The Blue Ocean Strategy (BOS) is a novel method for firms to gain a competitive advantage, that is, to earn superior profits over the competition. Paradoxically, the BOS makes competition irrelevant, since the new market space is uncontested. This is because the unchallenged BOS is founded on the principle of a leap in value for consumers and, as a double bonus, the BOS product is offered at relatively lower cost.
Such value innovation cannot immediately be matched by competitors. As such, the new market space remains “blue,” unsullied by competition. But once the innovative firm’s business model is copied, the ensuing competition “bloodies” the blue ocean. When the budget Southwest Airlines made its debut in the USA in 1984, it was a BOS. It remained a BOS until it was imitated by other airlines.
Morris Chang, the founding chairman of Taiwan Semiconductor Manufacturing Co. Ltd., once said, “Without strategy, execution is aimless; without execution, strategy is useless.” So, to complete the full cycle of a strategic move, that is, a series of actions from the conception of a BOS idea to its execution, a BOS must be implemented. Only then can it help a firm to gain superior profits and the first-mover advantage flowing from it.
This article examines how Chan Kim and Renee Mauborgne, the proponents of the BOS in their seminal 2015 work, Blue Ocean Strategy, and their 2017 sequel, Blue Ocean Shift, advocate the implementation of a BOS. The cornerstone of BOS execution is “tipping-point leadership,” that is, leveraging people and factors with a significant influence on the performance of an organization.
Tipping-point leadership is reminiscent of Malcolm Gladwell’s concept in his eponymous 2000 book, The Tipping Point. Gladwell contends that once an idea, product, or message gathers a critical mass of acceptance, it gathers a force of its own to win the mass of people to it. Similarly, Kim and Mauborgne argue that once all the hurdles in implementing a BOS are overcome, implementation will proceed apace.
In support of their concept of tipping-point leadership, Kim and Mauborgne cite the illustrious achievements of William Bratton, Commissioner of the New York Police Department (NYPD). Bratton brought down the crime rate in New York City (NYC) precipitously in the mid-1990s; before his appointment in 1994, the crime rate in that city was at an all-time high. But, within two years, Bratton made NYC one of the safest cities in the USA without any increase in the NYPD budget. How did he do that? He overcame four hurdles, cognitive, resource, political, and motivational, in implementing his novel crime-reduction strategy.
Overcome the cognitive hurdle
The cognitive hurdle denotes the mental block that prevents employees from realizing the urgency of change. Showing employees performance data alone will not unblock their minds. They must be made to understand the urgency of change by, say, getting them to confront disgruntled customers. They must experience the harsh reality faced by customers which warrants employees’ remedial action.
Before Bratton took over the post of commissioner, the NYC subway system was crime infested. It was referred to derogatively as “the electric sewer.” The NYPD was not especially interested in addressing subway crimes, as serious ones committed in the subways comprised only 3% of the total. Most of those crimes not serious, like jumping turnstiles, pickpocketing, graffiti tagging, and aggressive begging. Bratton realized that if he could tackle those petty crimes, he would be signaling other criminals committing more serious offenses that sooner or later he would be coming for them.
To overcome their lethargy, Bratton got his staff to take the subways day and night so that they could see and feel the daily anguish New Yorkers felt riding it. Also, his officers were loath to charge petty criminals caught in the subway as they had to take the suspects to police stations some distance away. To overcome this reluctance, Bratton made the process of charging suspects easier. He converted unused buses into police posts at subway stations to motivate his officers to apprehend suspects and charge them quickly at those posts.
By these actions, Bratton was able to get NYPD officers to recognize the urgency of cleaning up subway crime.
Jump the resource hurdle
As with any strategy, executing a BOS requires additional resources. Bratton did not add any new resources to crime policing. What he did was novel: He redirected resources across the department. He shifted them from “cold spots,” where crime was not prevalent, to “hot spots” with high crime rates. Unlike cold spots, additional resources in hot spots will result in enhanced performance.
Additionally, Bratton encouraged divisions within the department to horse trade resources. Divisions could negotiate with each other to exchange their surplus resources, such as police vehicles and office space, for those that they needed from others.
Knock over the political hurdle
Politics within an organization can be especially intensive and, at times, ugly. That can make an organization dysfunctional and stymie the execution of a new strategy. To overcome organizational politics, leaders should do the following:
1. First, silence the “devils.” These are people who strongly oppose a leader’s position and the implementation of the BOS. They are the ones who stand to lose the most from a strategic shift. Leaders should confront them, giving them the option to either shape up or ship out. Or they could be reassigned to other functions where they would not obstruct the new strategy.
2. Second, leaders should leverage the “angels.” Angels are those who are supportive of the implementation of the new strategy as they tend to profit the most from it.
3. Third, leaders should seek the services of “consiglieres.” As trusted advisers, consiglieres are politically adept and well respected among top management. They have the acuity to know who will fight and who will support the new initiative. Consiglieres will therefore be able to advise leaders on how to tackle the devils while leveraging the angels to boost the implementation process.
Jump the motivational hurdle
A new strategy requires an especially motivated workforce to implement it, but there are impediments to motivating employees to act fast without incurring additional cost. As Niccolò Machiavelli in his 1513 book, The Prince, wrote: “There is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to set up as the leader in the introduction of changes. For he who innovates will have for his enemies all those who are well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new.”
Zoom in on kingpins
In motivating employees to undertake a BOS, Kim and Mauborgne argue that leaders should zoom in on “kingpins.” Instead of dissipating resources in motivating all to change, it is better to focus on the few who are respected by other team members and are persuasive among them. Using the analogy of bowling, where hitting the kingpin results in all other pins falling down, the authors suggest that leaders should identify those who have extraordinary influence, usually supervisors and department heads, on the rest of the team. Leaders should then motivate those kingpins, who will in turn motivate their team members.
Place kingpins in a fishbowl
Bratton applied the principle of encouraging kingpins to motivate the rest of their teams by bringing boroughs chiefs together, in a fishbowl-like fashion, and asking them to share their crime-control efforts in their own jurisdictions. Bratton and his top management attended those fortnightly performance-reporting sessions.
Requesting kingpins to report to their colleagues and top management induces them to perform better, as each wants to gain their esteem. Delivering that kind of impressive performance requires the kingpins to motivate the members of their teams to deliver superior results.
Atomize the execution process
To carry out a BOS, one needs to break up the implementation process into manageable tasks. So, to reduce crime across the city, Bratton broke up NYC into boroughs and each borough into precincts. The precincts in turn were subdivided into blocks. A borough chief’s crime-control targets were then distributed or disaggregated across the precincts and blocks. All that a block chief, and similarly a precinct chief, had to do was to ensure that crime-reduction targets for the block or precinct were met. The aggregation of performance across blocks and precincts would then represent the overall performance of a borough chief.
Build execution into strategy
Building execution into strategy involves shifting employee attitudes, winning their hearts and minds so that they view implementation favorably. To win minds, employees must feel that their ideas are recognized by management. That way, employees feel that they are appreciated for their contributions to advancing the new strategy.
Accordingly, leaders can secure employee engagement by asking for their inputs on decisions that affect them and by allowing the free debate of ideas. It is also important to communicate clearly what the new strategy is and ensure that everyone understands the rationale for change.
Implementation cannot and should not be done alone. Employees should be made to confront the harsh reality that customer needs are being unmet and therefore a new strategy is warranted. While stifling opposition, a leader should enlist the support of those whose interests are aligned with the strategic shift. The job of implementing a strategy should not be done all at once. That may overwhelm or frustrate employees. Rather, the task should be broken up into parts so that employees can comfortably manage the parts assigned.
Accountability for performance should be in place and be transparent. Such transparency will add pressure on managers to achieve their performance targets. Finally, employees must be engaged in the implementation process. They must know what is expected of them and the consequences should those expectations be not met.
Click here for The Blue Ocean Strategy Part 1: Introduction.
Professor Datuk Dr. John Antony Xavier is a Visiting Professor at Putra Business School, Malaysia. Prior to moving to academia, he was an Administrative and Diplomatic Officer in the Malaysian public service for 36 years. His current research interests are corporate strategy, competitiveness, and economic development and public policy.