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 Strategic Overload” (hbr.org/2021/05/eliminate-str...) as well as the book “Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance” (www.amazon.com/Better-Simpler....
Produced and edited by Scott LaPierre
Video by Dave Di Iulio and Elie Honein
Animation by Alex Belser
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[@Willbudi]

Strategy is a plan to create value. 1. Not focus on profit 2. About looking forward to planning for the future 3. Building value for customers, employers, and suppliers 4. Value = difference between willingness to pay (customer) and willingness to sell (supplier) 5. How do I raise willingness to pay? Product Quality, Product Complement, Network Effects 6. How do I lower the willingness to sell? Provide better working experience as a trade-off For e.g. Best Buy, increase WTP by offering customers with faster delivery directly from BB neighborhood stores, utilizing BB stores as warehouse

[@PGERARD63]

Where does all the value ends?

[@peacebakare]

This is a super complement of "A Plan is Not a Strategy" by Prof. Roger, that I just watched. I have learned so much about Strategy within 20mins I feel like I have some powers at my disposal right now. Looks like I'll like to have a MBA for structured and consolidated knowledge.

[@srinic9319]

I was just about to post this 😅 a plan is not a strategy but a strategy is a plan - 😭

[@peacebakare]

@Huy Phạm Quốc Really? So sorry about that. How can I help?

[@durgaprasadvadlamoodi1271]

i agree, i just watched and explained very well.

[@Anurag_Saxena]

@Huy Phạm Quốc me too. So I watched this video again and concluded that strategy is a "plan to create value". First Prof. Roger sounded incorrect to me. Then I re-watched Prof Roger and found his case study of Southwest explaining his points crystal clear.

[@michaelwilliams2337]

Prof Martin's video is excellent and probably the only strategy video which really says what strategy is all about in under 10 mins. Felix Oberholzer-Gee's video breezes over the ferocity of competitive forces.

[@SiddharthSingh07]

Amazing job creating this content - Core concepts simplified under 10 mins Hoping to see more content in this format.

[@carol7roberts]

Excellently and succinctly explained. Please put Mr. Oberholzer-Gee in more videos! Also, excellent visuals here!! Bravo!!!🏆

[@burhani3071]

Best content for a long time on youtube! Thank you for that HBR and Prof. Oberholzer-Gee.

[@ChengeerLee]

Brilliant. And you are an amazing educator. Great work, kudos to the production team. Top notch work!

[@PraveenKumar-ed3xt]

Tons of value loaded video, It can't be simpler than this, so clear, with examples 🙏

[@kumbukanikachingwe9919]

Thanks very much Havard, watching these videos really helps alot. It's kinda like we are on campus, i had to watch these episode 5 times to really get hold of WTP and WTS. Thanks.

[@osama151189]

Thank you! I like how straightforwardly you educate.

[@samartharya5668]

Beautiful video. Stick diagram makes it lot easier to understand. Example of Best Buy suits well too. Would love to read more.

[@SalawuIbrahim]

This is amazing! I feel a lot smarter on the topic of strategy. I'm also aware enough that I need to learn so much more to be able to take advantage of this body of knowledge I just acquired. Thank you Felix!

[@culturapoliticaycomputador9999]

This is a valuable video, it's a gift for all of us. Thank you Mr. Felix Oberholzer-Gee.

[@stevenmalolo938]

I love how you broke it down so we can understand. Love the content!

[@extedax]

Excellent content! If you're looking for a 10min MBA, this the closest you could get to it.

[@sergiomujica973]

Exactly! I completely agree. It reminded me of some of my MBA classes.

[@contemplore]

Also #personalMBA by Josh Kauffman. Combine with HBR and Economist guides. For more in business today, learn Economics, Computer science CS50, web3, Mathematical thinking, lateral thinking, design thinking, systems thinking..... And lessons from your specialization specific books/pods/courses/journals...

[@meshangovender]

Profound content. What a gift to be able to explain something so complex so simply. A true MBA in 10 mins

[@Ms.T]

The anticipation of starting my dream job in a couple of weeks thrust me into this journey... I started with optimization of the Game theory in in my career, then I stumbled on "Planning is not a Strategy" to wit; a strategy is a plan that is based on logic that is simple & can be tweaked(with a pre-established tweaking mechanism) when it is not working... Full circle moment... 🎉

[@vikastiwari6780]

My next 5 years strategy ready now.... But I will never disclose right now.... Focus on improving myself regularly.......

[@abirahmed1292]

Can we see this in real world" Wow, that question and answer really made the difference for me, you created a real value guys. Thanks

[@josephinebardot8403]

Thank you a lot for this video. This is very interesting and informative. Keep posting like those amazing videos, this is awesome.

[@miguelsalazar1602]

Wow! The content of this video is really good. I wish there we're more professors and intelectuales that could talk about business like this, without the jargon and mambo jumbo that most business teachers use.

[@abubalo]

I am impressed by HBR consistency to release great video after great video👏

[@alexisazria1169]

This is an excellent explanation. Thank you.

[@floydmunetsi]

Really great video... Clear and concise lesson.

[@moisestatis5418]

Great video, liked it so much. Thank you! Look forward to find more like this.

[@DodaGarcia]

That's fantastic! One question I have is: in the example of decreasing willingness to sell by improving the job conditions, where does the financial investment get factored in? Because while not a one-to-one comparison to just increasing pay, it's still not free to implement.

[@HS-wd5mp]

Absolutely stunning! Thank you so much.

[@adriendeotto7971]

Anyone who tries to grasp what strategy is should start with this video. A big thank you to Felix Oberholzer-Gee and the HBR channel for sharing such high-quality content and insights 🙏

[@teezfeelz-1716]

Hi Adrienne, I found the piece a little confusing especially around willingness to sell. What Am I missing. Can you explain to me like you would a 10year old.

[@somosagricultura]

Interesting topic. It's great to learn about strategy because it's easy to get wrong about this concept.

[@andessepta2535]

Great and clear explanation. Thanks for sharing.

[@nhungphuong2461]

This is high-value content! So impress. Thank Prof.

[@oliverwills1750]

Thank you for the explanation. Very much appreciated HBR.

[@swezin7125]

I learn a lot within 20 mins and thank you so much.

[@blurayism]

Simple & clear explanation😀

[@Kakanato]

Felix, you have just increased your value by increasing the willingness to pay and decreasing the willingness to sell! Awesome real life example!

[@manojphatak763]

OMG. That is the best damn explanation of strategy and value I have EVER heard !!!

[@romp39]

Product/Customer experience and employee experience are the two foundational factors. Sounds simple but as the layers of management there is more and more Vaseline on the lens when it comes to observing and measuring the quality of these experiences.

[@diklaakrat5413]

Great video! Thanks for sharing your work!

[@MohamadShurrab]

Excellent! Strategy is a Plan to Creat Value. This is where I differ with Professor Roger piece on Strategic Planning where he completely disconnects both.

[@joaquinjackson7510]

Very good explanation! Thank you

[@PhirunKao]

It's the best 10 mins about strategy!

[@melomelody91]

Bravo!! I love how you made it so simple to understand the concepts!

[@pujadeshani2419]

Excellent explanation. Go straight to my brain. Thank you...............................🙏🙏🙏🙏

[@ranganatht.r.1417]

… a very interesting, informative and impressive video. Thanks a lot.

[@monicaviola5018]

amazing video, though even more when you questioning about this for a whole month. Terima kasih 🙌

[@avono5330]

its a plan to create value. the beginning phase to achieve a benefit (a measurable outcome). determining optimal customer willingness to pay/price. determining willingness to sell for employees/compensation. the middle between the opposing position reflects company success.

[@gyanprakashgupta4629]

Amazing...could not have learnt more within 10 minutes

[@idrissakfalen8290]

The explanation is perfect. Understanding strategy starts with these foundations. I would just like to add something because I think welliness to sell doesn’t rely solely on compensation, it varies from a company to another. This could be entirely true if it’s a consulting firm where up to 60% of the revenue is spent on compensation but for other firms, like manufacturing firms, you just can’t apply the same logic cause the part of main costs are way higher than compensation and the perspective to create value decreasing wellinness to pay is comme merely different.

[@vinatram9930]

you have a point.

[@richardabbe799]

Great discussion on this topic! Thanks!

[@user-HRARTIST]

Fantastic explanation!!!!! Many thanks!!!!!

[@patriciatejado4334]

Excelente explicación. Gracias!

[@AllofGodsWord]

Great video and points made. The only thing I would change is the word choices of "willingness to sell". Most of the examples didn't align well; their "willingness to sell" didn't decrease in a logical sense, at least not with the visual being used. Perhaps flip it to "Reluctance to Sell". If the reluctance to sell decreases (goes down) and the willingness to buy increases (goes up), basically stretching out the line more, this signifies an increase in value. Similarly, if reluctance to sell increases (goes up) and willingness to buy decreases (goes down), basically compressing the line, this signifies a decrease in value.

[@dougr550]

A big part of strategy is a set of ideas that you are going to organize around to deliver value. Not surprisingly strategy is applied at many different levels, from the operating model and the way you organize, to individual initiatives. Project management vs Agile would be an example of two different strategies to solve at times the same problem. The problem with the very best strategies is that very few people seem to understand them ;)

[@someonenamedbob]

I"m curios what do you mean by agile?

[@dougr550]

@@someonenamedbob Agile is a software development philosophy for addressing the uncertainty that exists in terms of what to do and how to do it when building software. This philosophy has also been adapted for use in other settings, but is at its heart rooted in Lean management.

[@someonenamedbob]

@@dougr550 Oh that I've heard about it before, don't know much about it though.

[@herrysantoso2523]

Very good sharing!. It is simple and powerful! thanks

[@choupi0645]

Inspiring content! I am gonna use this concept into real life, thanks!

[@socratesbleu]

I want to take his class. I understood half of what he said but was engaged the whole way

[@Anurag_Saxena]

First, i watched prof Roger's video on strategy. Then, I watched this video twice and concluded that strategy is a "plan to create value" and Prof. Roger sounded incorrect to me. Then I re-watched Prof Roger and found his case study of Southwest explaining his points crystal clear. In plans, even deviations from goals are anticipated and there's plans in advance to fix them. In strategy, one isn't sure what sort of deviations come ahead and there's no plans in advance to fix them. One needs to twist and turn the strategy as and when the deviations arise.

[@monkichi1112005]

simply explanation and easy to understand

[@muteeburrehman7628]

So much insight really helpful and amazing

[@johenbalinton6534]

Great content .. thanks for sharing this video...😁

[@robinzhang6205]

Hi ROFESSOR OBERHOLZER-GEE,I'm just in "Business Strategy" class online, good to see you here

[@alphonsusraj8510]

As its core strategy is a plan of action designed to achieve some specific goals. It involves making decisions to allocate resources and navigate tasks and challenges in order to reach desired outcomes.

[@drannoc100]

One’s think the more employees are engaged, the more they’ll be “willing to sell.” This phrase/concept of “willingness to sell go ‘down’” seems really about “enlarging” the portion/likelihood of willingness to sell instead of the actual level of willingness to sell. - Correct me if I am wrong.

[@rabinraj15]

Superb!! Thank you very much 👍🏽

[@iangrant3615]

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.

[@atogweoghieaga2205]

This is unbelievable. No one has ever strategy this way!

[@annemaxwell9975]

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.

[@innovationconnected6762]

Love the video but have a different opinion on one point: What customer value is. I see it from a customer's point of view: If I pay $100 for something, how much value will I realize over and above that inital investment? Buying something is a sunk cost, the value is in what I get out of the investment. What Prof Felix described to me (value stick) is really a price stick, the range in which a seller and buyer can potentially agree on a price.

[@sakshisingh-nt8re]

Thanks HBR for such helpful videos

[@gavincampion4961]

Excellent video! Thanks for sharing.

[@SafiullahWasiullah]

Great content. Thanks HBR

[@OwlofAsia]

A lot to think about. Thank you

[@cara804]

i love this is in direct difference to strategy is not a plan via HBR...

[@mrbonbonist]

Just finished his book on strategy.Totally recommend it.

[@philippededeken4881]

He's ignorant about the topic. What a waste of time.

[@mrbonbonist]

@@philippededeken4881 your comment is a waste of time.

[@ishushamit]

This is brilliant

[@matthew4031]

That was one of the most value pack videos I’ve ever watched

[@CarlosESanchez10]

Wao!! I had not seen such an informational and interesting video in a long time!! I just want to learn more. Can you please recommend a good book about strategy?

[@pau8727]

Maybe I'd missed, but where is the influence of rest of the expenses apart from labour cost in the suggested model?

[@harvardbusinessreview]

Observant question. To keep the video under 10 minutes we focused on 2 out of the 3 value levers (customers and employees) but sidestepped suppliers (though they do get mentioned in the Best Buy example near the end). But you are right that they're a part of the model, along with other costs. Felix covers those in more detail in his book in the description, or you can start here where it's also well covered: hbr.org/2021/05/eliminate-strategic-overload. Thanks for watching!

[@joaonogueirasantos8211]

Amazing content. It's like being at Harvard Business School! This quality teaching should be accessible to everyone in the world! Thank Prof. Felix!

[@MaxRuso]

So insightful tnx

[@t1mmytiger]

Very good video - well done

[@ConceptbyAI]

Thank u for sharing ☺️👌🏻

[@bayou__]

I Love It, Unique selling Point. Customers believe the want to pay.

[@utsabsarkhel4026]

Thank you professor

[@Hakimshafin]

Thank you sir ❤️

[@nambokki]

Big thank you!

[@johnklee3843]

This is a great video!! Pricing 101

[@johnpinheiro6211]

Great vídeo,man, keep them coming🇵🇹🇵🇹🇵🇹🇵🇹😁

[@user-tu3wv3gv6j]

What about the cost of making the Job a better Job? That will also redistribute the value -- from company to employees. We will need to calculate the difference between 'what if we pay extra to the employees' vs 'what will I spend to create a better working environment or culture'

[@NoCentsFilms]

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.

[@jwp363]

Felix, let me disagree, a strategy is not a plan. Strategy is about how-to achieve something - the story if you like. And a plan is about the what, where, and when - more like the chapters of a book.

[@TrangQuynh-ll4gr]

Excellent video!

[@Alejandro-ki8mr]

Amazing video!

[@melissaprice1424]

The reason why this seems so simple is because it is simplistic. Willingness to sell is impacted by many more things than satisfaction with the job - as any contact with contemporary economics should tell you. Such as cost of living pressures, to give the most obvious example, and straight out desperation, as well as personality and ethical considerations. Government policy to influence willingness to sell etc. You'd have to do better than this to sell a Harvard course to me. Like the relationship between an employee's willingness to sell their labour and their willingness to part with their money (say, to pay for an economics course) and the "value" perceived in the whole process.

[@johngreat]

Great talk. One question. How does this apply for an NGO though?

[@aldrickwa6895]

I am a bit confuse with the chart as I expected to see the value for the other stakeholders (suppliers for example, general public as well)

[@ramcharankotari8980]

Thank you Felix

[@BayuHendra-wb2zx]

Thanks tricks and strategies for success, always good luck

[@sendyardi5190]

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.

[@Dakid015]

Good summary! Thanks!

[@hk4848]

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.

[@alishamazaya4247]

This is gold