Insights from Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne
Every business has competitors, whether in the business to consumer market or the business to business market. Each of these competitors are targeting the same dollars in the same customers pockets. Over time in this competitive market a few big fish emerge that conquer the majority of the market leaving multiple smaller fish to subsist on smaller more niche parts of the remaining market. This dynamic can be viewed as a red ocean of competition where each company is viciously competing with one another over the same type of customers for their business.
In the book Blue Ocean Strategy, the authors layout the purpose, strategy, and execution for identifying and moving into what they call “blue oceans” where there is a lack of competition. These blue oceans are unexplored markets that are ripe for businesses to move into and dominate. These blue oceans are the best way for smaller players to expand and grow their company as well as for larger companies to move into other markets and not be left behind as industries and markets change. The authors are clear to note, however, that moving into these new markets is not necessarily easy or straightforward as in order to innovate, companies must think and act counter to how they have operated in the past.
In order to help companies operate in this new way of thinking the authors have laid out six principles of successfully identifying and moving into a blue ocean, each one explained in depth in the book. These six principles are broken up into four principles to formulate and identify blue oceans and two principles for executing moving into these blue oceans. In this blog series, we will help layout these six principles starting first with the way in which to execute and following up with how to formulate these strategies. While this may seem counterintuitive, we have found that the principles of execution are applicable to any organizational change and are often the most eye-opening. Once made aware of how to change, the desire to find areas that can be changed flow very naturally afterwards.
In order to make fundamental changes in any organization that has operated differently in the past the company must utilize the concept of tipping point leadership in overcoming key organizational hurdles. The concept of tipping point leadership is that by focusing on the factors that have a disproportionate impact on an outcome, that change is far more likely to occur than if the focus had not been focused there. This concept can be applied to the four organizational hurdles to executing a blue ocean strategy.
The Cognitive Hurdle
The first hurdle often faced by agents of change is that the company’s leadership is unaware that change is necessary. Often it is the case that leadership believe that the company is operating successfully in its current state of operation. As a result of this cognitive hurdle, attempts to modify or change that state are met with resistance. The most effective way to break through this hurdle is by “eating your own dog food,” meaning to make leadership understand and work in the day to day position of the desired area of change. If the desired area of change is in customer service, having management sit in on calls and see the problems faced would be a great way for them to realize that change is necessary.
The Resource Hurdle
The second hurdle faced is one of a lack of resources. All companies face a limited budget and resources to operate on. The hurdle is compounded when trying to make fundamental organizational change. In order to deal with the common problem of limited resources, look to redistribute them to places that will have disproportionate effects on the business. Whether these hot spots are in advertising, hiring a new employee, or purchasing better quality products, first identify where resources would have the biggest impact. Once these hot spots have been identified, look for other places where resources are not being utilized efficiently or where there is an excess of resources. Often times these are places that are not looked at on a regular basis and can slowly eat up time and money while not providing an equivalent return on that investment. Once these two areas have been identified the most difficult part is to trade the resources from areas of excess which are not impacting the company enough to areas that are starved and will have a disproportionate amount of impact.
The Motivational Hurdle
The third hurdle is one of motivation of management to accept and desire change. Unless the people who are in charge of the operations and management of the company change, then no one else will change. The authors explain that these managers are like kingpins in bowling, where if one of them fall, then all of the pins will fall. The best way to motivate these kingpins is to place them in a “fishbowl” so that there is a spotlight on them where all eyes are on them holding them accountable. By making the expectations of each kingpin clear and holding them publicly accountable, they will in turn push themselves to not be publicly shamed for their failure to accomplish their goal. While it is unrealistic to expect one person to change an entire division, by breaking down goals into smaller goal, what the authors refer to as atomizing, kingpins will be able to hold those who they oversee accountable and create a chain of self oversight that will create true change with realistic expectations. Overcoming this motivational hurdle is key to getting buy-in from those who are looked up to and respected in an organization and without it, any change is unlikely to succeed.
The Political Hurdle
The final hurdle is one that is often one of the most difficult to overcome, but is where the authors truly show their accurate insight into the inner workings of organizations. All companies have office politics which impact by which processes, by whom, and how quickly get done. There are cliques that exist and people who do and or not like each other. Whether or not this is beneficial for companies is not the subject of the blog or book, but merely a stated reality of the life of a company. Due to this nature of dynamic, the authors lay out specific types of people that are necessary to deal with in order to create lasting change to an organization. The first are those with a vested interest in the organization. This group must be either silenced or brought to your side of thinking as they are kingpins who have a disproportionate effect on others within the organization. Viewing managers and other influential parties as either for or against the new changes is helpful in identifying how they must be influenced. The best way to do this is to bring what the authors refer to as a consigliere for your management team. This individual is well respected and has unique insights into the political dynamics of the company due to their tenure. They must be viewed as a conduit by which those in agreement with changes can be leveraged, and those who are against can be persuaded to not continually voice their opposition. While hearing critiques to the strategy is beneficial at the beginning of the process, continuing to repeatedly face it will only bring down moral and hurt the end goal of a quick and successful strategy implementation.
The Three E Principles of Fair Process
While the above four principles are necessary to implement change from above, there is a critical piece to the execution puzzle still missing and absolutely necessary to succeed. In order to truly have a successful change at an organization, the employees must be brought in under the the three principles of Fair Process. Unless there is buy in on the strategy by employees, then no true change will occur and dissatisfaction will increase leading to greater disorganization and a failure of implementation. In order to dissuade this from happening, the authors have identified the need for engagement, explanation, and clarity in expectations as the critical components of implementing true strategic change at an organization. When engaging in the open discussion with employees, often managers will be able to identify the problems that they will undoubtedly face when they overcome their cognitive hurdle through the process of eating their own dog food. By listening to employees, management will get increased buy in when implementing new changes at an organization.
Once management has engaged in open discussion, explaining openly why there is a need for the changes that are being implemented is critical. This deters interoffice gossip and rumors about potential reasons for the change which might have an adverse effect on the implementation of new strategy. This open discussion treats employees as equals rather than cogs in a machine and helps to create a sense of dialogue that can foster a better working relationship over the long term between both upper management and employees. The final principle of fair process is the clarity of expectations. By writing out and clearly stating from the beginning what new expectations are, employees will not fear them or feel that they have been mandated from above without any input from the people in their day to day roles. This goes hand in hand with the first principle of engagement in determining what is both fair and achievable in new roles while also explaining how role changes impacts success going forward.
Building this execution into the overall strategy from the beginning will help to bolster the chances of success when implementing changes to the organization. While these principles are beneficial for any desired change for an organization, when combined with a blue ocean strategy, these efforts are amplified and result in disproportionate results than other methods. A look at how to identify these blue oceans will be explained In the follow up to this blog.
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