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

Introduction

This tutorial simplifies the concept of strategy as discussed by Felix Oberholzer-Gee from Harvard Business School. It aims to clarify how to create value in business and improve both customer and employee satisfaction through effective strategic initiatives. Understanding these concepts can help demystify strategy and equip you with practical tools for application in your organization.

Step 1: Understand the Core of Strategy

• Strategy is not primarily about profit.
• It focuses on creating value for customers and employees.
• Recognize that profit is a result of value creation, not the primary goal.

Step 2: Utilize the Value Stick Tool

• The value stick is a visual tool to help understand the value you're creating.
• It includes two key components:
  • Willingness-to-Pay: The maximum amount customers are willing to pay for your product or service.
  • Willingness-to-Sell: The minimum amount you need to receive to sell your product or service.

Step 3: Explore Willingness-to-Pay

• Consider factors that influence how much customers are willing to pay:
  • Quality of the product or service.
  • Customer experience and service.
  • Brand reputation and trust.

Step 4: Examine Willingness-to-Sell

• Understand what drives your costs:
  • Production costs and overhead.
  • Employee compensation and satisfaction.
  • Supply chain and operational efficiencies.

Step 5: Strategies to Enhance Value

• Increase Willingness-to-Pay
  • Improve product features and quality.
  • Enhance customer service and support.
  • Build a strong brand presence.
• Lower Willingness-to-Sell
  • Optimize operational processes.
  • Invest in employee engagement and satisfaction.
  • Streamline supply chain management.

Step 6: Focus on Key Value Drivers

• Concentrate your strategic initiatives on two main drivers:
  • Customer Satisfaction: Ensure that customer needs are met and exceeded.
  • Employee Satisfaction: Create a work environment that motivates and retains employees.

Step 7: Apply Real-World Examples

• Consider Best Buy’s turnaround as a case study:
  • Examine how they focused on customer and employee satisfaction.
  • Identify specific initiatives they undertook to simplify operations and improve the customer experience.

Conclusion

Incorporating these steps into your strategic planning can simplify your approach and lead to exceptional performance. By focusing on creating value for both customers and employees, you can enhance satisfaction and drive profitability. Consider implementing these strategies in your organization to see tangible results, and explore further readings such as "Better, Simpler Strategy" for deeper insights.