Blue Oceans StrategyChapter 7

John ParkerKyle Kunkel

Thor FinkTeddy Lathrop

Overcome Key Organizational HurdlesOnce a company has developed a blue ocean

strategy with a profitable business, it must execute it.

Getting started in the blue ocean is a big differentiation from the status quo

4 challenges (hurdles) that Managers face1. Cognitive: waking employees up to the

need for a strategic shift2. Limited Resources: The greater the shift

in strategy, the greater it is assumed are the resources needed to execute it

3. Motivation: how do you motivate key players to change away from the status quo

4. Politics: “You get shot down before you stand up.”

Overcome Key Organizational Hurdles 5th concept covered in the bookCompanies must abandon perceived wisdom

on effecting changeConventional wisdom: asserts that the

greater the change, the greater resources, and greater the time needed to do so

Tipping point leadership: this allows you to overcome the 4 major hurdles fast and at a low cost while winning employees

Tipping Point Leadership in ActionNYPDExecuted a blue ocean strategy in the 1990sBad times in New York City (high crime)Police Commissioner Bill Bratton had to act

fastEmployees were underpaid and unmotivated

and some were even corrupt

NYPD cont.Bratton executed a shift in strategy which

lead to very quick results for the cityFelony crime fell by 39%Murders by 50%Theft by 35%

He did so by defying conventional wisdom and shifted the strategy because it was not working

The Pivotal Lever: Disproportionate Influence FactorsChanges can happen quickly when the beliefs

and energies of a critical mass of people create an epidemic movement toward an idea

The key to unlocking an epidemic movement is concentration, not diffusion

Cont…Tipping point leadership builds on the rarely

exploited corporate reality that in every organization are people, acts, and activities that exercise a disproportionate influence on performance.

Key questions answered by Tipping pointWhat factors or acts exercise a

disproportionate positive influence on breaking the status quo?

On getting the maximum bang out each buck of resources?

On motivating key players to aggressively move forward with change?

And on knocking down political roadblocks that often trip up even the best strategies?

Breaking Through the Cognitive HurdleMost CEOs will try to make a case simply on

numbers, but don’t really stick with people They could not take it seriously, for example

if they are doing well they may not think that the numbers apply to them

Tripping Point leaders do not rely on numbers to break through the cognitive hurdle they believe in a more “Seeing is Believing” approach and also use positive stimuli. (NYPD used a zoom in approach)

Facing Organizational Problems To break the status quo, employees must

come face to face with the worst organizational problems.

Numbers can be uninspiring to employees, but facing the issues directly will influence more.

New York Subway SystemNew York City Subway system was filled with

gangs, graffiti, homeless, etc in the 1990s.

Subway System earned the epithet “Electric Sewer”

Police felt nothing needed to be changed due to the low percentage of major and violent crimes.

Citizens and Police Commissioner Bill Bratton felt differently.

Riding The Electric SewerTo make changes, Bratton made all brass,

including himself ride the “Electric Sewer.”

Police realized that the numbers were misleading, and that a change needed to be made.

New York subway system is now much safer after Bratton applied these methods.

Changing the mindset of SuperiorsSome alternatives are available in changing

the mindset of superiors, but the best way is by showing them the absolute worst in and organization.

Bratton used this method once again to change the mindset of Mass Bay Transportation Authority board.

New Squad CarsMBTA began purchasing new and smaller

squad cars.

In order to change the mind of top brass Bratton took MBTA’s General Manager on a tour of New York in one of the cars.

Several hours later the GM demanded that Bratton let him out of the car, and ordered the board to buy larger squad cars.

Meeting with Disgruntled CustomersDon’t just listen, or review surveys, actually encounter

disgruntled customers.

Bratton once again changed the mindset of NYPD by arranging town hall meetings with officers and neighborhood residents.

Town meetings led to overhaul of police priorities to focus on the blue ocean strategy of “broken windows”

Making all brass come face to face with organizational problems, key issues, and disgruntled customers will influence the need for organizational change.

Jump the Resource HurdleHot Spots

Activities that have low resource input but high potential performance gains

Cold SpotsActivities that have high resource input but

low performance impactHorse Trading

Involves trading your unit’s excess resources in one area for another unit’s excess resources to fill remaining resource gaps

Redistribute Resources to Your Hot SpotsHotspots are activities that have low resource

input but high potential performance gains

You want to relocate your resources to hot spots to improve efficiencyEx. New York Transit Police subway hot spots

Redirect Resources from Your Cold SpotsCold spots are activities that have high

resource input but low performance impact

Leaders need to free up resources by searching out cold spotsEx. “Bust Buses”

Engage in Horse Trading• Horse trading Involves trading your

unit’s excess resources in one area for another unit’s excess resources to fill remaining resource gaps

Tipping point leaders skillfully trade resources they don’t need for those of others that they do needEx. New York Transit Police

Jump the Motivational Hurdle

Employees must be aware of the need for a strategic shift

Identify how to achieve a strategic shift with limited resources

Don’t diffuse change efforts widely, seek massive concentration

Kingpins, fishbowl management, and atomization

Zoom in on Kingpins

Key influencers in the company

Focus efforts on them to create a ripple effect

NYPD example

Place Kingpins in a FishbowlShine spotlight on

kingpins in a repeated and highly visible way

Exposes those lagging behind and those who are fairing well

Must establish a level playing field

Atomize to Get the Organization to Change ItselfRelates to the framing of the strategic

challenge

People need to believe the strategic challenge is attainable

Break down the strategic challenge to attainable scale, relatable to all levels of an organization

Knock Over the Political HurdleAge/treachery > youth/skill

Organizational politics will exist

Negative influencers exist and will protect their stances more fiercely the more strategic changes become likelytheir resistance can damage or even derail the

strategy execution process

Leveraging Angels, Silencing Devils, and getting a ConsigliereAngels: have the most to gain from the

strategic shift

Devils: have the most to lose from it

Consigliere: politically adept but highly respected insider who is aware of potential threats and opportunitiesTipping point leaders put one on their top

management team

Challenging Conventional WisdomConventional theory of organizational

change rests on transforming the massesRequires steep resources and long time frames

Tipping point leaders focus on transforming the extremes (people, acts, and activities) that exercise a disproportionate influence on performanceFast strategic shift at a low cost