How to Build Winning Strategy

Roger Martin

Global Strategy Advisor & Former Dean, Rotman School

STRATEGY EXPERT

Core Definition

What Is Strategy?

"Strategy is an integrated set of choices that compels desired customer action. We control many things, factories, R&D, advertising, people. What we don't control is what customers do with their money. That's the job of strategy."

It's about the whole system of choices, not individual decisions
Every choice must reinforce the others, that's the integration
The outcome: customers voluntarily choose to give us their money

Framework

The Strategy Choice Cascade: 5 Questions

integrated questions you must answer

Winning Aspiration: What are we trying to accomplish? Why this market?
Where to Play: Which customers? Which products? Which channels? What value chain?
How to Win: Be differentiated OR low cost, never both
Capabilities: What must we build that competitors don't have?
Management Systems: What systems enable these capabilities?

Why these five?These questions emerged from 8 years of deep work (1987–1995) trying to commercialize Porter's frameworks. Clients wanted to know: how do you actually build differentiation or cost leadership?

The Cascade Deep Dive

Questions 2–5: Where, How, Capabilities, Systems

"Where to Play" includes:
• Who are the customers?
• Which products / components?
• What distribution channels?
• Where in the value chain?
"How to Win" is binary:
• Differentiation (better customer value)
• Low cost (lower price for same value)
• NO "stuck in the middle"
"Capabilities" are the moat:
• What must you do better than competitors?
• What can't be easily replicated?

Four Seasons Example

Where: Luxury hotel management (not real estate, not construction, not ownership, just management). Why? To be world-class at operations. Capabilities: obsessive guest experience standards no one matches.

Westlaw Example

Digital legal research that saves lawyers time = lower their costs. Moat: all the case law indexed and searchable. Creates defensible advantage for lawyers who can't practice without it.

Playbook

How to Avoid Strategy Failure

Don't enter a market just because it's "big", that's not a reason
Ground your aspiration in customer pain, not your growth ambitions
Pick your mode: be radically differentiated OR radically cheaper, half-measures fail
Build the capabilities gap first, then scale
Test: can your capabilities be protected? (Warren Buffett's "moat")

Roger's warning on moatsEven genius investors get moats wrong (Warren Buffett: Salomon Brothers, USAir). You should be pleased with your moat-spotting if you're 80% right. Moats erode. That's normal.

Contrarian

What Business Schools Get Wrong

✗Resource-Based View of the Firm is scienceINSTEAD →✓ It's an academic turf war against Porter. RBVF doesn't tell you what resources to build. It's silent on strategy.

✗Top people should teach strategyINSTEAD →✓ At top schools, teaching practical strategy is "illegal", you must swear allegiance to RBVF or you don't get hired.

✗Strategy is execution. Separate them.INSTEAD →✓ Strategy IS a choice cascade. Execution is implementing those choices. They're inseparable. A brand manager 4 levels down makes strategy daily.

✗Great strategists are born, not madeINSTEAD →✓ I've never met a "natural" strategist. Every great strategist practices relentlessly. It's learnable.

Based on Roger Martin's episode on Lenny's Podcast. All ideas on this page are from the episode.Watch on YouTube Follow @RogerLMartin on X

GO DEEPER IN THE EPISODE

02:27 The importance of strategy 07:03 Challenges in developing strategy 08:30 Critique of modern strategy education 17:40 Defining strategy and the choice cascade 23:20 Playing to win vs. playing to play 24:57 Examples of strategic success 31:04 Exploring differentiation and moats 40:23 Applying strategy to real-world scenarios 43:39 Customer-centric strategy 44:06 Defining the market and product 45:31 Value chain and distribution 50:34 Cost leadership vs. differentiation 53:16 Capabilities and management systems 57:37 Competitive advantage and market positioning 01:06:10 Adapting to market changes 01:14:32 Practical strategy tips 01:18:44 Final thoughts on strategy

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