Better, Simpler Strategy | Felix Oberholzer-Gee

Summary of: Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance
By: Felix Oberholzer-Gee

Introduction

Dive into the world of strategic simplicity with Felix Oberholzer-Gee’s ‘Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance’. Drawing from his popular strategy course, this book highlights the importance of creating value through maximizing your customers’ willingness-to-pay (WTP) and minimizing suppliers and employees’ willingness-to-sell (WTS). Using real-life examples featuring Best Buy, Apple, and Amazon, Oberholzer-Gee emphasizes how focusing on WTP and WTS can dramatically improve a company’s performance. Get ready to explore the power of simpler, value-based strategies for your own business and better understand the intricacies behind successful companies.

Simplify for Strategic Success

Harvard business professor Felix Oberholzer-Gee highlights the significance of strategic simplicity in making better business decisions. He emphasizes that great firms maximize customers’ willingness-to-pay (WTP), while minimizing the price at which suppliers and employees will be willing to sell their services (WTS), with value in between, including margin and profits. Oberholzer-Gee advocates that no strategy should include efforts that do not increase WTP or decrease WTS. This essential work of strategy guides firms towards efficient decision-making to achieve unparalleled success.

Creating Value from Simple Strategies

In his book, Oberholzer-Gee recommends using simpler strategies focused on buying low and selling high to create value. He suggests increasing what customers will pay and/or minimizing what suppliers and employees will sell for by improving the attractiveness of what you sell, creating a better place to work, and making it easier for suppliers to sell to you. By doing all three, additional value can be created. He cites Best Buy as an example of a company that faced bankruptcy but was able to turn things around by increasing customer WTP by embracing brick-and-mortar stores and inviting competitors to set up shop in their locations, collectively investing in improving stores and contributing to workforce costs.

Capture Apple’s Magic

In his book, Prof. Felix Oberholzer-Gee highlights the value of increasing customer willingness to pay (WTP) and decreasing willingness to switch (WTS) to achieve success in business. He uses Apple as a prime example of an organization focused on WTP. Apple’s customers are willing to pay more for their high-quality, prestigious products, which increases Apple’s profit margins. The author suggests identifying areas that improve WTP to attract customers, then enhancing and differentiating those areas to capture some of Apple’s magic. For example, airlines could add free TV and more legroom to charge more and gain customers. If competitors are focused on price, focus on selection to stand out. In addition, Prof. Oberholzer-Gee recounts a compelling story about Amazon’s failed attack on Etsy, an online craft market. Despite Amazon’s market size advantage, Etsy tripled its sales and increased its value 10-fold by focusing on improving the seller’s experience rather than focusing solely on buyers. Ultimately, if you can increase WTP and decrease WTS effectively, you can achieve long-term success in business.

Focus on Customer Value

Oberholzer-Gee advises a shift in mindset from solely focusing on selling products to making customers happy. Amazon’s success in the e-reader market is attributed to its addition of wireless capabilities, which delighted customers. The author argues that simplifying strategy and investing in employee engagement leads to improved productivity, customer service, and revenue. Understanding what delights employees and gig workers can lead to lower cost and increased value. The key to success is making customers cheer, and this can be achieved by prioritizing their value and satisfaction.

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