To determine how to win, an organization must decide what will enable itto create unique value and sustainably deliver that value to customers in away that is distinct from the firm’s competitors. Michael Porter called itcompetitive advantage—the specific way a firm utilizes its advantages tocreate superior value for a consumer or a customer and in turn, superiorreturns for the firm.

Where to play selects the playing field; how to win defines the choices forwinning on that field. It is the recipe for success in the chosen segments,categories, channels, geographies, and so on. The how-to-win choice isintimately tied to the where-to-play choice. Remember, it is not how to wingenerally, but how to win within the chosen where-to-play domains.

The next two questions are where to play and how to win. These twochoices, which are tightly bound up with one another, form the very heart ofstrategy and are the two most critical questions in strategy formulation.