Blue Ocean Strategy By W. Chan Kim And Renee Mauborgne - A Simplified Book Summary Of How To Execute A Blue Ocean Strategy
This blog article is the third in a series of five blog articles on the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. In this third article you will learn the keys for how to execute a blue ocean strategy.
Start From The Start
If you have not read the first article in this series click here to go to the first article titled "Blue Ocean Strategy Summary"
- companies should look to create new demand in uncontested market space (blue oceans) instead of competing head to head in an existing industry (red oceans)
- the way to do that is to
The 3 Tiers Of Non Customers And How To Unlock Them
1. Soon To Be Customers
Characteristics: Purchase a minimal amount of an industries offering out of necessity
How To Unlock: Investigate what is making them unsatisfied and find commonalities of needs and desires among buyers
Example: Netflix determined that many people purchase cable because that is the only TV entertainment service option they have. A large part of the market was unsatisfied with having to watch commercials and that movies and shows could not be watched when the viewer wanted. Instead they had to watch them on the channels schedule. Netflix solved this by fully removing commercials from its service and allowing people to watch movies and shows any time on demand on their schedule.
2. Refusing Non Customers
Characteristics: Aware of industry offering but has voted against buying it
How To Unlock: Eliminate access barriers (economical, functional, educational & geographical)
Example: A good example here is Subway. Many people were aware of fast food but avoided it because it was unhealthy and any healthy options were far more expensive. Subway unlocked these customers by educating them that their products were healthy (the Jared Fogle Campaign) and low cost (the 5 dollar foot long campaign, more information). As a result of these initiatives Subway more than tripled sales from $3.1 Billion to $11.5 Billion in 2011. Source: http://www.usatoday.com/story/money/business/2013/02/23/jared-fogle-subway-diet/1928793/. Subway is often noted as well as one if not the fastest growing franchises in the world.
3. Unexplored Non Customers
Characteristics: Has never thought of markets offering as an option
How To Unlock: Remove long held assumption on customer needs & behavior
Example: Colgate-Palmolive captured many additional customers but changing people's assumption that only their dentist could whiten their teeth. Instead they educated consumers that they could and should whiten their own teeth. As a result they they brought in a bunch of new customers and revenue by getting consumers to realize they have another option.
Tipping Point Leadership & Fair Process
Tipping Point Leadership
The common thought is that for greater change you need a larger amount of resources and that there is a direct correlation between amount of resources and the amount of change. The concept of tipping point leadership claims that great change can be done very fast and with minimal resources by focusing on points of leverage to over come all hurdles as outlined below in The Four Key Blue Ocean Implementation Hurdles.
Without fair process it will be hard to implement a strategy. The book suggests that any implementation should engage employees in strategic decisions that affect them (getting their feedback, thoughts, ideas), explaining the rationalization for the final decision and making the expectations very clear to all involved/affected.
The Four Key Blue Ocean Strategy Implementation Hurdles
1. Cognitive Hurdle
What it is: Mental blocks that prevent employees from seeing a need for change
How to get past it: It can not be conquered by sharing numbers or telling employees about the problem. Have employees experience the problem (ie. talk to customers, go through the process themselves
2. Resource Hurdle
What it is: Challenges managers face in implementing change because of a lack of resources
How to get past it: Take resources from cold spots to hot spots and engage in horse trading. What this means is taking resources from low output highly resourced areas (cold spots) and moving them to high output low resourced areas (hot spots). It also means trading resources not needed with other areas, departments or organizations for the specific resources that are needed.
3. Motivational Hurdle
What it is: The blocks experienced to motivating employees to implement a new strategy.
How to get past it: The key to over coming this hurdle is to achieve disproportionate influence through the use of kingpins (target the natural leaders and people in control of resources), fishbowl management (transparently showing to all who is taking action and who is not in a fair process) and atomization (making the actions of the vision broken down by section or department).
4. Political Hurdle
What it is: The political forces (either within or outside the organization) that may rise to block a new strategy.
How to get past it: In order to over come the political hurdles the book recommends to leverage your angels (people that strongly support your position), silence the devils (people that strongly oppose your position, those who have the most to lose from it) and get the consigliere (a politically adept and well respected member of top management).
Blue Ocean Strategy ROI
Click here to see what kind of ROI companies get that use the blue ocean strategy
Read The Next Articles In This Series
1. Blue Ocean Strategy Summary - Click Here To Read This Article
2. Blue Ocean Strategy Formulation - The Four Principles Of Strategy Formation - Click Here To Read This Article
3. Blue Ocean Strategy Formulation - The Strategy Canvas - Click Here To Read This Article
4. Blue Ocean Strategy Execution - You Are Reading This Article
5. Blue Ocean Strategy Examples & ROI - Click Here To Read This Article
Sources For This Series
To see the sources for this article series go to the first article in the series titled "Blue Ocean Strategy Summary".