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“
Companies should simplify and focus on two value drivers, he argues: customer satisfaction and employee satisfaction. By aligning strategic initiatives to these alone, strategies should help leaders make their workers’ jobs less complicated and improve customer experiences.
What is a Strategy?
My takeaways
As I mentioned in a previous post, designers must become skilled facilitators that respond, prod, encourage, guide, coach, and teach as they guide individuals and groups to make decisions critical in the business world through effective processes. Few decisions are more challenging than deciding how to prioritize.
I’ve seen too many teams deciding by asking, “What can we implement with the least effort” or “What are we able to implement,” instead of “what brings value to the user.”
From a user-centered perspective, the most crucial pivot that needs to happen in the conversation between designers and business stakeholders is the framing of value:
- Business value
- User value
- Value to designers (sense of self-realization? Did I positively impact someone’s life?)
The mistake I’ve seen many designers make is to look at prioritization discussion as a zero-sum game. Our user-centered design tools set may have focused too much on the user’s needs at the expense of business needs and technological constraints.
That said, there is a case to be made that designers should worry about strategy because it helps shape the decisions that not only create value for users but value for employees. And here is why.
Companies that achieve enduring financial success create substantial value for their customers, their employees, and their suppliers.
Oberholzer-Gee, F. (2021). Better, simpler strategy (2021)
I recently had a conversation with the participants of the Strategy Multiplier Program I’m running at SAP and they all got very curious about Oberhozer-Gee’s Value Stick:
The Value Stick is an interesting tool that provides insight into where the value is in a product or service. It relates directly to Michael Porter’s Five Forces, reflecting how strong those forces are: Willingness to Pay (WTP), Price, Cost, and Willingness to Sell (WTS). The difference between Willingness to Pay (WTP) and Willingness to Sell (WTS) — the length of the stick — is the value that a firm creates (Oberholzer-Gee, F., Better, simpler strategy, 2021)
This idea is captured in a simple graph, called a value stick. WTP sits at the top and WTS at the bottom. When companies find ways to increase customer delight and increase employee satisfaction and supplier surplus (the difference between the price of goods and the lowest amount the supplier would be willing to accept for them), they expand the total amount of value created and position themselves for extraordinary financial performance.
I don’t know about you, but I’m not in this (only) for the money: I feel my work needs to mean something, create value, and change people’s lives! For the better! We need to bring users’ needs to the conversation and influence the decisions that increase our customer’s Willingness to Pay (WTS) by — for example — increasing customers’ delight so that we can create products and services we are proud to bring into the world!
In conversation with the Strategy Multipliers, I told them that — with the Value Stick — I saw for the first time a framework that visualises what we all intuitively believe: strategy should not be about helping the “bottom line” only, but also getting leadership stakeholder to understand that aspirational strategies will employees excited about the future they should be helping to create!
Becoming a Design Strategist
Let’s raise awareness about how unprepared designers are to understand and influence strategy, advocate for a new role called Design Strategist, and propose a minimum set of skills required for becoming a Design Strategist.
About 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, Professor Oberholzer-Gee received his Masters degree, summa cum laude, and his Ph.D. in Economics from the University of Zurich. His first faculty position was at the Wharton School, University of Pennsylvania. He currently teaches competitive strategy in executive education programs such as the Program for Leadership Development, the Senior Executive Program for China, and in 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. Professor Oberholzer-Gee 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. Prior to his academic career, Professor Oberholzer-Gee served as managing director of Symo Electronics, a Swiss-based process control company.
Recommended Reading
McCullagh, K., “Strategy for the Real World” in Building Design Strategy: Using Design to Achieve Key Business Objectives, Lockwood, T., Walton, T., (2008), 272 pages, Publisher: Allworth Press; 1 edition (November 11, 2008)
Mintzberg, H., (2001), “Crafting Strategy” in Harvard Business Review, 65(3):469.
Oberholzer-Gee, F. (2021). Better, simpler strategy: A value-based guide to exceptional performance. Boston, MA: Harvard Business Review Press.
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[…] should simplify and focus on two value drivers, Professor Oberholzer-Gee argues: customer satisfaction and employee satisfaction. By aligning strategic initiatives on these alone, leaders make their workers’ jobs less […]