Strategy in Three Minutes. Episode One.

This is the first issue of Strategy in Three Minutes. Once a week, on Thursdays, you'll receive bite-sized, easily digestible messages related to business strategy.

1. Business Model and Value Exchange

Our world is a vast marketplace of value. We create value to receive value. Strategy is a set of actions aimed at creating more value for customers, employees, and partners and capturing more value from them.

The business model answers two questions:

[1] For whom do we create value?

[2] From whom do we capture value?

Image is generated by Dall-E 3

For instance, a retail chain creates value for all six stakeholder groups: customers, employees, business partners, shareholders, regulators, and society.

But above all, a retail chain creates value for shoppers.

It captures value from shoppers and suppliers who pay for special terms.

A newspaper creates value for readers and captures value from them through subscriptions and from advertisers.

Contemplation questions:

[1] Do you have a list of priority customer segments for whom you should create value?

[2] Does this value meet their needs?

[3] How could you create more value for customers?

[4] From whom do you capture value, and how could you capture more?

2. Customer cognitive biases

Veblen Goods

Our customers are humans, and nothing human is alien to them.

A Veblen good is a product for which the demand increases as the price increases.

A rich man bought a tie.

But then he learned he could buy the same tie at a higher price and got upset.  

The higher prices of Veblen goods may make them desirable as a status symbol. 

Packard was an American luxury automobile manufacturer founded in 1899.

The company was successful, but in the 1950s, its leadership launched several more affordable models to the market.

It was a mistake.

Wealthy consumers stopped seeing Packard cars as a status symbol and ceased buying them.

Contemplation questions:

[1] Do you have Veblen goods in your lineup?

[2] Do you consider adding such products to your product line?

[3] What value could they deliver to customers?

Check out my new book, Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism, here.

3. Trend Of The Week

Gen AI, Forbes, future predictions and sustainability

Forbes published an article with HR trend predictions for 2024 on 4 January 2024. It is now mid-year, and we can reflect on whether they are coming true.

Here is a short summary of the article. If you'd like to read the whole text, please DM me, and I will send you the link.

[1] In 2024, Generative AI will shake up how we think about what work we do and what we delegate to our new “work buddy.” This will be the year of specialized AI-powered assistants working side by side with humans.

[2] Generative AI will impact how managers lead. The impact on managers is not simply in training employees on how to use Gen AI, but also in helping managers lead teams of humans and digital workers.

[3] The Fear of Obsolescence Will Force Companies to Increase Spending in Career Development & Mobility.

[4] Companies need to stop debating the merits of hybrid work and realize this is the new way of working for many knowledge workers as we enter 2024.

[5] Cognitive skills will Increase in importance as Generative AI gains traction.

[6] The sexy C-suite job for 2024 is Chief Artificial Intelligence Officer.

[7] An organization’s sustainability record will attract and retain talent.

In my personal opinion, nothing of the above is becoming a part of our reality except maybe point #6.

But what do you think? Which trends predicted by Forbes are here to stay?

Please share your opinion in the comments.

---

Get strategic insights in my main newsletter Strategic Seeing.

Help me make this newsletter popular: share this post on social media or restack it here.

Read also: Business As The Art of Breathing Underwater.