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!

In the 1980s, Clayton Christensen cofounded a startup that took over a market niche from DuPont and Alcoa. That experience left Christensen puzzled. How could a small company with few resources beat rich incumbents? It led to his theory of disruptive innovation, introduced in the pages of Harvard Business Review in 1995 and popularized two years later in The Innovators Dilemma. The idea has inspired a generation of entrepreneurs. It has reshaped R&D strategies at countless established firms. And it has changed how investors place billions of dollars and how governments spend billions more, aiming to kickstart new industries and spark economic growth. But disruption has taken on a popular meaning well beyond what Christensen’s research describes. Some critics argue that the theory lacks evidence. Others say it glosses over the social costs of lost jobs of bankrupted companies. And debate continues over the best way to apply the idea in practice. 4 Business Ideas That Changed the World is a special series from HBR IdeaCast. Each week, an HBR editor talks to world-class scholars and experts on the most influential ideas of HBR’s first 100 years, such as shareholder value, scientific management, and emotional intelligence. Discussing disruptive innovation with HBR editor Amy Bernstein are: Rita McGrath, professor at Columbia Business School Felix Oberholzer-Gee, professor at Harvard Business School Derek van Bever, senior lecturer at Harvard Business School Further reading: HBR: What Is Disruptive Innovation?, by Clayton M. Christensen, Michael E. Raynor, and Rory McDonald New Yorker: The Disruption Machine: What the Gospel of Innovation Gets Wrong, by Jill Lepore Business History Review: How History Shaped the Innovator’s Dilemma, by Tom Nicholas HBR: Disruptive Technologies: Catching the Wave, by Joseph L. Bower and Clayton M. Christensen

Felix Oberholzer-Gee, professor at Harvard Business School, says many organizations spend so much energy on strategy that it overwhelms with conflicting priorities. Instead, he argues companies should simplify and focus on two value drivers: customer satisfaction and employee satisfaction. By aligning strategic initiatives on these alone, leaders make their workers’ jobs less complicated and also improve customer experiences. Oberholzer-Gee is the author of the HBR article “Eliminate Strategic Overload” as well as the new book "Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance."

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'.

Marketing, economics, and finance professors from Harvard discuss Uber's struggles, Apple vs. Qualcomm, Pinterest's IPO, Brexit fallout, and TV shows about business. Topics include tech industry challenges, Brexit repercussions, TV portrayals, and the value of reading S1 documents. They also touch on a young artist's rise and a finance meme trend.