Blue Ocean Strategy: Overcome Key Organizational Hurdles

1. Blue Ocean Strategy: Overcome Key Organizational Hurdles By: Andrei Gololobov, Lana Grimes, & Laura McMannis

2. So You Have a Plan… • For your strategy to work, the working plan must be translated into action. • Regardless of which strategy is used • Beware: Translating a plan in a Blue Ocean Strategy is more difficult. • Managers face Four Hurdles

3. Four Hurdles to Strategy Execution • Cognitive: Departing from the status quo. • Limited Resources: A shift in strategy may demand additional resources. • Motivation: Invigorating employees and key players to break from the status quo. • Politics: Bureaucracy, corruption, and opposition from key players who support the status quo.

4. Tipping Point Leadership • Used by leaders to successfully jump the Four Hurdles with the backing of employees while using limited resources. • Breaks the myth that the only way to bring about greater change is to use greater resources

5. Tipping Point Leadership • Key is to concentrate on specific areas of an organization • Time and money can be saved if the organization focuses in on factors of disproportionate influences • Example: Bill Bratton and the New York City Police Department

6. Key Questions to Answer • What factors exercise disproportionately positive influence on….. • Breaking the status quo • Getting the maximum results from limited resources • Motivating key players to support change • Knocking down political roadblocks

7. Cognitive Hurdle • Make people aware of a need for change • Avoid using numbers and statistics • They can be misleading • People respond more effectively with personal observation and experience • “Seeing is beliveing”

8. Breaking the Status Quo • Make employees personally face the operational problems • Personally meet with dissatisfied customers and employees • Avoid using surveys

9. Jump the Resource Hurdle • Major impediment – limited resources What can happen then? Trim the Fight for more Ambition resources

10. What is the Solution? • DO NOT focus on getting more resources • DO multiply the value of the resources you already have • Consider three factors that can help, on the one hand, to free resources, and on the other to multiply resources

11. Three Factors of Influence • Hot Spots – activities with currently low resource input but high potential gains • Cold Spots – high resource input but low performance impact • Horse Trading – exchanging one unit’s excess resources in one area for another unit’s excess resources to fill remaining gaps

12. Redistribute Resources in YourHot Spots • NYPD reorganization: 1) Subway officers changed from patrolling every line and station to just those in need of most attention 2) Narcotics unit was prioritized to appropriate time and number of officers it really required

13. Redirect Resources from Your Cold Spots • NYPD: The bottleneck of processing criminals in court is replaced by using “bust buses” right outside the subway stations, thus cutting time spent from 16 hours to just one

14. Engage in Horse Trading • NYPD: Transit Department’s Division of Parole’s surplus of vehicles excess office space

15. Four Actions Framework High___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ Low ___________________________________________________________________ Widespread Involvement Arrests of Issuance of desk Arrests Group Focus on Arrests of Use of Train Sweeps Patrols of of officers in warrant violators appearance tickets Arrests Quality-of-life warrant s “bust Subway System processing in daytime Crimes during busses” arrests sleeping hours After Bratton’s Appointment Before Bratton’s Appointment Figure 7-2 from BOS

16. Johnson & Johnson: Three Factors • Hot Spots – Recently announced plans to expand work in infectious diseases like HIV, hepatitis C and the flu (WSJ: October 19, 2010); J&J’s purchase of Crucell(Blumberg Business Week: October 24, 2010) • Cold Spots – In 2009 the world's biggest health-care products company faced patent expirations worth $3 billion in sales along with a worldwide economic downturn, which drove earnings down (2010 Fortune 500) • Horse Trading - Scientific breakthroughs, marketing insights and manufacturing expertise transfer across the full range of businesses. - Decentralization - delegation of decision-making to the subunits of an organization, closer to consumer or beneficiary.

17. Jump the Motivational Hurdle • Alert employees about need for a strategic shift • Identify how it can be achieved with limited resources • Use a reverse course and seek massive concentration • Focus on three factors of disproportionate influence to motivate • Kingpins, fishbowl management, and atomization

18. Zoom in on Kingpins • Key influencers in the organization • Natural leaders • Have ability to unlock access to key resources • Relatively small number

19. Place Kingpins in a Fishbowl • Fishbowl management • Actions and inactions are made transparent • Based on transparency, inclusion, and fair process • Intense performance culture evolves • No one wants to be a laggard

20. Fair Process • Meaning • Engaging all the affected people in the process • Explaining basic decisions • Explaining reasons people will be promoted or side-stepped • Setting clear expectations of what that means to employees’ • Signals • Level playing field • Leaders value employees’ intellectual & emotional worth despite all the change that may be recquired

21. Atomize to Get the Organization to Change Itself • Framing of the strategic challenge • Making employees think it is attainable • Make the challenge actionable at all levels

22. Knock Over the Political Hurdle • Overcome • Internal & external negative influencers • By utilizing three disproportionate influence factors • Leveraging angels • Have the most to gain from the strategic shift • Silencing devils • Have the most to lose from it • Getting a consigliere on top management team • Insider who knows in advance all the land mines (who will fight you and who will support you)

23. Leverage Your Angels & Silence Your Devils • Identify detractors and supporters • Strive to create a win-win outcome for both, quickly • Isolate detractors by building a coalition with angels before the battle begins • Discourages the war from even starting • Win over detractors/devils by • Knowing their angles of attack • Building up counterarguments backed by facts and reason

24. Challenging Conventional Wisdom • Conventional • Transform the mass • Tipping point leadership • Reverse course • Focus on transforming the extremes • People, acts, and activities that exercise a disproportionate influence on performance • Able to change the core fast & at low cost to execute their new strategy

25. Conventional Wisdom Versus Tipping Point Leadership

26. Takeaways • DO NOT give up if it is impossible at the moment to increase financial support in order to boost the company's outputs, instead DO work on maximizing the value of existing resources • Critical leadership component is focusing on acts of disproportionate influence because it aligns employees’ actions with the new strategy • Tipping point leadership allows you to overcome these four hurdles fast and at low cost while winning employees’ backing in executing a break from the status quo