Better Simpler Strategy. (Guide for Exceptional Performance). Felix Oberholzer-Ge
Strategy is simple, but seeing its simplicity is difficult.
PART ONE: EXCEPTIONAL PERFORMANCE
The complexity of the society and the environment we work in,
(globalization, climate change, marketing) has increased
exponentially. → Generates a Problem: Increases expectations to
respond effectively to each of the new challenges, asking even more
of our organizations, have even higher for employees, and require our
complex strategies to bring about miracles. All the ideas seem worth
pursuing when our company falls short of expectation.
Consequences: Sophistication of firm strategies and intensity in our work lives. “In concentrating on all
the trees, we lose sight of the forest.”
Solution: By simplifying strategy, we can make it more powerful. Using an overarching, easy-to-grasp
framework that is tide to financial success we gain common language that allows us to evaluate and pull
together the many activities that take place in our organization.
Best approach → Value-based strategy
VALUE: Maximum amount of money a costumer would ever pay for a product (willingness-to-pay WTP)
and lowest compensation a person is willing to accept for performing a particular type of work (willingness
to sell WTS). The greater the length of these two opposites is the value that a firm creates (long-term
financial success and significant advantage towards competitors).
→ Every decision must aim toward IMPROVING those two:
increase WTP or decrease WTS. Every strategic initiative needs to
be evaluated against these two metrics.
THINK VALUE, AND THE PROFIT WILL FOLLOW
Companies create value by increasing WTP and decreasing WTS.
they capture value by setting prices and compensations. The
overall value that a business create gets divided in three ways
(Image). A starting point to measure and improve profitability is to
identify the reasons why the middle section of the value state is
slim for some companies.
The ability to capture value depends on differences in value
creation. The greater the similarity between two values sticks from
two different companies, the greater is the tendency for cast
members to focus on price, the greater pressure to compete on
price. Offer also other things for costumer’s delight. Innovate! Stand out! Be different! Copying from
, Better Simpler Strategy. (Guide for Exceptional Performance). Felix Oberholzer-Ge
others reduces the ability to capture value. Strategists think in differences. Exceptional product quality
and outstanding working conditions do not confer a lasting advantage if they can be matched easily by
rival firms.
PART TWO: VALUE FOR CUSTOMERS (WTP)
The distinction between focusing on product and focusing on WTP, is subtle but very important. You do
not want to sell more products, but for costumers to clap and cheer when they invest on you. → Improve
customers experience even after they have committed to a purchase; consider the entire customer
journey and search for opportunities to great value at every step along the way.
* It is helpful to develop practices that periodically remind everyone of their firm’s focus. This practice
encourages employees to determine a target audience and make decisions based on them.
Advantages:
• We trust companies that have our best interests at heart.
• Skillful at recognizing the needs of multiple groups of customers and intermediaries.
• As you focus on the costumers, the company performs better because they get to serve the right
ones.
Interdependence is the rule, not the exception. WTP, WTS, price and cost are all connected. When you
increase WTP, the other elements that make up the value stick will typically improve as well.
(TARGET THE NEAR-COSTUMERS) *Your company is intimately familiar with its customers, but how much
do you know about individuals or businesses who are not currently active (but could be) in your market?
→ Why waste time chasing unlikely prospects? Attractive business opportunities may hide in plain sight,
you must be open to those. (If they are new to your product or service, category, and brand, keep it simple.
Sometimes offering less can be attractive)
Winning with complements
A. If you want to grow the category and expand the industry, non-proprietary, industry-level
compliments suits your needs best. (EXAMPLE: Run a movie-theater. Complement: offer parking
area).
B. If your goal is to gain market share, proprietary complements are more powerful. (EXAMPLE: Sell
electric car. Complement: Produce chargers that supply power only to the vehicles you produce).
This might slow the adoption of the product, but your competitors won’t take the benefit.
COMPLEMENTS WITH OTHERS! Complementors are *frenemies*: friends because they collaborate to
create value, enemies because each wish to lower the price of the other’s product. Most successful
executives maintain a delicate emotional valance in their relationship with complementors: Optimistic
with regards to the promise of collaboration, and at the same time realistic about the need to share their
slice of pie.
Strategy is simple, but seeing its simplicity is difficult.
PART ONE: EXCEPTIONAL PERFORMANCE
The complexity of the society and the environment we work in,
(globalization, climate change, marketing) has increased
exponentially. → Generates a Problem: Increases expectations to
respond effectively to each of the new challenges, asking even more
of our organizations, have even higher for employees, and require our
complex strategies to bring about miracles. All the ideas seem worth
pursuing when our company falls short of expectation.
Consequences: Sophistication of firm strategies and intensity in our work lives. “In concentrating on all
the trees, we lose sight of the forest.”
Solution: By simplifying strategy, we can make it more powerful. Using an overarching, easy-to-grasp
framework that is tide to financial success we gain common language that allows us to evaluate and pull
together the many activities that take place in our organization.
Best approach → Value-based strategy
VALUE: Maximum amount of money a costumer would ever pay for a product (willingness-to-pay WTP)
and lowest compensation a person is willing to accept for performing a particular type of work (willingness
to sell WTS). The greater the length of these two opposites is the value that a firm creates (long-term
financial success and significant advantage towards competitors).
→ Every decision must aim toward IMPROVING those two:
increase WTP or decrease WTS. Every strategic initiative needs to
be evaluated against these two metrics.
THINK VALUE, AND THE PROFIT WILL FOLLOW
Companies create value by increasing WTP and decreasing WTS.
they capture value by setting prices and compensations. The
overall value that a business create gets divided in three ways
(Image). A starting point to measure and improve profitability is to
identify the reasons why the middle section of the value state is
slim for some companies.
The ability to capture value depends on differences in value
creation. The greater the similarity between two values sticks from
two different companies, the greater is the tendency for cast
members to focus on price, the greater pressure to compete on
price. Offer also other things for costumer’s delight. Innovate! Stand out! Be different! Copying from
, Better Simpler Strategy. (Guide for Exceptional Performance). Felix Oberholzer-Ge
others reduces the ability to capture value. Strategists think in differences. Exceptional product quality
and outstanding working conditions do not confer a lasting advantage if they can be matched easily by
rival firms.
PART TWO: VALUE FOR CUSTOMERS (WTP)
The distinction between focusing on product and focusing on WTP, is subtle but very important. You do
not want to sell more products, but for costumers to clap and cheer when they invest on you. → Improve
customers experience even after they have committed to a purchase; consider the entire customer
journey and search for opportunities to great value at every step along the way.
* It is helpful to develop practices that periodically remind everyone of their firm’s focus. This practice
encourages employees to determine a target audience and make decisions based on them.
Advantages:
• We trust companies that have our best interests at heart.
• Skillful at recognizing the needs of multiple groups of customers and intermediaries.
• As you focus on the costumers, the company performs better because they get to serve the right
ones.
Interdependence is the rule, not the exception. WTP, WTS, price and cost are all connected. When you
increase WTP, the other elements that make up the value stick will typically improve as well.
(TARGET THE NEAR-COSTUMERS) *Your company is intimately familiar with its customers, but how much
do you know about individuals or businesses who are not currently active (but could be) in your market?
→ Why waste time chasing unlikely prospects? Attractive business opportunities may hide in plain sight,
you must be open to those. (If they are new to your product or service, category, and brand, keep it simple.
Sometimes offering less can be attractive)
Winning with complements
A. If you want to grow the category and expand the industry, non-proprietary, industry-level
compliments suits your needs best. (EXAMPLE: Run a movie-theater. Complement: offer parking
area).
B. If your goal is to gain market share, proprietary complements are more powerful. (EXAMPLE: Sell
electric car. Complement: Produce chargers that supply power only to the vehicles you produce).
This might slow the adoption of the product, but your competitors won’t take the benefit.
COMPLEMENTS WITH OTHERS! Complementors are *frenemies*: friends because they collaborate to
create value, enemies because each wish to lower the price of the other’s product. Most successful
executives maintain a delicate emotional valance in their relationship with complementors: Optimistic
with regards to the promise of collaboration, and at the same time realistic about the need to share their
slice of pie.
