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.