Better, Simpler Strategy Quotes

“I am deeply convinced that we can do better. The key to progress is a relentless focus on value creation, not value capture. Fortunately, there is no contradiction. Financial success, as we have seen time and again, will follow true value creation.10 At a policy level, this means that corporate leaders need to pay close attention to benchmarks number four and number five. Undermining markets will surely leave us poorer—and more divided! The most important work, however, takes place in companies. No matter where you sit in your organization, whether you work alone, in a team, or lead a large corporation, can I ask you to never tire of seeking new ways to increase WTP and lower WTS? Can I convince you that your role is both vital and noble? What better way to lead a life than being preoccupied with creating value for others, to touch their lives in ways both big and small?”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Applying a value lens to stakeholder capitalism, two ideas strike me as particularly important. First, business creates substantial value for customers, employees, and suppliers even if its only goal is to maximize financial returns. Think of all the stories in this book—Best Buy, Apple, Michelin, Quest, Intel, Tommy Hilfiger, and many more. Every one of them is testament to the ability of business to create significant customer delight, employee satisfaction, and supplier surplus. Competition is our best assurance that companies continue to innovate in service to these stakeholders. Second,”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Connecting the dots—seeing the connections between your value drivers, prices, and cost (be they positive, neutral, or negative)—is an important step in assessing the true attractiveness of a strategic move.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“To begin this conversation in your company, take a piece of paper, draw a value stick, and ask three simple questions. What do we do to move WTP? How do we change WTS? What are the connections between our value drivers, prices, and costs?”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Becoming stuck in the middle is often a manifestation of a firm’s unwillingness to make choices about how to compete. It tries for competitive advantage through every means and achieves none, because achieving different types of competitive advantage usually requires inconsistent actions.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“My recommendation is to begin your value curve analyses by employing a fine-grained customer segmentation. Create separate value curves for many different groups of customers. If the data show that two segments have nearly identical value drivers, you can treat the two groups as one segment. If you begin with a broad grouping, however, subtle differences that might influence your strategy will remain hidden.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“companies cannot be good at everything; true excellence requires firms to shift resources from value drivers of lesser importance to critical customer concerns that drive WTP.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“every value proposition reflects a set of trade-offs, a mixture of dos and don’ts, a blend of promises and letdowns.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Taste-based loyalty is only one example of brands setting standards that are difficult to beat. Amazon taught Americans how one-click shopping works. WeChat showed Chinese consumers how to use a messaging app to pay for just about everything. Airbnb set our expectations for ways to find private accommodations. At times, a brand’s name becomes synonymous with the activity; we Google information, wipe our faces with Kleenex, and TikTok funny videos.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Good management practices and operational effectiveness help create meaningful differentiation between companies. They are hard to achieve, diffuse slowly, and can serve as the basis of a long-term competitive advantage.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“This configuration provides Walmart with three types of benefits. By placing the stores within a day’s drive of the distribution centers, the company spreads the fixed cost of the central warehouses over a large volume of sales, creating economies of scale. Because the stores are relatively close to one another, delivery trucks can supply them quickly, creating economies of density, a special type of scale economy. For every mile that a store is closer to a distribution center, Walmart’s profit increases $3,500 annually.16 With more than 5,000 stores in the United States alone, economies of density contribute noticeably to the company’s bottom line. Because the stores can be resupplied quickly, they reserve little space for inventory; virtually every inch is dedicated to selling products.17 Walmart’s third advantage highlights the link between market size and fixed costs. In a small market, fixed cost cannot be spread over a large volume of business. As a result, Walmart, the company with the largest share, has a distinct cost advantage. Even if a second firm decided to compete, was able to match Walmart’s infrastructure, and managed to gain significant share, both companies, each saddled with significant fixed cost, would suffer reduced profitability. Anticipating this outcome, potential entrants are reluctant to enter in the first place. In many of the smaller markets, Walmart faced little competition for precisely this reason. Where it was alone, the company raised prices by as much as 6 percent.18”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Why do banks grow increasingly larger? One important reason is that they benefit from economies of scale, that is, average costs fall as the business grows. Figure 13-2 shows the increase in cost that the largest US and European banks incur if they grow by 10 percent.11 Any value below 10 percent (see the horizontal line at the top of figure 13-2) indicates economies of scale. Any value greater than 10 percent is evidence of diseconomies of scale—in other words, costs grow more quickly than the business.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“By helping your suppliers lower their cost, by making it easier for them to sell to your organization, you end up helping yourself. Ask not what your supplier can do for you …”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Just as creating value for clients requires a degree of customer intimacy, being close to your suppliers enables you to see initiatives that would increase supplier surplus. Do you remember Yasukane Matsumoto, the Japanese printing executive? He visits each of his suppliers personally before he decides to build a partnership.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Is it even plausible that WTS is low? For work that is not intrinsically attractive, the answer is probably no. Remember, it is passions that drive down WTS. Also, contractors for whom the work constitutes their principal income are unlikely to have low WTS. For example, a work arrangement with a person whose full-time job is to clean homes should not be based on a premise of low WTS.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Our passions move WTS in a powerful way. We all have activities that we pursue for pure enjoyment, no compensation needed. WTS is zero (or even negative if you are willing to pay good money to engage in your favorite hobby).”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Power and experience are two of the reasons why competing for talent by reducing WTS is a demanding (if promising) strategy.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“As long as the price increase is smaller than the rise in WTP, both customers and the company are better off. At the bottom of the value stick, companies create more attractive working conditions to lower WTS. They then share this value by reducing compensation. As long as the drop in WTS is greater than the reduction in salaries, both employees and the company are better off.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“We are now able to train for the ‘why’ behind the way we do things.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“The strategy creates superior value by combining investment in employees with four operational choices that increase their productivity, contribution, and motivation. These choices are: focus and simplify, standardize and empower, cross-train, and operate with slack.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“When Deutsche Bahn, the German railway company, offered its workforce the choice of a 2.6 percent pay increase, a one-hour reduction in weekly hours, or six additional days of vacation annually, 58 percent chose the extra week off.4 The opportunity to exchange money for time is increasingly popular, particularly in developed economies and among younger employees.*5”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“In the early days of studying companies that benefit from network effects, many investors assumed these companies were poised to dominate their markets. Scaling quickly without any regard for profitability became the mantra.16 This approach is deeply flawed for two reasons. In chapter 8, we observed how geography often limits the power of network effects. In this chapter, we have seen that markets with network effects often remain competitive because small players find ways to persist.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“The distinction between buyer-focused and seller-dominated platforms is particularly stark in B2B.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“The question of whether companies like Facebook, Google, and Alibaba have become “too big” is hotly contested.24 To resolve the issue, we need to weigh the customer delight that results from network effects against the cost of limited competition.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Network effects increase WTP by connecting users directly, through complements or via platforms. Companies that build network effects raise WTP and they limit competition at the same time. M”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Network effects are a positive feedback loop: as more retailers attract a larger number of customers, additional retailers are drawn in. Network effects can cause markets to reach a tipping point: to spring from very low adoption to universal acceptance in no time at all. And the reverse is true as well. As fewer people use cash, the number of establishments that can make change drops and fewer stores are willing to accept cash. This situation gives customers an incentive to move to mobile payments.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“This is a first insight. If you examine customer data to find complementarities, you would like to see that nonexistent world in which the online product is not available. If we could somehow compare that world with the world that includes online purchases, we would be able to discern the true relationship between the two products. The most sophisticated businesses use three approaches to get closer to the truth: pattern recognition, trend analysis, and experiments.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Did you notice the pattern in the three examples? In each instance, we predicted substitution when in fact the new technology turned out to increase the willingness-to-pay (WTP) for existing products and activities. This type of bias is the norm. We fear change; potential losses loom larger than similar gains, a phenomenon that psychologists Amos Tversky and Daniel Kahneman call loss aversion.12 Loss aversion keeps us preoccupied with the risk of substitution even when we look at complementarities.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Complements help raise WTP. The currency that counts in competition is customer delight, and complements are a powerful means of increasing WTP and, as a result, creating more value for customers.”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance

“Products and services that raise the willingness-to-pay (WTP) for another product are called complements. These (easily overlooked) helpers contribute substantially to the WTP of just about every product ever created. Just think of all the complements without which cars would be far less valuable: roads, parking garages, gas stations, repair shops, GPS, and driving schools (figure 6-1).”
― Felix Oberholzer-Gee, Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance