Success comes from value creation.    For a strategic initiative to create value, it must increase willingness to pay or decrease willingness to sell. Otherwise, the resources expended will not flow into profitability.   Today’s discussion is one I was looking forward to because we’re focusing on value-based strategy frameworks and using strategic analysis to understand whether a company has a competitive advantage. Joining us to explore this topic is someone who has taken a fundamentally sound framework and brought it to life with excellent insights and vivid examples, Felix Oberholzer-Gee.   Felix Oberholzer-Gee is the Andreas Andresen Professor of Business Administration in the Strategy Unit at Harvard Business School. A member of the faculty since 2003, Felix has won numerous awards for excellence in teaching, including the Harvard Business School Class of 2006 Faculty Teaching Award for best teacher in the core curriculum and the 2002 Helen Kardon Moss Anvil Award for best teacher in the Wharton MBA program. He teaches competitive strategy in executive education programs such as the Program for Leadership Development, the Senior Executive Program for China, and a program for media executives titled Effective Strategies for Media Companies. His course, Strategies Beyond the Market, is a popular elective class for second-year MBA students. Felix is the author of numerous books, and his latest book, Better, Simpler Strategy, will be a major subject of today’s conversation.   In this episode, Felix, Tano, and I discuss how Felix defines his strategy framework, why willingness to pay and willingness to sell should be at the core of every strategy conversation, the value of ROIC as a metric of success, how Felix thinks about driving competitive advantages, value capture versus value creation, how to think about complements and substitutes, the potential for innovation and productivity growth, and so much more! Key Topics:   Welcome Felix to the show (2:03) Why a Ph.D. for career advancement unexpectedly led to Felix’s transition into academia (2:24) How case writing guides Felix’s interests and research focus (4:20) Defining a value-based strategy framework (6:25) Why should every conversation start with “Are we increasing willingness to pay or are we decreasing willingness to sell?” (10:08) Why Felix chose return on invested capital (ROIC) as a primary metric (12:40) Looking at ROIC distribution over the long term (14:22) Focusing on creating a competitive advantage inside of your industry segment (18:25) The significant issues strategists have with P&L statements (21:31) Value capture versus value creation (24:56) Determining willingness to pay (28:21) Harnessing network effects to increase willingness to pay (29:19) When to be worried about new entrants (33:18) Types of relationships between complementors (36:59) Understanding complements and value creation (40:26) Identifying complements and subtitutes (43:27) The effect of different management practices on productivity and willingness to sell (50:53) Tying willingness to pay and willingness to sell to strategy maps (56:01) Case study: Best Buy (58:09) The potential for innovation and productivity growth (1:02:09) Why Felix is obsessed with the differences between how we think about products and services versus jobs (1:04:50) Felix’s book recommendations (1:08:18) And much more! Mentioned in this Episode:   Felix Oberholzer-Gee’s Book | Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance Youngme Moon’s Book | Different: Escaping the Competitive Herd Frances Frei & Anne Morriss’ Book | Uncommon Service: How to Win by Putting Customers at the Core of Your Business Thanks for Listening!   Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.   Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!

Rita McGrath from Columbia Business School, Felix Oberholzer-Gee from Harvard Business School, and Derek van Bever, also from Harvard, dive into the fascinating world of disruptive innovation. They discuss its origins, tracing back to a ceramic startup that challenged industry giants in the 1980s. The conversation highlights the shift from product innovation to innovative business models and critiques of the theory's application. They explore lessons from the dot-com boom and emphasize the need for established companies to adapt while balancing current operations with future opportunities.

Felix Oberholzer-Gee, a Harvard Business School professor and author of "Better, Simpler Strategy," discusses the pitfalls of overwhelming strategic complexities in organizations. He champions a streamlined approach focused on two core value drivers: customer and employee satisfaction. By simplifying strategic initiatives, companies can enhance both worker experiences and customer engagement. Oberholzer-Gee also shares innovative methods for aligning teams around these values and adapting strategies for better performance in competitive markets.

Felix Oberholzer-Gee, a professor at HBS Online specializing in business strategy, discusses the pitfalls of buzzword-heavy jargon in leadership. He underscores the critical need for clarity in strategic planning to avoid confusion. Oberholzer-Gee also critiques the shifting definitions of disruption, advocating for precise language to bolster competitive advantage. The conversation touches on effective decision-making, emphasizing transparency and team collaboration as keys to fostering trust and resilience in leadership.

Harvard Business School professors discuss U.S.-China trade, Disney, CVS Health, short-termism, and persuasive opinions. They recommend NBER, 'Bel Canto', 'Chernobyl', 'Fleabag', and the 'Best Green Salad in the World'.