Blue Oceans Strategy

1. Blue Oceans Strategy Chapter 7 John Parker Kyle Kunkel Thor Fink Teddy Lathrop

2. Overcome Key Organizational Hurdles • Once 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

3. 4 challenges (hurdles) that Managers face • 1. Cognitive: waking employees up to the need for a strategic shift • 2. 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.”

4. Overcome Key Organizational Hurdles 5th concept covered in the book • Companies must abandon perceived wisdom on effecting change • Conventional 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

5. Tipping Point Leadership in Action • NYPD • Executed a blue ocean strategy in the 1990s • Bad times in New York City (high crime) • Police Commissioner Bill Bratton had to act fast • Employees were underpaid and unmotivated and some were even corrupt

6. NYPD cont. • Bratton executed a shift in strategy which lead to very quick results for the city • Felony 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

7. The Pivotal Lever: Disproportionate Influence Factors • Changes 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

8. 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.

9. Key questions answered by Tipping point • What 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?

10. Breaking Through the Cognitive Hurdle • Most 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)

11. 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.

12. New York Subway System • New 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.

13. Riding The Electric Sewer • To 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.

14. Changing the mindset of Superiors • Some 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.

15. New Squad Cars • MBTA 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.

16. Meeting with Disgruntled Customers • Don’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.

17. Jump the Resource Hurdle • 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 unit’s excess resources in one area for another unit’s excess resources to fill remaining resource gaps

18. Redistribute Resources to Your Hot Spots • Hotspots are activities that have low resource input but high potential performance gains • You want to relocate your resources to hot spots to improve efficiency • Ex. New York Transit Police subway hot spots

19. Redirect Resources from Your Cold Spots • Cold spots are activities that have high resource input but low performance impact • Leaders need to free up resources by searching out cold spots • Ex. “Bust Buses”

20. 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 need • Ex. New York Transit Police

21. 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

22. Zoom in on Kingpins • Key influencers in the company • Focus efforts on them to create a ripple effect • NYPD example

23. Place Kingpins in a Fishbowl • Shine 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

24. Atomize to Get the Organization to Change Itself • Relates 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

25. Knock Over the Political Hurdle • Age/treachery > youth/skill • Organizational politics will exist • Negative influencers exist and will protect their stances more fiercely the more strategic changes become likely • their resistance can damage or even derail the strategy execution process

26. Leveraging Angels, Silencing Devils, and getting a Consigliere • Angels: 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 opportunities • Tipping point leaders put one on their top management team

27. Challenging Conventional Wisdom • Conventional theory of organizational change rests on transforming the masses • Requires steep resources and long time frames • Tipping point leaders focus on transforming the extremes (people, acts, and activities) that exercise a disproportionate influence on performance • Fast strategic shift at a low cost