Downturns and disruption will pave the way to innovation | Daily News
From crisis to sustenance – Part 12/B

Downturns and disruption will pave the way to innovation

‘If only you open your mind and adapt’

 

We continue with our Blue Ocean Strategy Basics and today we will highlight Tipping Point Leadership and the Four Organizational Hurdles to Strategy Execution. The Tipping Point means -the time at which a change or an effect cannot be stopped.

Let us begin. How can you catapult your organization to high performance when time and money are scarce? The Blue Ocean Strategy offers you the answers.

A good Blue Ocean Strategy will have three defining characteristics:

* The blue ocean strategy will be tightly focused – and everyone will understand on what factors the company is competing. This helps avoid the temptation to invest in things which are unrelated to those key competitive factors.

* The Blue Ocean Strategy will diverge from that used by other industry players – because you are looking across alternatives rather than solely attempting to be better than the established players.

* The Blue Ocean Strategy will be clear-cut and easy to communicate – meaning it will be able to be described in a tagline that is compelling and inviting. For example, Southwest’s tagline could be - “The speed of a plane at the price of a car – whenever you need it”. A great blue ocean strategy will be so obvious your competitors will wonder why they did not think of that themselves.

Once a company has developed a Blue Ocean Strategy with a profitable business model, it must execute it. The challenge of execution exists, of course, for any strategy. Companies, like individuals, often have a tough time translating thought into action whether in red or blue oceans. But compared with red ocean strategy, blue ocean strategy represents a significant departure from the status quo. It hinges on a shift from convergence to divergence in value curves at lower costs. That raises the execution bar.

Hurdles

Managers have understood that the challenge is steep. They face four hurdles.

* Knowledge: waking employees up to the need for a strategic shift. Red oceans may not be the paths to future profitable growth, but they feel comfortable to people and may have even served an organization well until now, so why rock the boat?

* Limited resources. The greater the shift in strategy, the greater it is assumed are the resources needed to execute it. But resources were being cut, and not raised, in many of the organizations we studied.

* Motivation. How do you motivate key players to move fast and tenaciously to carry out a break from the status quo? That will take years, and managers don’t have that kind of time.

* Politics. As one manager put it, “In our organization you get shot down before you stand up.”

Although all companies face different degrees of these hurdles, and many may face only some subset of the four, knowing how to triumph over them is key to attenuating organizational risk.

This brings us to the fifth principle of blue ocean strategy: Overcome key organizational hurdles to make blue ocean strategy happen in action. To achieve this effectively, however, companies must abandon perceived wisdom on effecting change. Conventional wisdom asserts that the greater the change, the greater the resources and time you will need to bring about results.

Tipping point leadership

Instead, you need to flip conventional wisdom on its head using what we call tipping point leadership. 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.

Blue Ocean Strategy introduces Tipping Point Leadership which allows you how to triumph over those hurdles. This leadership skill can attenuate the organizational risk, moving fast at low cost, providing a break for the winning employees from the status quo.

Quite a lot of managers would like to introduce a new idea to change the existing selling method, product or service in the organization. However, the top level of managers won’t have enough knowledge and experience to accept those ideas. Meanwhile, the managers should implement the Tipping Point Leadership to overcome those hurdles. First of all, they should research the data from the disgruntled customers. Sum up all the complaints from them and study the existing problems.

Then write up a report to the organization and bring out a need for a strategic shift and a break from the status quo. The report should include the strategy canvas of transit. This strategy canvas graph can indicate the disproportionate influence with the new strategic plan.

Lacking in resources can be a very big hurdle in the new idea. The resource can be manpower, capital and facilities. Professor W. Chan Kim suggests the managers should find out the hot spots and cold spots in the organization. Hot spots are activities that have low resource input but high potential performance gains. Cold spots are the activities that have high resource input but low potential performance.

The management level should relocate the resource and focus on hot spots rather and eliminate the cold spots. For instance, iPod is the device which is cold spot in developing this product. Therefore, Steve Jobs relocates the resources in developing the iPad and iPhone. Another way to cut the cost in executing the new idea, horse trading is very common in use within the Tipping Point Leadership. For example, free store warehouse in an organization can be traded with other vendors for electronic components.

Motivation

Several ways to motivate the employees in the organization. Blue Ocean Strategy introduces the kingpins and fishbowl management in human resources. Kingpins are the people inside the organization who are natural leaders, who are well respected and persuasive, or who have an ability to unlock or block access to key resources.

Successful leaders should carry out transparency, inclusion and fair process in production. They can set clear expectation in performance from everyone. Each department should respond in particular service or production. All the members should be having their clear duty role. Atomization can be used to make sure everyone in the company are working under the specific department to deliver their capabilities in each section respectively.

Executing the Blue Oceans Strategy is challenging conventional wisdom. Tipping Point Leadership brings out the disproportionate influence on performance to achieve a strategic shift fast at low cost. It can brings out the political hurdle. The managers should find out the angels, devils and consigliore (advisors to a Mafia boss). They can spot all the landmines in the office. Then cooperate with the one who align to your idea and fight against the detractors with irrefutable facts and reason.

Blue Ocean Strategies are more about risk minimization and less about risk taking. When the four guiding principles for the successful formulation is utilized, these principles will reduce search risks, planning risks, scale risks and business model risks.

For every company, there are literally hundreds of potential Blue Ocean Strategy possibilities. The challenge lies in determining which are commercially viable and which are not. In practice, the key is to look at familiar data from a new perspective.

Example

Let us now study an example from New York Police Department. In early 1990s New York City was famous as a crime infested state. And, then came William Bratton as the Chief of Police. Within two years, he gave following results: Felony crime fell by 39%, Murders fell by 50%, Theft fell by 35%. The public confidence jumped from 37% to 73%. Job satisfaction in police department reached an all-time high.

How does he achieve it? He maneuvered the hurdles efficiently.

1. Cognitive hurdle

The hardest battle was simply getting people to agree on the causes of current problems and the need for change. He broke through it by putting managers face to face in operational problems. He said reality cannot be evaded and poor performance should be seen but not only heard. He changed policy in NYTP and allowed officers to use subways for free travelling. He purchased new cars and gave officers intensive training in detective work.

2. Resource hurdle

He side-stepped the resource hurdle. He stressed efficient resource utilization and not demanding extra using at right places. In New York narcotics unit, he changed schedules (focus on nights and weekends.) He increased numbers (5% staffing to 35%). He created New York Transit police to monitor crime rates at all subways. He enhanced strengths at required tolls. He employed non-uniform cops for monitoring.

3. Motivational hurdle

He alerted employees to the need for change and identified how it can be achieved with limited resource. He told employees, “You must not only recognize what needs to be done, you must also want to do it. He reformed incentives throughout organization. He introduced semi-weekly strategy meetings. Participants were commanders who control 200 to 400 officers.

4. Political hurdle

Even if an organization has reached the tipping point, powerful vested interests will resist the impending reforms. The more likely change becomes, the more fiercely and vocally these negative influencers - both internal and external - will fight to protect their positions, and their resistance can seriously damage, even derail, the reform process. He emphasized that the Department has to fight to protect their position. He told his staff to be alert.

Not every executive has Bratton’s personality, but most have his potential—if they follow his success formula. In any organization, once the beliefs and energies of a critical mass of people are engaged, conversion to a new idea will spread like an epidemic, bringing about fundamental change very quickly.

In the next issue, we will study about the paths companies typically follow to reconstruct their market possibilities and open up blue ocean possibilities.

 

Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance journalist and could be contacted on [email protected]


 

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