Executing Blue Ocean Strategy

Overcome Key Organizational Hurdles

Blue Ocean
Chapter 7
IRAN MBA
 Executing the Blue Ocean
• Challenge exists for all strategies
• Four Hurdles:
– Cognitive: getting employees onboard. (eliminating
comfort zone of current strategy)
– Limited Resources: The greater the shift from the
norm, the greater the need for resources to execute.
– Motivation: Key players (stakeholders) to break from
status quo.
– Politics: Internal and external resistance to change
• Use Tipping Point Leadership to overcome
hurdles fast, at a low cost, while winning
employees backing.
Four Organizational Hurdles
Cognitive Hurdle
An organization wedded
To status quo

Political Hurdle
Resource Hurdle Opposition from
Limited resources Powerful vested
interests

Motivational Hurdle
Unmotivated staff
 Tipping Point Leadership
• Use of organizational culture and leadership
style in which the belief that a fundamental
change can happen quickly when the beliefs and
energies of a critical mass of people create an
epidemic movement towards an idea.
• Key is concentration, not diffusion.
• There is a disproportionate influence by a few
key players, acts and activities, ie. Leveraging
those factors.
• Bill Bratton and NY Police.
 Key Questions?
• What factors or acts exercise a
disproportionately positive influence on
breaking the status quo?
– “Maximum bang for your buck”
– “Motivating key players to move aggressively
forward with change”
– “Knocking down political roadblocks that often
trip up strategies”
 Break Through Cognitive Hurdles
• Need to make people aware of the need for a
strategic shift and to agree on its causes.
• Not using financial measures as whip or tool to
“stretch and meet budgetary goals”,
• Make people see and experience reality first
hand. “seeing is believing”.
– Bratton made top brass ride the subway to and from
work to show how bad the crime was (gangs, winos,
aggressive begging).
– Get the managers out of the office, have them meet
with disgruntled customers first hand.
 Jump the Resource Hurdle
• Instead of asking for more resources, tipping
point advocates multiplying the value of the
resources you have.
• Three forces of disproportionate influence:
– Hot spots: activities that have low resource inputs but
high potential performance gains.
– Cold spots: activities that have high resource inputs
but low performance impact.
– Horse trading: trading your units excess resources for
another units excess resources to fulfill resource
gaps.
 Questions?
• What actions consume your greatest
resources but have little performance
impact?
• What activities have the greatest
performance impact but are resource
starved?
 Actions for Resource Hurdles
• Redistribute Resources to Hot Spots:
– Question the status Quo.
– Bratton achieved success with limited resources by
targeting the worst subway lines on the route and
targeting resources at it.
• Redirect Resources from Cold Spots:
– Bratton found a large time delay occurred in bringing
criminals from subway to station to process, so he set
up processing buses that was mobile to come and get
criminals.
• Engage in Horse Trading:
– Bratton traded unmarked cars that transit had for
office space which was in excess to transit division.
 Questions?
• Are you allocating resources based on old
assumptions, or do you seek out and
concentrate resources on hot spots?
• Where are your hot spots?
• What activities have the greatest performance
impacts but are resource starved?
• Where are your cold spots?
• What activities are resource oversupplied, but
have little performance impact?
• Do you have a horse trader, and what can you
trade?
 Jump the Motivational Hurdle
• For a new strategy to be successful, people
must not only recognize what needs to be done,
but must also act on that insight in a sustained
and meaningful way.
• Tipping Point strategy follows the course of
massive concentration, by focusing on three
disproportionate influencers in motivating
employees.
– Kingpins
– Fishbowls management
– Atomization
 Influencers - Motivation
• Focus on Kingpins
– The key influencers in the organization (based on powerbase,
O.B.), natural leaders, respected and persuasive.
• Fighting
• Place Kingpins in Fishbowl
– A sustained and meaningful way to shine a spotlight on the
actions in a repeated and highly visible way.
– Based on Transparency, Inclusion and Fair Process.
• Presentation of results at monthly manager meeting (like BSC
defense)
• Everyone knows how they are being evaluated.
• Atomize to Get the Organization to Change Itself
– Framing of the strategic challenge, as achievable, by breaking
down overall project in smaller or bite-size chunks.
– Bratton made the streets of NY safer, one block at a time.
 Questions?
• Do you indiscriminately try to motivate the
masses, or do you focus on key
influencers, your kingpins?
• Do you put the spotlight on and manage
kingpins in a fishbowl based on fair
process?
• Do you issue grand strategic visions, or do
you atomize the issue to make it
actionable to all levels?
Knock over the Political Hurdles
• Organizational politics are an inescapable reality
of corporate and public life.
• There are those who will resist the changes,
those who face to lose power or control as a
result of the changes.
• Three disproportionate influencers:
– Leverage Angels (those who have most to gain)
– Silencing Devils (those who have most to lose)
– Getting a consigliore on the management team. (well
respected person who knows the landscape, where
and who will oppose you, how and where and who will
support you.
 Build Execution into the Strategy
• To effectively execute the blue ocean strategy,
every person in the organization needs to be
involved and engaged in the process.
• To build employee’s trust and commitment, and
inspire voluntary cooperation
• Use of fair process will minimize the
management risk of distrust, non-cooperation,
and even sabotage.
 Fair Process affects People’s
Attitudes and Behaviours
Strategy Fair Process
Formulation Engagement
Process Explanation
Expectation Clarity

Trust and
Attitudes
Commitment
“My Opinion Counts”

Voluntary
Behaviour Cooperation
“I’ll go beyond the
Call of duty”

Strategy Exceeds
Execution Expectations
Self-initiated
 Fair Process

Voluntary
Intellectual and
Trust and Cooperation in
Fair Process Emotional
Commitment Strategy
Recognition
Execution

Intellectual and Refusal to

Violation of Distrust and
Emotional Execute
Fair process Resentment
Indignation Strategy
 Sustainability and Renewal of the
Blue Ocean
• Creating a blue ocean eventually will
attract other entrants/competitors and will
form a red ocean
• Reap benefits of first mover advantage.
• What barriers exist to blue ocean
imitators?
• When should a company look to find a
new blue ocean?
 Barriers to the imitation of blue
oceans
• CNN was ridiculed and not thought of as serious to other
stations.
• Brand image conflict. Body Shop used unconventional
advertising and for others to copy would invalidate their
current business models.
• Patents
• High volume sales and low cost through value innovation
reduces imitators on cost disadvantage, and economies of
scales.
• Network externalities. The more customers a product/service
has, the harder it is for others to enter the market and draw
customers away, ex. eBay and online auctioning.
• Politics, operational and culture change from having to
change business models of competitors may provide short-
term protection.
• Leap-in-value provides customer loyalty through branding.
 When to Look for New Blue
Oceans
• By constantly updating your strategy canvass,
you can see how others in the industry is trying
to converge on your value curve.
• By looking for ways to outdistance your
competitors on your value curve you may be
able to prevent them from converging.
• When you no longer have focus, divergence and
a compelling tag line, it is time to look for new
blue oceans.
 Last Piece of Advice
• The Value of an MBA: