Better, Simpler Strategy | Felix Oberholzer-Gee

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

Introduction

Embark on a journey to exceptional performance by embracing strategic simplicity with Felix Oberholzer-Gee’s book ‘Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance’. This summary will delve into the concepts of maximizing customers’ willingness-to-pay (WTP) and minimizing suppliers’ and employees’ willingness-to-sell (WTS) for sustained success. Discover captivating real-life examples like Best Buy, Apple, and Etsy that showcase how their simple and effective strategies have helped them thrive in competitive environments. By extracting powerful insights from these inspiring stories, you’ll gain knowledge on how to create value by improving your product’s attractiveness, creating a better workplace, and enhancing relationships with suppliers.

Mastering Strategic Simplicity

Harvard Professor Felix Oberholzer-Gee’s strategy course insights highlight how to make effective strategic decisions by simplifying the process. By prioritizing maximizing customers’ willingness-to-pay while minimizing the price at which suppliers and employees would sell, businesses can increase value, which invariably leads to higher margins and profits. According to him, a sound strategy is one that does not increase WTS or decrease WTP. Mastering Strategic Simplicity is a must-read for anyone seeking to make better strategic decisions.

Simplify Your Strategy

According to Oberholzer-Gee, the key to creating value lies in two simple strategies: buying low and selling high. To increase WTP and decrease WTS, improve the attractiveness of what you sell, create a better work environment for your employees, and make it easier for suppliers to sell to you. The success story of Best Buy illustrates this approach, where inviting competitors boosted customer WTP and decreased WTS, leading to a remarkable comeback. The takeaway is clear: a simplified strategy can lead to immense success.

Maximize Product Value

In the book, Professor Oberholzer-Gee uses Apple as an example of a company that focuses on increasing customers’ willingness to pay (WTP) and thereby capturing greater margins. He emphasizes that it is vital to identify elements that improve WTP by attracting customers, then differentiate by enhancing those factors. Professor Oberholzer-Gee cites airlines’ case, stating that if they provide the same service at the same price between two cities, customers just toss a coin to decide. But if one airline provides free TV and more legroom, it can charge more and gain customers. Moreover, if the dominant players compete on price, businesses should consider selection. Using a fascinating Etsy case, Professor Oberholzer-Gee explains how Etsy managed to triple its sales despite Amazon’s much more significant buyer platform by focusing on sellers’ willingness to sell (WTS) instead of WTP. Therefore, he suggests that to maximize product value, businesses should always strive to increase customer WTP or decrease customers’ WTS.

Shifting Focus to Customer Value

In “Making Great Strategy,” Felix Oberholzer-Gee emphasizes the importance of focusing on customer value when developing a business strategy. He uses Amazon’s success in the e-reader market as an example of this approach. By adding wireless capabilities to the Kindle, Amazon shifted the focus from competing with Sony’s superior products to delighting customers in a significant way. Oberholzer-Gee also stresses the importance of investing in employee engagement and improving work conditions to increase productivity and revenue. Ultimately, simplifying strategy and focusing on customer and employee value can lead to powerful results.

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