Happiness strategy for competitive advantage

March 20 is celebrated as International Day of Happiness. Companies today face constant competition to survive and grow. The article notes that strategy must adapt to these challenges, as research shows it has a 90% failure rate. To address this, the author introduces a new approach namely, happiness strategy.

A happiness strategy is to relook at a business through a happiness perspective and integrate happiness into all aspects of the company, from vision to daily operations, to tackle business challenges and explore emerging opportunities, resulting in a competitive advantage for the organisation. The happiness strategy approach includes both internal and external stakeholders: employees, business functions across the organisation as internal customers; and customers, suppliers, government and society as external customers. 

Happiness strategy for competitive advantage

A happiness strategy aligns personal and company goals. Strategy often fails when individual and organisational objectives differ. Since people seek happiness, but companies rarely address this, motivation and commitment decline. A happiness strategy seeks to unify these goals, strengthening engagement and competitive advantage.

This goal alignment leads to better performance. Research indicates that happiness improves outcomes in marketing, finance, operations, and HR. As a result, the happiness strategy becomes integral to company operations and competitive advantage.

There are three main ways companies can have a competitive advantage: by leading on cost, standing out from others, or doing both. It says a happiness strategy can help with all of these. For cost leadership, the focus is on reducing costs and cutting losses. Since employees are a high cost, especially in knowledge-based companies, unhappy or stressed workers take more sick days and perform worse, which costs money. A happiness strategy that improves employee well-being can help reduce these losses.

Relationships, particularly teamwork, are another important part of controlling costs. Research shows that good relationships are key to team building and teamwork. Stressed or unhappy employees can cause conflict and lower team spirit, which hurts performance. Happier employees, on the other hand, build better relationships, leading to stronger teams and less conflict. This helps reduce costs. Also, happy employees are less likely to leave. Unhappy or stressed employees make more mistakes, but happiness can reduce these errors. Research also shows that happier employees are more productive, so a happiness strategy can make the company more efficient and lower costs. The article also connects happiness to innovation, which can help a company stand out or save money. Aligning goals, as mentioned earlier, can also create benefits that lower costs. Overall, the article sees happiness strategy as a practical way to achieve cost leadership.

The second way to a competitive advantage is through differentiation. Research shows that happiness supports innovation, which helps companies stand out. Good relationships also lead to stronger teams and better performance, which supports differentiation. Aligning personal happiness with company goals creates benefits beyond cost savings, such as differentiation. Also, motivated and satisfied employees are more likely to support the company’s strategy, including efforts to differentiate from competitors.

The third approach is dual advantage, combining cost leadership and differentiation. And innovation enables companies to achieve both. Since happiness strategy lowers costs and encourages innovation, it supports dual advantage. Motivated and engaged employees further contribute to this combined strategy.

In a fast-changing and unpredictable world, companies need new strategies. Happiness strategy is one such approach, empowering business leaders to outperform competitors and secure sustainable advantage in today’s business environment.

Key insights and takeaways 

Happiness strategy is a new way of looking at strategy that puts happiness at the centre of the business. It leads to better goal alignment between the individual and the organisation. It leads to competitive advantage by cost leadership, differentiation, and dual advantage. Happiness strategy, when implemented both in letter and in spirit, can be a big help to the organisation’s strategy and competitive advantage.

(The author is a Professor of Strategy at the Management Development Institute, Gurgaon. He is popularly known as India’s Happiness Professor and his latest work is The Indian Practice of Happiness: Secrets from Centenarians. He could be reached via email [email protected])