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What Is Strategy? It’s a Lot Simpler Than You Think

To many people, strategy is a total mystery. But it’s really not complicated, says Harvard Business School’s Felix Oberholzer-Gee, author of “Better, Simpler Strategy”.

00:00 To many people, strategy is a mystery.
00:25 Strategy does not start with a focus on profit.
00:52 It’s about creating value.
01:00 There’s a simple tool to help visualize the value you create: the value stick.
01:30 What is willingness-to-pay?
02:30 What is willingness-to-sell?
03:14 Remind me: Where does profit come in again?
03:48 How do I raise willingness-to-pay?
05:00 And how do I lower willingness-to-sell?
06:18 Real world example: Best Buy’s dramatic turnaround

Companies should simplify and focus on two value drivers, he argues: customer satisfaction and employee satisfaction. By aligning strategic initiatives on these alone, leaders make their workers’ jobs less complicated and improve customer experiences.

Oberholzer-Gee is the author of the Harvard Business Review article “Eliminate…

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  1. He's really willing to pay $8 for a cup of coffee? Well, amazon that, and you're done, then. The value of one product is not only its price (yeah, 8 seconds in the whole presentation). With this mindset, you have crappy products at affordable prices, and yes, people are willing to pay. Take money out of this whole equation/presentation and there's nothing left to see. Not a good one.

  2. In this video, Felix Oberholzer-Gee explains that strategy is a plan to create value and that a company's financial success is the result of its strategy, not the starting point. He describes value as the difference between willingness to pay and willingness to sell, which is split between customers, employees, and the company. The ways to increase willingness to pay are through product/service quality, complements, and network effects. The two ways to attract talent are to pay more or make the job better. Although both methods create value, paying more shifts value from the company to the employees, while making the job better lowers willingness to sell.

  3. "Value distributes from the company to the people that work for the company". This is misstated. He should have said, "value distributes from the [owners] of the company to the people that work for the [owners]".

  4. This commentary is far superior to the explanation offered by the other professor with whose language I took issue with. I still say Strategy is the why and the vital plan to achieve it's likely success or to optimise the desired outcome is the what, which, where, when, who and how.

  5. I don't think strategy is a plan. Plan is more rigid and deals with much less unknowns than strategy. IMO, a strategy is a theory to achieve some goal(s). Multiple plans can be created to follow a strategy. Each plan doesn't know about other plans, may not be aware of overall strategy.

  6. This is interesting, although I'd suggest if you need to explain willingness to buy/willingness to sell, it highlights that those terms are not clear or intuitive enough to be effective. The explanation was effective and made an impact, but the original terms remain ambiguous.

  7. The big flaw in this is on “willingness to sell” and that it is linear. The idea of exponential value felt by the employee beyond the compensation increase is not explored. Too simplistic.

  8. So, if my customers are willing to pay 100 USD for a product of my company, and my company decided to sell it at 99 USD, does it mean that my company created only 1 USD of value to my customers?

  9. To put it in layman terms a plan is when you plan to sell something to a market a strategy is when you decide how will you make your Products and services different from, the rest of the competition which makes consumer consider your Products and services.

  10. Interesting: Strategy is about CREATING VALUE!. But the strategy is NOT a plan as stated in the video's beginning. Strategy is what you DO. It's not an aspirational roadmap (which implicitly has a plan)

  11. I’m an author and do not see how this model of strategy helps me in the arts. Publishing looks at the pay/sell paradigm. But as the author, I’m out of that decision loop even though the majority of publishers today rely on the artist’s own efforts to drive sales. So I need a model of strategy that will help me navigate the randomness-filled arts economy and turn my name and/or books into customer magnets. To apply a strategy to all the “branding” and “book launch” advice and options flying around. Particularly since I have one book a year coming out with respected publishers in 2023 + 2024, with another under contract.

  12. I can not figure out where these weird people come from claimig to be business experts – like this crazy dude. Oh, Harvard University – a den of inequality. What he is talking about 'strategy', 'value' and thereof is a load of crap.

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