Blue Ocean Mindset in the Covid-19 era

 

The Blue Ocean Strategy book launched a revolution in business strategy. After all, which firm would not be operating in uncontested market space, where the competition was irrelevant? Instead of struggling to survive in the bloody shark-infested “Red Oceans” of vicious competition, why not move to the “Blue Oceans” where there was little or no competition?

What inspired is how organizations and individuals that created new frontiers of opportunity and growth. Where success was not about fighting for a bigger slice of an existing, often shrinking pie, but about creating a larger economic pie for all.

In the effect, Blue Ocean strategy involves market-creating innovation. It opens up new possibilities that are not available to organizations operating within the existing cost-value structure. It expands the universe as to what is possible, often enabling higher value at a lower cost.

 

 So, what are the key components in successful Blue Ocean implementation

Mindset: as in the world of Agile management, Blue Ocean strategy is fundamentally a shift in mindset. It involves shifting understanding of where the opportunity lies.

Tools: Successful implementers of the Blue Ocean strategy have used practical tools to systematically adopting Blue Ocean thinking is another.

Human-ness: Successful implementers exemplify a process, which inspires people’s confidence to own and drive the process for effective execution.

The Five-Step Process

Blue Ocean initiative can be successfully launched in even the most bureaucratic organization that is trapped in a bloody Red Ocean, in these five steps:

Choosing the right place to start and constructing the right Blue Ocean team for the initiative.

Getting clear about the current state of play

Uncovering the hidden pain points that limit the current size of the industry and discovering an ocean of non-customers.

Systematically reconstructing market boundaries and developing alternative Blue Ocean opportunities.

Selecting the right Blue Ocean move, conducting rapid market tests, finalizing, and launching the shift.

Though this process, the organization can move from the limitations of competing within the existing industry to migrate towards greater value improvement and eventually towards creating new value for people who are not already customers.

 

 The Trap of Mere Product Improvement

We need to move beyond the trap of merely focusing on making things better for existing customers. Thus, usually, product improvement doesn’t lead to large new markets of those who were formerly non-customers. If it does, that is a happy accident, rather than the main goal. To get more consistent success in generating market-creating innovations, an explicit focus on attracting non-customers is needed. This includes:

soon-to-be non-customers

refusing non-customers

unexplored non-customers

 

 PROFESSORS KIM & MAUBORGNE (HACHETTE)

Market-creating innovations sometimes involve eliminating features, not adding or improving them. Paradoxically, less may be more. Yet the decision to eliminate seemingly popular features is not easily taken at the level of the individual team. Moreover, existing features typically have their own constituencies within the organization: a team that has created a feature often becomes a lobby for retaining and improving it.

Market-creating innovations can also lead to self-cannibalization of the firm’s existing products and so generate a reluctance to interfere with a current revenue stream. Such a decision is never easy and typically it has to be taken at a high level of the organization.

In the absence of an explicit process to foster market-creating innovation, decisions on “big bets” also risk being engulfed in corporate politics: the loudest voice having the most hierarchical clout may end up making the call. In the absence of hard numbers, proceeding with the investment will often be perceived as presenting too great a risk and the investment will be abandoned.

Blue Ocean shows that there is a process for systematically generating market-creating innovations. There are well-established principles that can lead to sustained success.

At the same time, we need to avoid the trap of suggesting that the Blue Ocean strategy is simply another process. Ultimately Blue Ocean strategy is about a different mindset. Unless the Blue Ocean initiative is conducted by people with the distinctive opportunity-based thinking that is at the foundation of the Blue Ocean strategy, it will risk having no impact.

The COVID-19 Challenge: Organizational Transformation

I believe that COVID-19 challenged every organization to the right mindset to launch and implement a Blue Ocean initiative.

The kind of leadership and management needed to implement a Blue Ocean strategy the initiative is very different from the typical big bureaucracy, where strategy is decided at the top, and where big leaders appoint little leaders, who in turn appoint even smaller leaders, who report upwards on their progress of implementing the top management game plan.

COVID-19 force much cooperation to change their perspective and reconsider the blue ocean strategy. Since these, challenging days needed a different leadership.  Not the short-term perspective and are principally focused on maximizing shareholder value, pumping up the share price through share buybacks, defeating competitors through mergers and acquisition and lowering costs by the offshoring of production.

It becomes increasingly clear that Blue Ocean strategy is about a lot more than just formulating a strategy or implementing a single initiative. Sustained success inevitably entails organizational transformation.