Felix Oberholzer-Gee is a professor at Harvard Business School and the author of Better, Simpler Strategy. He is known for developing the "value stick," a framework that evaluates business strategy based on raising a customer's willingness to pay and lowering an employee's willingness to sell. This profile synthesizes his practical approach to cutting through organizational complexity and focusing on the variables that drive performance.

Visual summary of operating lessons from Felix Oberholzer-Gee.

Part 1: The Core Mechanics of Value

  1. On the Goal of Strategy: "The key to progress is a relentless focus on value creation, not value capture. Fortunately, there is no contradiction." — Source: [Better, Simpler Strategy]
  2. On Strategic Relevance: "If no one misses you, if your value stick resembles everybody else's, you are not making a difference." — Source: [Better, Simpler Strategy]
  3. On the Value Stick: "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?" — Source: [HBR IdeaCast]
  4. On Financial Success: "If it is not going to create the kind of value that ultimately gets translated into financial success for customers, employees, or suppliers, they do not touch it." — Source: [Harvard Business School]
  5. On Strategy's Foundation: "Value creation is the distance between willingness to pay and willingness to sell." — Source: [Harvard Business Review]
  6. On Profit vs. Value: "Profit is simply the fraction of the total value created that a company manages to capture." — Source: [Better, Simpler Strategy]
  7. On Competitive Advantage: "Sustainable advantage is rooted in creating more value than rivals, rather than simple profit maximization." — Source: [The Parlor Room]
  8. On Self-Interest: "The companies that perform best do not think about themselves first and foremost. They dream up ever better ways to create value for others." — Source: [Better, Simpler Strategy]
  9. On Defining Value: "Value for customers is the difference between their appreciation of a product or a service and what they have to pay for it." — Source: [Harvard Business Review]

Part 2: Customer Willingness to Pay (WTP)

  1. On Willingness to Pay: "Willingness to pay is the maximum amount a customer would rationally spend to acquire a product or service." — Source: [Better, Simpler Strategy]
  2. On Customer Delight: "The gap between a customer's willingness to pay and the actual price they are charged is customer delight." — Source: [HBS IdeaCast]
  3. On Raising WTP: "You do not raise WTP by simply lowering the price. You raise it by making the product fundamentally more appealing or useful." — Source: [The Parlor Room]
  4. On Complements: "Products that are used together can dramatically increase a customer's willingness to pay for both." — Source: [Better, Simpler Strategy]
  5. On Differentiation: "True differentiation means moving your customer's WTP independently of what your competitors are doing." — Source: [Harvard Business Review]
  6. On Feature Bloat: "A new feature that costs money to develop but does not increase the customer's maximum willingness to pay is a strategic error." — Source: [After Hours Podcast]
  7. On Subjectivity: "Willingness to pay is inherently context-dependent and varies wildly depending on the specific problem the customer is trying to solve in that moment." — Source: [Harvard Business School]
  8. On Trust: "Brand connection and trust act as direct multipliers for willingness to pay." — Source: [Better, Simpler Strategy]
  9. On Price Ceilings: "If your price ever exceeds a customer's WTP, the transaction simply will not happen." — Source: [The Parlor Room]

Part 3: Employee Willingness to Sell (WTS)

  1. On Willingness to Sell: "Willingness to sell is the lowest compensation an employee would accept to take a job." — Source: [Harvard Business Review]
  2. On Lowering WTS: "You lower willingness to sell not by cutting wages, but by making work more attractive." — Source: [Better, Simpler Strategy]
  3. On Non-Monetary Value: "Flexibility, autonomy, and a good culture are forms of compensation that effectively reduce an employee's WTS." — Source: [After Hours Podcast]
  4. On Wage Increases: "Raising pay simply redistributes existing value. Making a job genuinely better creates new value by expanding the gap between WTS and WTP." — Source: [HBS IdeaCast]
  5. On Job Quality: "If you offer a terrible work environment, you will have to pay a steep premium just to keep people from leaving." — Source: [The Parlor Room]
  6. On Meaningful Work: "Employees who find meaning in their daily tasks have a substantially lower willingness to sell their labor to a competitor." — Source: [Better, Simpler Strategy]
  7. On Talent Retention: "Retention achieved through lower WTS is far more sustainable than retention bought through constant salary hikes." — Source: [Harvard Business School]
  8. On Workplace Culture: "Developing a positive corporate culture makes the organization a more attractive place to work, lowering the threshold for recruitment." — Source: [Harvard Business Review]
  9. On Compensation: "The difference between WTS and the actual wage paid is the value the employee captures from the relationship." — Source: [Better, Simpler Strategy]
  10. On Employee Experience: "The strategic lever is improving the lived experience of the worker." — Source: [After Hours Podcast]

Part 4: Supplier Relationships and Cost

  1. On Supplier WTS: "Suppliers have a willingness to sell, which is the lowest price they will accept for their goods or services." — Source: [Harvard Business Review]
  2. On Reducing Supplier Costs: "Helping a supplier reduce their own operating costs automatically lowers their WTS." — Source: [Better, Simpler Strategy]
  3. On Predictability: "Offering suppliers stable, predictable demand is a non-monetary benefit that can drastically lower their WTS." — Source: [The Parlor Room]
  4. On Squeezing Partners: "Squeezing suppliers on price is a zero-sum game; lowering their WTS by being a better partner expands the total value." — Source: [HBS IdeaCast]
  5. On Data Sharing: "Sharing inventory data and forecasts with suppliers helps them optimize, which lowers the minimum price they need to charge." — Source: [Better, Simpler Strategy]
  6. On Supply Chain Strategy: "A supplier's WTS applies to every input factor a company consumes." — Source: [Harvard Business School]
  7. On Long-term Contracts: "Long-term relationships reduce transaction costs and risk, fundamentally altering the supplier's cost structure." — Source: [After Hours Podcast]
  8. On Input Quality: "If you lower a supplier's WTS, you can capture that value as lower costs or reinvest it into higher quality inputs." — Source: [Better, Simpler Strategy]
  9. On Mutual Benefit: "The goal with suppliers is to create a scenario where they are highly motivated to serve you because doing so is easy and profitable for them." — Source: [Harvard Business Review]

Part 5: Eliminating Strategic Overload

  1. On Initiative Fatigue: "Many organizations struggle with strategic overload, pursuing too many initiatives, which leads to complexity and limited impact." — Source: [Harvard Business Review]
  2. On Focus: "Rather than spreading resources across a wide array of projects, leaders must prioritize the one or two value drivers where they can outperform." — Source: [HBS IdeaCast]
  3. On Saying No: "Strategy is as much about deciding what not to do as it is about picking what to pursue." — Source: [Better, Simpler Strategy]
  4. On Project Approval: "If an initiative does not move WTP or WTS, it is a distraction, no matter how interesting it seems." — Source: [The Parlor Room]
  5. On Value Maps: "Value maps are a visualization tool to identify exactly where a company is currently delivering benefits and where it is wasting effort." — Source: [Harvard Business Review]
  6. On Resource Allocation: "Strategic overload happens when a company tries to beat competitors on every single dimension of a value map." — Source: [Better, Simpler Strategy]
  7. On Execution Speed: "The simplicity of the strategy is key if one is to execute at breakneck speed." — Source: [Harvard Business School]
  8. On Alignment: "It is much easier to align an entire organization around two critical value drivers than a twenty-point strategic plan." — Source: [After Hours Podcast]
  9. On Zombie Projects: "Organizations lack the discipline to kill projects that are fun to do but fail to generate real value." — Source: [HBS IdeaCast]
  10. On Simplification: "Companies can make their strategies more powerful by selecting fewer, higher-impact initiatives." — Source: [Harvard Business Review]

Part 6: Growth, Scale, and Competition

  1. On Competitive Rivalry: "You avoid brutal rivalry not by attacking competitors, but by differentiating your value stick." — Source: [Better, Simpler Strategy]
  2. On the Limits of Scale: "Scale alone does not guarantee a sustainable advantage if it fails to translate into a higher WTP or a lower WTS." — Source: [Harvard Business Review]
  3. On Market Share: "Market share is an outcome of a superior value stick, not a strategy in itself." — Source: [The Parlor Room]
  4. On Digital Transformation: "Digital technologies are only strategically useful if they fundamentally alter the customer's willingness to pay or the firm's cost structure." — Source: [After Hours Podcast]
  5. On Network Effects: "Network effects can plateau; simply having more users does not infinitely raise WTP." — Source: [Harvard Business School]
  6. On Imitation: "Copying a competitor's moves usually just leads to price convergence and eroded margins." — Source: [HBS IdeaCast]
  7. On Competing on Cost: "Trying to win purely on price without structurally lowering WTS is a fast track to destroying value." — Source: [Better, Simpler Strategy]
  8. On Technological Change: "The rate of change in modern companies is often overstated; the fundamental rules of value creation remain constant." — Source: [UnSILOed Podcast]
  9. On Industry Disruption: "Disruptors win by finding entirely new ways to structure the value stick, usually by drastically lowering WTS." — Source: [The Parlor Room]

Part 7: Execution and Simplicity

  1. On Daily Operations: "Every employee, from the executive team to the store manager, needs to know exactly how they help move WTP or WTS." — Source: [Better, Simpler Strategy]
  2. On Complexity: "Complex strategy frameworks paralyze action and confuse the frontline workers who actually have to execute them." — Source: [Harvard Business Review]
  3. On Decentralization: "When the strategy is simple, decision-making can be decentralized because everyone understands the criteria for a good idea." — Source: [HBS IdeaCast]
  4. On Testing Ideas: "Before launching a new feature, managers should have to explicitly state whether it is designed to increase WTP or decrease WTS." — Source: [Harvard Business School]
  5. On Clarity: "A good strategy fits on a single piece of paper." — Source: [Better, Simpler Strategy]
  6. On Actionable Metrics: "WTP and WTS are not abstract concepts; they are practical filters for everyday operational decisions." — Source: [The Parlor Room]
  7. On Strategic Agility: "Simplicity allows an organization to pivot rapidly when market conditions change." — Source: [After Hours Podcast]
  8. On Translating Vision: "The job of management is translating abstract goals into concrete actions that visibly alter the value stick." — Source: [Better, Simpler Strategy]
  9. On Continuous Improvement: "Can I ask you to never tire of seeking new ways to increase WTP and lower WTS?" — Source: [Better, Simpler Strategy]
  10. On Middle Management: "Middle managers are most effective when they act as editors, filtering out initiatives that do not clearly impact value creation." — Source: [Harvard Business Review]

Part 8: Leadership and Trade-offs

  1. On Leadership Choices: "The most difficult job of a leader is telling eager, smart employees that a good idea will not be pursued." — Source: [HBS IdeaCast]
  2. On Courage: "It takes courage to ignore what competitors are doing and focus entirely on your own value drivers." — Source: [Better, Simpler Strategy]
  3. On Communication: "Leaders must constantly communicate the why behind decisions by linking them back to the value stick." — Source: [The Parlor Room]
  4. On Balancing Priorities: "You cannot simultaneously maximize WTP and minimize WTS across the board; strategy requires choosing a distinct posture." — Source: [Harvard Business Review]
  5. On Evaluation: "Executives should be evaluated on the total value they create, not just the short-term financial metrics they capture." — Source: [Harvard Business School]
  6. On Trade-offs: "A strategy without painful trade-offs is not a strategy; it is a wish list." — Source: [Better, Simpler Strategy]
  7. On Social Responsibility: "When a company increases value for customers and improves conditions for workers, it fulfills its highest social purpose." — Source: [After Hours Podcast]
  8. On Legacy: "The mark of a great leader is leaving behind an organization that fundamentally understands how to generate its own value." — Source: [HBS IdeaCast]
  9. On the Long View: "Leaders who obsess over the size of the profit margin often destroy the very value creation engine that generated it in the first place." — Source: [Better, Simpler Strategy]