Blue Ocean StrategyCh7
Transcript of Blue Ocean StrategyCh7
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Blue Ocean Strategy
Chapter 7
Overcome Key Organizational
Hurdles
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EXECUTION for a profitable business
model is key, although it can be verychallenging.
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Blue oceans represent a significant exit from
the status quo..They hinge on a shift from
convergence to divergence in value curves at
lower costs.
This raises the execution bar.
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4 Hurdles
1. Cognitive.
2. Limited Resources.
3. Motivation
4. Politics.
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5th Principle of Blue Ocean Strategy
* Overcome key organizational hurdles to make
blue ocean strategy happen in action.
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Tipping Point Leadership
This allows you to overcome the four hurdles
fast and at a low cost, while winning
employees backing in executing a break from
the status quo. (pg. 148)
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New York City Police Department
(NYPD)
In the early 1990s, New York City was heading
toward anarchy. (Crimes and Murders were at
an all time high)
Bill Bratton was police commissioner of NYC
during the time, with a very small budget to
utilize.
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Bill Brattons
Blue Ocean Strategy
In less than 2 years and without an increase in his
budget, Bratton turned NYC into the safest large city in
the U.S.
Used a blue ocean policing strategy that revolutionizedU.S. policing as it was then known.
Profits jumped and Customers won.
Crime rates have continued to fall due to this.
Defying conventional wisdom, Bratton achieved these
results in record time with few resources, lifting
employee morale, creating a win- win for all involved.
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The Four Organizational Hurdles to
Strategy Execution
Cognitive Hurdle- An organization wedded to
the status quo
Resource Hurdle- Limited resources
Motivational Hurdle- Unmotivated staff
Political Hurdle- Opposition from powerful
vested interests
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The Pivot Lever: Disproportionate
Influence Factors
Key to unlocking an epidemic movement is
concentration, not diffusion. (pgs. 150-151)
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The Pivot Lever: Disproportionate
Influence Factors
Tipping point leadership builds on the rarely
exploited corporate reality that in every
organization, there are PEOPLE, ACTS, and
ACTIVITIES that exercise a
DISPROPORTIONATE INFLUENCE on
performance. (pg. 151)
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Break Through the Cognitive Hurdle
There are only two performance alternatives: to
make the performance targets or to beat them.
Figures can be manipulated Even when the numbers are not manipulated, they can be
misleading
Stretch goals encourage abuse
Which leads to hostility and suspicion among the parts of
the organization
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Tipping Point Leadership
Does not rely on numbers to break through
the organizations cognitive hurdle
Seeing is Believing
Builds on insight to inspire a fast change in
mindset that is internally driven of peoples
own accord
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Ride the Electric Sewer
Employees must come face-to-face with the
worst problems
Showing the worst reality to your superiors can
shift their mind-set
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New York Subway
Was feared by New Yorkers
Citizens boycotted the system
Only 3% of the citys major crimes happenedon the subway
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Massachusetts Bay Transportation
Authority
Squad Car Problem
MBTA
Brattons Strategy
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Meet with Disgruntled Customers
Dont rely on market surveys
Do you ever wonder why sales dont match
your confidence in your product?
There is no substitute for meeting and listening to
dissatisfied customers
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Bostons Police District 4
High crime rates
People were moving out of the neighborhood
Brattons strategy
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Jump the Resource Hurdle
How do you get an organization to execute
strategic shifts with fewer resources?
Hot Spots: activities that have low resource input
but high potential performance gains
Cold Spots: activities that have high resource input
but low performance impact
Horse trading: involves trading your units excessresources in one area for another units excess
resources to fill remaining resource gaps
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Jump the Resource Hurdle Cont.
What actions consume your greatest
resources but have scant performance
impact?
What activities have the greatest performance
impact but are resource starved?
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Redistribute Resources to YourHot Spots
Bratton achieved the sharpest drop in subwaycrime and disorder in Transits history byplacing police officers at targeted Hot spots.
Resulted in decrease in crime, while the size of thepolice force remained constant
Bratton identified the Hot spots in thenarcotics department and reallocated staff
and resources to those Hot spots
Resulted in decrease in drug related crime
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Redirect Resources from YourCold Spots
Leaders should free up resources by searching
out Cold spots
New York subway example
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Engage in Horse Trading
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Overcome Key Organizational
Hurdles
Jump the Motivational Hurdle
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Executing Blue Ocean Strategy
Alert employees of the need for change
Identify how strategy can be achieved
People must not only recognize the need forstrategic change but they must also acton
insight in a meaningful way
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Do Mass Reactions Require Mass
Actions?
Many business leaders think massive reaction
to strategy change requires massive action.
This is often cumbersome and expensive.
Is there an easier way?
Yes- Zoom in on Kingpins, Place Kingpins in a
Fishbowl, and atomize to get the organization
to change itself.
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Zoom in on Kingpins
Kingpin = Key influencer in the organization
As in bowling, when you hit the kingpins, the
rest of the pins come tumbling downwhich is
a good thing in this case.
Basically, a change catalyst within the
organization should start with kingpins and
eventually trickle down.
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Place Kingpins in a Fishbowl
Kingpins actions and inactions are made
transparent to others within the organization
like a fish in a bowl of water.
By doing this you greatly raise the stakes of
inaction.
Those who lag behind are exposed and a fair
stage is set for rapid change agents to shine
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Fair Process
In order for the fishbowl to work effectively,
the playing field must be levelthat is
responsibilities and expectations are clearly
stated for everyone to hear/see.
This means engaging all the affected people in
the process and explaining reasoning
associated with promotions and demotions.
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Atomize to get the Organization to
Change Itself
Atomization = framing of the strategic
challenge
Unless people believe the challenge is
attainable, the change is not likely to succeed.
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Secure a Consigliere on Your Top
Management Team
(A highly respected insider)
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** Tipping Point Leaders engage one role few
other executives think to include: a
CONSIGLIERE.
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Example ~ NYPD
Bratton from the NYPD always ensured that he had a
respected senior insider on his top team who knew
the challenges he would face in implementing the
new policing strategy. He appointed John Timoney as his number two
(basically a cops cop).
Timoney dramatically changed the guard by
reporting the likely attitudes of the top staff to the
NYPDs new policing strategy, identifying those who
would fight or silently sabotage the new initiative.
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Leverage Your Angels and Silence
Your Devils
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To knock down the political hurdles,
ask yourself 2 sets of questions:
1. Who are my devils? Who will fight for me?
Who will lose the most by the future blue
ocean strategy?
2. Who are my angels? Who will naturally align
with me? Who will gain the most by the
strategic shift?
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Example ~ NYPD
One of Brattons most serious threats with hisnew policing strategy came from New York Cityscourts.
They believed that his new strategy of focusingon quality of life crimes would overwhelm thesystem with small crime cases.
Bratton clearly illustrated to his supporters that
the court system could handle the quality of lifecrimes and that focusing on the, would in thelong term, actually reduce their caseload.
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Key to winning over your detractors or devils
is knowing all their likely angles of attack and
building up counterarguments backed by
irrefutable facts and reason. (pg. 168)
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Important Questions to Ask Yourself
Do you have a
consigliere in your top
management team?
Do you know who willfight you and who will
align with the new
strategy?
Have you built
coalitions with natural
allies to encircle
dissidents? Do you have your
consigliere remove the
biggest challenges?
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Challenging Conventional
Wisdom
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Conventional Wisdom vs. Tipping Point
Leadership
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Important Strategies to Remember:
Dont follow conventional wisdom.
In order to execute a strategic shift with
limited resources, use tipping point
leadership.
By addressing the hurdles to strategy
execution and focusing on factors of
disproportionate influence, this leads toactualizing a strategic shift.
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Important Strategies to Remember:
Focus on acts of disproportionate influence.
~ This is a critical leadership component
for making blue ocean strategy happen.
~ It aligns employees actions with the new
strategy.