actually, parking costs and the like are much less, so the overall total cost to the, to the customer is, is, uh, is less. And so nobody could s- nobody could stop them. What would have they had to do to stop them? Well, American or United would have to say, "We're, uh, gonna sell most of our fleet off. We're gonna totally... A- and then buy all the same, the, the same plane. Uh, we're gonna tear up our route schedule and go, uh, point to point. We're gonna tell, uh, travel agents to go bye-bye. We're gonna tell our, all of our, uh, customers that there's no advanced se- seat selection. There's no first class. There's no none of that."Right? They just all just said, "Life's too short. We're not gonna do that. And they're little anyway, and they're low cost, and yeah, da, da, da." And so they just sat, sat by while Southwest went across all of America and became the number one in passenger seat miles and the only consistently profitable airline across all of them. Never's gone into Chapter 11, didn't need bailouts, uh, and any of those, any of those things. So that's, that's a strategy of making a completely different set of choices that all fit together and, and reinforce their where to play, their how to win. And it all plays out in, in, in different set of capabilities and management systems, right? If you have the same capabilities and management system, the last two boxes o- of the diagram, um, but a really clever where to play, how to win, right? What'll happen when people figure out your where to play, how to win is clever, right? They'll redeploy their exactly the same capabilities and management systems to your where to play, how to win, and make it a disaster. You know, Southwest, right, in union negotiations... Everybody says, "And the way Southwest, uh, gets their low cost is by being non-union." Er, non-union. No. They're e- as unionized. They have the same percentage of unionization as the, the other, uh, big carriers. But in union negotiations, they are very, very generous on pay. They typically are the highest paid, uh, w- uh, workers in the industry. For the low-cost carrier, how do you do that? But they are completely, completely intransigent on flexibility. They won't have, you know, you know, you're part of the bring ladders to the plane union. You're part of the, uh, taking bags out union. You're part of the check-in people. You're part of the people who put people on p- on planes, right? Um, uh, you have to have complete flexibility. So you get paid more, you have more profit share, uh, and complete flexibility. Meanwhile, the other airlines are trying to grind down labor costs and, and, and so your system for union relations, labor relations, is completely different. And I saw this in play. I gotta, gotta say, I'm just... Some of the Southwest stories are great. I was flying to give a speech. I live in Fort Lauderdale, and I was giving a speech in Orlando, and Southwest is the, is the only carrier that, that, uh, f- uh, flies there. And so I was flying from Fort Lauderdale to Orlando, and I, I sort of... My schedule was such that I kinda had to have, be on this plane and, and that plane be relatively on time. There just wasn't any choice in my, in my schedule to, to be on stage on time. And so I'm sitting there, and there's becomes this giant lineup of, of wheelchairs. Like, I'm not exaggerating. There's at least 40 wheelchairs. You know, normally there's one or two.

    4. AGAakash Gupta51:39

       Yeah.

    5. RMRoger Martin51:39

       And there be more people come, these old people in these wheelchairs than I, and they're all lined up. And I'm like, "This is gonna take an hour. This is gonna be horrible. I'm gonna be so, so late." But then, you know, the door opens. The passengers, uh, ki- kind of, uh, uh, come off. And then from all across the terminal, these Southwest people descend on this lineup, and suddenly there's one Southwest person with every wheelchair, right? It's not like one guy goes in and then comes out and does the next one. Literally, all of... And they're suddenly as if the shotgun goes on, or starter pistol goes on and all of them are on the plane in like five minutes. I, I was like agog, but that, there I saw it right in front of my eyes, the Southwest, uh, strategy and the management system. Flexibility, uh, high flexibility, high pay, not low flexibi- uh, low flexibility, uh, low pay. Uh, I saw it in action, and it got me on time, and that plane was on the ground for 15 minutes and loaded up 40, uh, aging people in wheelchairs. Cool. That's so cool.

    6. AGAakash Gupta52:58

       And what I love about... What I really took away listening and reading to the Southwest example is a couple things. The first is how integrated, again, these five steps are, right?

    7. RMRoger Martin53:08

       Yeah.

    8. AGAakash Gupta53:09

       The-

    9. RMRoger Martin53:09

       And-

    10. AGAakash Gupta53:09

        And how much that when you make the early decisions of where you're gonna play and how you're gonna win, the other decisions become really natural, right?

    11. RMRoger Martin53:18

        Yes.

    12. AGAakash Gupta53:18

        Like, these decisions to potentially pay our pilot, uh, all our staff more, for instance. Like, this is just a mind-blowing decision that they made, but it follows naturally based on-

    13. RMRoger Martin53:28

        Yes

    14. AGAakash Gupta53:28

        ... some of the other strategic choices and how kind of all of these five pieces connect.

    15. RMRoger Martin53:32

        Yes.

    16. AGAakash Gupta53:32

        Another takeaway for me is-

    17. RMRoger Martin53:34

        And can I just interrupt you there before you go to the next one? And think of it if it was have been on a list of, a random list of initiatives. Somebody would've said, "You're out of your mind. We're gonna pay them more?" Right? Because it, it doesn't make any sense. But as you say, in the context of those other choices, it's like, "Are you an idiot or is this the r- the only thing to do?" So you're, so you're, you're very much right on that.

14. 53:57 – 1:00:29

    Strategy needs a theory of the future + ‘what would have to be true’ (Bayesian updates)

    1. AGAakash Gupta53:57

       And then the second thing is heading to where the puck is going. What we heard from both the Walmart example missing out on the Amazon opportunity and the Southwest example is seeing where the tech is going. And hopefully for Anthropic, in my case, understanding that there's gonna be a huge enterprise AI adoption. And so you really need to have some sort of hypothesis about the future. Being a strategist also means being able to have some opinions about the future.

    2. RMRoger Martin54:25

       I think that's true. I mean, uh, uh, you know, I, I, I think you maybe noticed I used the word theory a number of times, right, in this. You have to have a theory about those things. Are your theories always gonna be right?No. But having the theory that the future's gonna look a lot like the past, which is the dominant th- uh, theory in business, right? The, the dominant... One of my, one of my mentors, Chris Argyris, c- called the dominant theory in use, what people actually do rather than what they espouse. The dominant theory at use is the future is gonna be like the past, so let's keep on keeping on, right? That's a bad theory. Now, the future nobody knows for sure, and so it's a bet. That's why I say strategy is if you, if you think strategically, you know, put your mind to it, you can dramatically improve your odds of success. But you c- there's no such thing as perfection in strategy. It can't be perfect. But what I say is you need to have a theory about the future, you know, to say, "This is the where to play, how to win that I think will work well with the future I hypothesize." Then I have this, this, this, uh, question. I say the most important question in strategy is not what is true, it's what would have to be true. So you say then, "Okay, so I'm gonna head out on that course based on this theory," then what would have to be true? What would have to be true about customers? What would have to be true about the distribution channel? What would have to be true about the industry, about our competitors? You s- put all those what would have to be trues down, and what I say is you ha- pick alternative theories about the future, do this for each of them, and ask yourself the question, "For which theory are the what would have to be trues feeling more likely to be true?" Right? And then you pick the one where, where you feel most confident that what would have to be trues are going to become true, and we can help make them, uh, come true. But then I say you watch them like a hawk. What I say is you tack up that, that what would have to be true chart on your desk right in front of your, uh, your, uh, on your tack board in front of your desk or beside your desk, wherever it is. Uh, and every morning come in and say, "What I'm doing depends on these what would have to be trues getting more and more true over time rather than less and less true." And if you come to the office and you say, "I think those are getting less true," what do you do? Rethink. Ask yourself the question now, Bayesian updating. You know, I'm now, I'm not two years ago when I put that in, in federal. What has the additional data, uh, c- you know, caused me to s- to think might be other than I think, and then you rethink and, and, uh, adjust your strategy.

    3. AGAakash Gupta57:20

       And I think that's a really good template for product leaders who are thinking about those planning sessions, is go back to the original strategy and say, "What are the Bayesian updates we're making about the predictions we made about the future? What have we learned that's new? How are we gonna change that?" I think that's really how you take the annual planning cycle and you make it not just a planning cycle, but actually an update on your strategy.

    4. RMRoger Martin57:42

       I like that. Hadn't thought of it that way. Maybe I'll write something on that. I think that's a good, I think it's a good, uh, I think it's a, it, it's a really concrete, uh, to, to do. Next time you start a planning session, ask the question, uh, the, the question that, uh, that you've, that you've asked. I think it, I think it would reduce the amount of autopilot that goes on. Like, there is a, wouldn't you agree? There's lots of autopilot. It's, uh, even though the decision was made three years ago, it's just, well, you know, kind of what initiatives do we have to do to keep, to keep on, uh, re- refining this, uh, and that sort of, you know, kind of autopilot instead of let's just step back. Don't have to take a long time to do it, but let's just ask the question, what, what has changed over the, over that, if it's, uh, two years, what's changed over that two, or even last year. What's changed since last year that might cause us to think a course correction would be in order versus nope, keep, uh, plowing forward.

    5. AGAakash Gupta58:40

       Yeah, I think the autopilot curse is one curse. I spend a lot of time with middle career people, so the curse I see is the kind of throw your hands up curse, which is like, "That's above my pay grade." [chuckles]

    6. RMRoger Martin58:52

       Oh, yeah.

    7. AGAakash Gupta58:52

       And what I always encourage folks to say is, like, especially if you have the word product in your title, assume that it is in your pay grade to be questioning those assumptions and surfacing that information up to the people who can make changes.

    8. RMRoger Martin59:06

       Yeah. I, I would agree. I mean, like, and, and part of this just has to do with, with maturity. Like, if you surface it in the form of, as any plain, as, as any fool can plainly see, you're gonna get slapped down. But if you surface it as, "It feels to me as though we had this set of assumptions about what would have to be true when we made this, and that, and that was the best we could do at that time, and now we've got this additional information that suggests that some of those, uh, kind of might not be quite as true as we thought. That gets me thinking that maybe, maybe we need to, uh, modify the strategy. What do you think, boss?" Right? If, if you do that, uh, in my experience, bosses don't chop your head off. They say, "Well, I got a thoughtful person working, uh, uh, with me. He or she is not saying I'm an idiot. Uh, he's saying it's prudent for us to give this some consideration before continuing to charge down, uh, the path." And I, and I think, I think if you're not willing to do that as a product manager, you ain't ever gonna be the boss.

    9. AGAakash Gupta1:00:20

       Yeah. You're gonna need to put on that boss hat way before-

    10. RMRoger Martin1:00:23

        Yeah

    11. AGAakash Gupta1:00:23

        ... so that when you finally get there, you're used to thinking that way.

    12. RMRoger Martin1:00:27

        I agree. I agree. It's, uh-

15. 1:00:29 – 1:11:16

    Finding competitors’ ‘won’ts’: mixed motives as a source of defensibility (Olay, Tesla, Amazon, Dollar Shave Club)

    1. AGAakash Gupta1:00:29

       So a third takeaway I would take from the Southwest, Anthropic, and Amazon, Walmart stories is how important it is to understand what your competitors won't do.

    2. RMRoger Martin1:00:41

       Yeah.

    3. AGAakash Gupta1:00:41

       And that was, that was a really important takeaway from all three of these, and I think that's the one that I even sometimes struggle with. I'm just thinking about it right now, like versus my podcast competitors, what they won't do, and I'm just like, gosh, I guess they would just do everything I'm doing. How do you think about what they won't do? Like when you're coaching people and they're having trouble with that, how do you work through that?

    4. RMRoger Martin1:01:03

       Well, I, I, I try, I try to get them to, to role play to a certain extent, right? Uh, you know, just put yourself, uh, um, you know, uh, we... For in, in Playing to Win, as you know, we used the Olay example and, and the key, the key won't there was the number one selling skincare brand in the world at the time at a price point now just slightly higher. They are 20 bucks, and we were $18.99 for the new Olay product. We'd taken it up from a $5 price point and made it a much higher quality product and sell it for. But they were gigantic, uh, three-ish times as big as we were at, at, at the time. Um, and we were gonna sell in the mass channels, kind of, uh, Walmart, Target, uh, Kroger's, uh, uh, uh, Walgreens, CVS. Those are, we call them the mass channels, uh, versus the prestige channels, department stores, Sephora, Ulta. Um, uh, they were in, in those prestige channels. The big won't that we had to believe in was that, uh, uh, their parent, Estee Lauder, uh, wouldn't say, "This is an existential threat. We're gonna go into mass." Because if they would've gone into mass, I think they would've overwhelmed us. They were beloved. Uh, there were reasons, reasons, uh, uh, why we had a, a real chance of winning because going to a prestige channel made women take an extra trip. They were in the mass channels every week, and so we were gonna give them something that was prestige-like in the mass channel, not an extra trip. That goes right out the window if Clinique does the same thing, like right out the window. A big, a big thing that was, uh, kind of w- working for us, and they'd probably get more shelf space than we would do because they were three times as big as, uh, we were. And the, the, the mass trade would, would think, "This is great. We gotta really suck up to, to them 'cause this is the first, this is the first Estee Lauder product line that, that we're getting in the mass," right? So severe, horrible threat. Why did we think it would be a won't? Well, not only does Estee Lauder own Clinique, the Estee Lauder brand, Bobbi Brown, MAC, and a half a dozen others. They're the dominant player in prestige. What do you think the prestige channel would've done to all those other brands if, uh, if Estee Lauder would've said, "We're gonna take the biggest one, the one that you make the most money on, and we're gonna take it over to your competitors, the mass channel"? They would've taken Estee Lauder out back and [imitates smashing sound] .

    5. AGAakash Gupta1:04:05

       [chuckles]

    6. RMRoger Martin1:04:07

       And so they haven't. It's now, uh, yeah, 24-ish years.

    7. AGAakash Gupta1:04:16

       Yeah.

    8. RMRoger Martin1:04:17

       And they haven't. And so that, that was a very powerful won't. And the won't tends to come with this idea of mixed motives, right? Which is, which is, which is that they would have to give up something that was valuable to them to do the thing we want. It's not just an ad. In that case, what Es- uh, what Estee Lauder, the company, the parent company, had to do is say, "How much will we get punished by prestige across our, the re- the prestige channel across the whole rest of our line?" That's a bit... That's a negative number against the positive of how much we'll sell in this new channel. And the answer was little positive, gigantic negative. Gigantic negative. And so it was a, it was a won't. And the automakers said, "Okay, every, every, uh, electric vehicle we've, we've tried to sell, uh, thus far when we've, when we've created them has lost X number of dollars per vehicle. Every ICE vehicle, internal combustion engine vehicle we sell, we make this much money. Uh, shall we start to take the investments that we take to keep on making our ICE vehicles great and put them over here?" It was like, "Why the hell would you ever wanna do that?" So Tesla says... And Tesla, you see, has what? Zero mixed motive. How much money did they lose on not selling ICE vehicles? One big zero, right? Um, and so, so if you can exploit the mixed motives of your c- uh, competitor with your strategy, then that is a, that is a wonderful, uh, wonderful thing. And Amazon, uh, did it. Tesla, uh, did it. Olay did it. Uh, and in each case, you know, it was worth billions and billions and billions of dollars. Um, and like it's somewhat hard, hard to say, you know, your, the, the company in question is stupid, right? Right? I mean, that happened, you know, if you want, uh, the opposite story for Procter & Gamble, it was Dollar Shave Club, right? When Dollar Shave Club came into existence, there was a big won't for P&G to follow.So let me get this straight. You say to all your retailers, because you have a gr- 100% of your business virtually is retail distribution. And you go to them and say, "Guys, we're starting this club where we're gonna start selling directly to cons- to customers, to consumers. What do you-

    9. AGAakash Gupta1:07:10

       For cheaper than you do.

    10. RMRoger Martin1:07:12

        Yeah, yeah. What do you, what do you think of that? Right? And the answer, the answer would've been like, you know, "Well, no problem. That's okay. We'll just de-list you," right? It would've been a, a disaster of epic proportions. And so we had to let Dollar Shave Club do it. But then in due course, we went back to the retailers and said, "It's coming out of your pocket too, right? You know, you're getting zero dollars from Dollar Shave Club, zero dollars from Dollar Shave Club, and Gillette sales are disappearing. How's about we do this? We create a joint venture and we give... We keep track of where we sell, uh, to, uh, where the customers are, and if they're in your catchment area, you get your share of the share of money we make to- uh, make together." If we would've gone to that, that before Dollar Shave Club, they would've said, "Are you out of your effing mind?" Like, "That's stupid," right? We literally had to let them see that this thing was happening, uh, and then say, "Here we have a solution, uh, for you." And in that case, and we also competed aggressively enough during the time that Dollar Shave Club never made a buck ever. Uh, they did manage to sell to Unilever for... I always forget if it's one billion or 1.1 bi- one or $1.1 billion. Uh, Unilever couldn't make a buck on it and recently sold the mo- uh, privately, but the, the scuttlebutt is for $70 million, so they lost a billion dollars, uh, uh, on, on that. But lots of people absolutely slayed Procter & Gamble for being so slow to respond, and why didn't they think of it and there... Well, you know, uh, we had mixed motives. We want, we wanted to protect the business, uh, with our channel partners, uh, and took, and, and took a beating for it. But that was clever. The entrepreneurial kids, the guys, I think it was three of them who started Dollar Shave Club, got to sell it for a billion dollars. I'm sure, you know, their LPs made most of that, but they probably walked off with 100 or a couple hundred million dollars. So they f- they saw mixed motives, then they went at it and made a bunch of money.

    11. AGAakash Gupta1:09:45

        I think exploit the mixed motives. That if my Anthropic strategy works, they'll have to exploit ChatGPT's reliance on consumer.

    12. RMRoger Martin1:09:53

        Yes.

    13. AGAakash Gupta1:09:53

        So it seems like mixed motives is a really good disruption strategy if you have a bigger target player. And it always feels so scary, like, "How do I compete against them? They have more money. They have more resources." So try to exploit those motives that they have because of those money and resources.

    14. RMRoger Martin1:10:10

        And, and as part of that, what can you not do? Replicate their where to play, right? Because then there you'll be replicating their mixed motives, right? You'll be just the same as them, and what you're saying is even though we could say Anthropic replicates their where to play, yes.

    15. AGAakash Gupta1:10:32

        Right now.

    16. RMRoger Martin1:10:32

        They sell to consumers, but, but really the meat of the business is, is, is in the area that, that exploits the mixed motives of their, of their bigger competitor. But that, that would be like... So if you, if you have that in your mind, "I'm going to exploit the mixed motives of the incumbent, uh, uh, uh, to carve out a business," the next thing you have to do is say, "How's my different where to play going to enable me and, and enable me to do that?" If you don't ask that question, chances are you're not going to have a winning strategy.

    17. AGAakash Gupta1:11:12

        Yeah. If you replicate their way to play, you replicate their mixed motives.

    18. RMRoger Martin1:11:15

        Exactly.

16. 1:11:16 – 1:19:57

    Roger Martin’s work today: advisory model, writing flywheel, and monetization

    1. AGAakash Gupta1:11:16

       Then you have to, you have to look at the interconnectedness, which goes back to our first takeaway. So that is our 65-minute walkthrough on strategy. Obviously, you have written 12-plus books. You have tons and tons of resources out there for folks to go... if they wanna go further. And that's actually where I wanted to shift to right here at the end. I like to ask all my guests a little bit more personally. What does the business and time allocation of Roger Martin look now after being a world-renowned strategy author, having retired from being dean of School of Business? What is keeping you busy now?

    2. RMRoger Martin1:11:54

       I, I spend my time split about 50/50 now. So I used to do three things, academic administration, writing, and advising CEOs on, on strategy. And I, I said after 21 years of it, enough of, of that, uh, academic administration piece, and now it's largely split 50/50. Uh, uh, I have like about a dozen CEOs who I advise on strategy, uh, kind of around the world, sort of fun. Uh, and the other half of my time writing. The biggest use of my writing time these days, and I would say for your listeners, please ch- please check it out. If you liked "Playing to Win," I have had for the last four and a quarter years a series on Medium, on the Medium platform, called the "Playing to Win Practitioner Insights" series. And every week for the last, you know, four-plus years, so over 200 pieces, I've written a, a-1,500 to 2,000-word piece on some aspect of, of strategy. Like Mondays is going to be personality people. And people will ask me questions, personality types, uh, Big Five, uh, Myers-Briggs. Does it-- How, how does that relate to you being the strategy? That's gonna be Monday. Uh, and so anybody who likes Playing to Win and likes the conversation today, there are literally, um, five pla- five, five and a half Playing to Win worth of, of, uh, of topics. They're all on my website. So my website is www.rogerlmartin. You gotta have, remember my middle initial, or you'll get a, uh, real estate agent in Houston, who's very nice, but I, I, I try to keep him from being inundated with my, uh, my f- uh, uh, falsely dir- uh, directed emails. Www.rogerlmartin.com, and you just look for my, my Playing to Win Practitioner Insight series. So you don't even have to be on the Medium platform, which is only 50 bucks a year. But if you don't want that, they're all freely available, uh, and you can just search through for topics. You know, how to take on a big, uh, big incumbent. Uh, how do you deal in a growing industry? Like there, there are all details on the general theme of, of Playing to Win.

    3. AGAakash Gupta1:14:12

       And I've had several really famous authors on the podcast, and I always ask them, "What does the monetization pie chart look like?" And the most surprising insight is usually the time pie chart will be something like ha- 50% writing, but the monetization will be a lot less for the books and a lot more from the consulting. Is it similar for you?

    4. RMRoger Martin1:14:33

       Absolutely. Um, like I don't even try to monetize the writing directly. It's indirectly, and I can't tell you how many, how many times a CEO has called me up and said, "I r- I read your reading- Medium piece, and I'd love to talk more about that." So you could say it's not monetization because I didn't charge him for that Medium piece, right? But you could say it's monetization because, you know, the last time that happened, it was, it was, uh, over a million bucks, uh, of, of, of consulting, right? And so, so that's, that's basically w- I've come to the conclusion of is if you've got good ideas, and I believe I do, otherwise I wouldn't write. I would be insane then. If [chuckles] so I believe I've got good enough ideas to write, and I know because people read them that, that, that, uh, uh, that they must be useful ideas. Getting them out to the widest audience is key, not putting them behind a paywall that makes sure nobody's, nobody sees them. Get them out w- uh, widely, and business of the sort you wanna do will come to you. Uh, so that, that is my... That is, for what it's worth, a monetization, uh, kind of technique. Like I, you know, royalties on Playing to Win, it's split 50/50 with, with AG. I don't know. It's been out 12 years. I'd have to look. I bet, I bet together we've, we've gotten a million, maybe a million two in, in, in royalties. Um, that would be a tiny, tiny proportion of the consulting, uh, uh, revenues that I've done in, in the 12 years since, since the, the publication of, of, uh, of the book. So that's, that's the monetization, uh, scheme.

    5. AGAakash Gupta1:16:38

       So I look really closely at my analytics on the retention for these episodes, and those of you listening 70 minutes in or watching on YouTube, a very high number of you tend to be creators or have books or have consulting. It just, it shakes out that way somehow. And so I think a lot of them might be asking, "How do you structure your offer, Roger, for these consulting packages?"

    6. RMRoger Martin1:17:03

       Oh, I just, uh, I just say, um, "Here's my, uh, daily rate. A day is eight hours." Uh, if I, if you ask me to show up, uh, it's eight hours if I have to travel for it. If you wanna Zoom like this, it's however long, however many hours it, uh, it takes, and I will just, uh, promise you X number of days a year. You promise to use me X number of days a, a year, and that's it. I don't... I never do proposals and any, any, any such thing. It's just, it's just pure, pure, uh, advisory.

    7. AGAakash Gupta1:17:42

       Got it. And some coaches, they bill a certain amount of hours, but they always over-deliver. They're available on Slack. They're sending pre- and post-messages and stuff like that. It sounds like you're not doing that. You're really focused on your time.

    8. RMRoger Martin1:17:56

       Oh, yes and no. I mean, I, I, I, I'm actually not terribly, terribly strict on it. I mean, the most strict thing I'm on is if you want me to fly to your city to spend a day with you, uh, even if it, you only have four hours for me, it's gonna be a day 'cause I had, I gotta, had to fly, fly there. But if you... There are, uh, there are clients that'll send me, "Could you read this deck before our two-hour, uh, meeting?" And I, I'm like, as long as they're good c- as, as long as they're good people and good clients. If they're abusive, I just stop working with them. Uh, but if, if, if they're a good person, I try to, I try to be flexible. But the, the, the arrangement just is I just make myself available to th- to think with you. And, you know, the CFO of, uh, you know, the thing immediately before this podcast was a C- uh, CFO of a client, and he is putting his mind to enterprise strategy, and he just wanted me to spend an hour with him shaping his thinking about how to approach that question, right? The CEO said to him, "I'd like you to think about our enter- enterprise-level strategy," 'cause I've done a bunch of work at the business units, uh, for them, uh, and they wanna do that. And so he just gets on for, for an hour, and we talk, and, and that hopefully sets him off in a more productive direction than he might have other- otherwise. And, uh, you know, we're off to the races.

    9. AGAakash Gupta1:19:21

       Wow. Even the masterclass on consulting was great, but the masterclass on strategy was the true gem. Roger Martin, thank you so much.

    10. RMRoger Martin1:19:29

        It's my pleasure. Thanks for having me, Aakash.

    11. AGAakash Gupta1:19:31

        I really hope you guys enjoyed that episode. It would mean a ton to me and the team if you could please subscribe on YouTube, follow on Apple and Spotify podcasts, and leave a rating and review. Those ratings and reviews really help grow the show and help other people discover the show, and they help fund the production so that we can do bigger and better productions. Can't wait to share the next episode with you. Until then, see you later.

Episode duration: 1:20:18