Book Summary-Better, Simpler Strategy.
Strategy is simple. But seeing the simplicity in strategy is not easy.
The book very well describes and triggers thoughts on strategical thinking using its simple structure and constructive approach. It consists of six sections and sets a constructive approach explaining exceptional process and ranging through Values including customer, value generators, operation, and implementation. It generates a delight sighting various studies and examples as you explore the simplicity in understanding the value drivers.
Section 1: Exceptional Performance.
This section directs that path of exceptional performance is through ‘the simpler, the better’ approach. It metaphorically connects value for an organization to trees and forest stating, “In concentrating on all the trees, we lose sight of the forest” and guides to avoid hyperactivity on a strategic approach.
Followingly, it explains the soul of the book ‘value stick’, which explains how increasing willingness to pay (WTP) & lowering willingness to sell (WTS) can help extract maximum value hence reaching exceptional performance.
It triggers us to think of value, not profit, and explains generating value will fetch the profit. And guide towards focusing on your industry rather than expanding in other domains and sights study stating the difference between leading and lagging companies in the same industry is greater than the variation across industries.
Lastly, it advises to think differently as refined product quality and work culture cannot serve as entry barriers but once a value is created it builds customer and employee trust thus strategic thinking in differences.
The section ends with a note that “Someone needs to miss you “
Section 2: Value For Customers
This section triggers thought transition from Product centric to Customer-centric increasing WTP(willingness to pay) throughout the customer journey coupled with customer delight.
“First, they built the buildings. But instead of paving the roads on campus, they allowed people to find their own way. Once the trails were formed, they laid the concrete. This is how we think about our process.” - Lomtadze.
It’s focused on providing customers not what they want, but rather what they can’t resist. It directs you to innovate your Willingness to pay (WTP) path to include your near-customer ( The one who is near the current WTP range) thus converting non-customer into a customer by filling the gap and generating delight.
It further explains the paradigm between complements ( Products and services that raise the willingness-to-pay (WTP) for another product ) and substitutes ( Products and services that provide alternative or suppress value driver for another product ) through examples. It explains Complements as frenemies: friends because they collaborate to create value, enemies because each wish to lower the price of the other’s product.
It guides towards the power of the network to strengthen the choice customer makes under influence and explain different network effects. Also providing secret for small company staring at a large platform through meaningful differentiation by focusing on the WTP of the group that is less favored by your competitor.
Section 3: Value for Talent & Suppliers ( Value Generators )
This section very well describes difference between value creation and value redistribution explaining effects of increased compensation on the firm’s margins and attractive working conditions on value creation by linking people’s passion to business.
It highlights that Supply chains are people too and explains how encouraging learning for a supplier can help achieve lower WTS thus By helping your suppliers lower their cost you end up helping yourself.
It states that the logic of value capture dominates many buyer-supplier relationships and Making value creation the center of a buyer-supplier relationship is hard thus generating mutual value can help extract supplier’s delight.
Section 4: Productivity
It focuses on three factors explaining and governing strategies around productivity. These include scale, learning, and operational effectiveness. It further explains the economy of scale and how it can be leveraged to create an entry barrier. It explains the concept of minimum efficient scale (MES), the business volume that you need to be cost-competitive, and explains its importance in competitions.
Guiding on the role of learning it very well describes the advantage companies have by adopting a learning approach but also hints of patience required to see the change. It explains so by sighting example of advances in artificial intelligence and machine learning and their role in reducing cost. Lastly, it explains operational effectiveness based upon advice in the first section that operation advantage is temporary but the value created to serve as a long term and sets entry barrier.
Section 5: Implementation
It describes the steps and thought process required when implementing the strategy whether to focus on WTP or WTS by directing the resources required.
It very well describes the use of Value Map, and how to leverage them to extract information required, divert resources and arrange trade-offs. It explains why it’s beneficial for a company to extend customer delight in a segment they are already leading but focused around a theme rather than on single value drivers because competing on the same drivers as competitors will stress on price and limit the capability to cash value created. It advises on value generation throughout the customer journey and with different focuses on customer segments.
Section 6: What’s is to value ?
This section connects the dot through an example and will form a link between the value learning from the previous section. It also talks about generating value for society and sharing value generated through a strategic approach. Describing stakeholder centric approach sets a guideline as no credit for increasing and lowering WTP and WTS instead count these activities as signs of sound management practices.
About FELIX OBERHOLZER-GEE (Author)
is the Andreas Andresen Professor of Business Administration at Harvard Business School. An award-winning instructor, his academic work and consulting are focused on competitive strategy and the effects of digital technology on corporate performance. His research has been published in the very best peer-reviewed journals of his profession and profiled by media outlets around the world, including the Financial Times, Le Figaro, the New York Times, and the Wall Street Journal.
LinkedIn : https://www.linkedin.com/in/felix-oberholzer-gee-16424b4/
About Sunmeet Singh Oberoi(Summarizer)
Sunmeet has a proven track record in Enterprise digital transformations and strategy initiatives in the domain of manufacturing. Sunmeet is working with Tata Consultancy Services in Strategic growth business addressing Manufacturing industries digital solutions with present in international geographies.
LinkedIn : https://www.linkedin.com/in/sunmeetso/
