How is value defined in strategy?

Value is the difference between customers' willingness to pay and suppliers' willingness to sell.

What factors contribute to customer success?

Customers are successful when the price is below their willingness to pay.

How is employee value and customer delight defined?

Employee value is the difference between compensation and willingness to sell, and customer delight is the difference between willingness to pay and price.

How can an organization increase profitability?

The profitability of an organization reflects the amount of overall value created, which can be increased by improving product/service quality and other less obvious methods.

Simplifying Strategy: Boosting Customer Value and Lowering Supplier Costs

Name: Simplifying Strategy: Boosting Customer Value and Lowering Supplier Costs
Uploaded: 2023-04-17 12:29:05
Description: Strategy is a plan to create value by increasing customers' willingness to pay and lowering suppliers' willingness to sell.

This article is a summary of a YouTube video "What Is Strategy? It’s a Lot Simpler Than You Think" by Harvard Business Review

TLDR Strategy is a plan to create value by increasing customers' willingness to pay and lowering suppliers' willingness to sell.

Key insights

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Understanding willingness to pay and willingness to sell is crucial for creating more value for customers, employees, and suppliers.
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The success for customers is just a difference between willingness to pay and price.
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The difference between willingness to pay and price is significant in creating customer delight.
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There are three ways to raise willingness to pay: improving the quality of the product or service, and two other less obvious methods.
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To be more attractive in the market for talent, companies can either pay more money or create more attractive working conditions and benefits.
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Best Buy's turnaround shows that strategy is not always about complexity, but rather about finding a clear and effective path forward.
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By increasing customers' willingness to pay and lowering willingness to sell, Best Buy was able to become more profitable and have a return on invested capital that exceeds 20%.

Q&A

What is strategy?

— Strategy is a plan to create value by increasing customers' willingness to pay and lowering suppliers' willingness to sell.
How is value defined in strategy?

— Value is the difference between customers' willingness to pay and suppliers' willingness to sell.
What factors contribute to customer success?

— Customers are successful when the price is below their willingness to pay.
How is employee value and customer delight defined?

— Employee value is the difference between compensation and willingness to sell, and customer delight is the difference between willingness to pay and price.
How can an organization increase profitability?

— The profitability of an organization reflects the amount of overall value created, which can be increased by improving product/service quality and other less obvious methods.

Timestamped Summary

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00:00
Strategy is a plan for future value creation.
💰

00:47
Value is the gap between what customers are willing to pay and what suppliers are willing to sell.
💰

01:44
Customers succeed when price is lower than their willingness to pay.
💰

02:20
Employee value and customer delight are determined by the differences between compensation/willingness to sell and willingness to pay/price.
💰

03:13
Increasing organizational value can be achieved through product/service quality and other methods.
💰

04:15
Companies can increase their appeal to talent by improving pay and working conditions.
💰

05:27
Redistributing money doesn't create value, making the job more attractive does.
🔥

06:22
Best Buy was saved from bankruptcy by a new CEO's successful strategy of increasing customers' willingness to pay and lowering willingness to sell, resulting in a return on invested capital of over 20%.