The embodiment of the blue ocean strategy. How to use a blue ocean strategy to differentiate yourself from competitors What is a blue ocean strategy

Jang kim
René Mauborgne A chapter from the book “Blue Ocean Strategy. How to find or create a market free of other players "
Publishing house "Mann, Ivanov and Ferber"

Overcoming major organizational hurdles

Having developed a blue ocean strategy and a profitable business model, the company must bring its best practices to life. Of course, there are difficulties in the way of implementing any strategy. Companies and individuals alike often have a hard time transforming thought into action, whether it is in the red or blue oceans. Compared to the crimson ocean strategy, entering the blue ocean implies a serious disruption to the status quo. This strategy is based on moving from convergence to divergence of value curves while reducing costs. This is what makes its implementation much more difficult.

The managers assured us that this was not an easy ordeal. They need to overcome four obstacles. The first is the internal dissonance of employees. You need to convince them of the correctness and the need to make a strategic change. While red oceans can never lead your company to profitable growth, they keep people at ease.

If the scarlet waters have served the organization well so far, why rock the boat?

The second obstacle is limited resources. It is believed that the more serious the changes an organization makes, the more resources are needed to carry them out. However, in many of the organizations we studied, resource use declined rather than increased.

The third obstacle is motivation. How to motivate key actors to act quickly and purposefully in order to break out of the current state of affairs? It can take years, and managers don't have that time.

And the last obstacle is political intrigue. As one manager put it, “it’s like this in our company: you didn’t have time to say anything yet, but you have already been dealt with.”

While these barriers are complex in each case, and many companies only face a few of the four, the ability to overcome them is essential to reducing organizational risk. This brings us to the fifth principle of blue ocean strategy: overcome major organizational barriers so that the blue ocean strategy translates into action.

To do this effectively, a company must abandon the traditional view of change. The conventional wisdom is that the greater the change, the more time and resources you need to invest to get results. It is necessary to turn this view upside down by using what we call purposeful leadership. Purposeful leadership allows you to quickly and cost-effectively tackle these four obstacles and, at the same time, enlist the support of employees in breaking the current state of affairs.

Purposeful leadership in action

Take, for example, the New York Pol ice Department (NYPD), which implemented a blue ocean strategy in the public sector in the 1990s. When Bill Bratton was named New York Police Commissioner in February 1994, he faced an unfortunate situation that few have ever seen. In the early 1990s, New York was slipping into anarchy. The number of murders broke all records. The newspapers were full of reports of street robberies, mafia raids, lynching and armed robberies. New Yorkers were under siege. Bratton's budget was paltry. Moreover, after a continuous increase in the crime rate in New York for 30 years, many sociologists have concluded that the police will not be able to cope with this. New Yorkers cried out for help. The headline on the front page of the New York Post screamed, "Dave, do something!" - it was a request to the then Mayor David Dinkins to reduce the number of crimes as soon as possible. With penniless pay, hazardous working conditions, long working hours, and little hope of a promotion in the police's career advancement system, the mood among the thirty-six thousand New York police officers was grim. Not even mentioning the detrimental effects of budget cuts, equipment wear and tear, and corruption.

In business terms, we can say that the NYPD was an organization constantly experiencing a lack of money, thirty-six thousand employees of which resigned themselves to the situation, had no motivation, receiving a beggarly salary; her dissatisfied customer base united all New Yorkers; performance has deteriorated steadily, as evidenced by the rise in crime, fear and disorder. The picture was completed by the apparatus fuss and political games. In short, the desire to lead the change in the strategic direction of the NYPD could not be dreamed of by most of its then leaders in an unimaginably nightmare. And competitors - criminals - became stronger and stronger, and their number grew.

And yet, in less than two years and without a budget increase, Bratton made New York the safest major city in the United States. He broke out of the crimson ocean, armed with the blue ocean police strategy that revolutionized what was then American police. In the period from 1994 to 1996, the organization began to win, its "profits" rose sharply: the number of serious crimes fell by 39%, murders - by 50%, and thefts - by 35%. The "clients" won: according to opinion polls conducted by the Gallup Institute, trust in the police among the city's citizens jumped from 37% to 73%. Employees also won: internal polls showed unprecedented satisfaction with their work as police officers. As one patrolman put it, "for this guy we would go down to hell and come back." And perhaps most impressively, the change went through the leader, and the consequence was a fundamental change in the culture and strategy of the NYPD. Even after Bratton left in 1996, the crime rate continued to fall.

Few corporate leaders have faced organizational hurdles as strong as Bratton in breaking the status quo. There are even fewer people who, in any organizational setting, would have been able to provide such a sharp leap in quality that Bratton made - and even more so with such unprecedented difficulties that he had to face. Even Jack Welch took ten years and tens of millions of dollars in reorganization and training to turn GE into a "powerhouse."

Moreover, by challenging public opinion, Bratton has achieved such impressive results in record time and with very modest resources, while raising the morale of employees and providing a "win" for all stakeholders. For Bratton, this was not the first change in strategy, but the fifth, and they were all successful, despite the need to overcome all four obstacles that, according to managers, usually limit their ability to implement blue ocean strategies. These barriers include a lack of understanding among employees of the need for radical change; limited resources inherent in almost all companies; low motivation, discouraging and demoralizing staff; political intrigues, the product of which is internal and external resistance to change (Fig. 1).

Rice. 1. Implementing Strategy: Four Organizational Barriers

Primary Leverage: Disproportionate Influences

The idea of ​​purposeful leadership comes from epidemiology and tipping points 1. It is based on the fact that in any organization, fundamental change occurs quickly when the beliefs and energies of a critical mass of people create an epidemic movement towards an idea. The key factor in initiating this movement is concentration, not diffusion.

Purposeful leadership is based on a rarely used corporate reality that every organization has people, actions, and activities that disproportionately affect performance. Thus, contrary to the traditional point of view, overcoming a major obstacle does not consist in organizing an equally large response, when performance is achieved through a proportional investment of time and resources. Rather, it consists in conserving resources and reducing time, for which one should concentrate on identifying the factors of disproportionate influence existing in the organization, and then on the impact on them.

The main questions focused leaders answer are: What factors or actions have a disproportionate positive effect on changing the status quo? How about getting the most out of each resource? Motivating key actors to actively promote change? Removing political barriers that continually threaten even the best strategies? By focusing solely on points of disproportionate influence, a focused leader can overcome all four obstacles to implementing a blue ocean strategy. He can overcome them quickly and inexpensively.

Now let's look at how you can tackle disproportionate influences to remove all four obstacles along the way from thought to action, blue ocean strategy.

Breaking through the barrier of misunderstanding

Very often, during course changes and corporate transformations, the main challenge is getting people to understand the need for a change in strategy and understand its reasons. Most CEOs, explaining the reasons for change, demonstrate numbers and insist that the company must set itself ever larger goals and achieve them: "There are only two alternative ways: to fulfill the tasks set or overfulfill them."

However, as we all know, numbers can be manipulated. By insisting on increasing target values, a manager can provoke abuse during the budgeting phase. This, in turn, creates hostility and suspicion in various parts of the organization. Even when the numbers are not rigged, they can lead to undesirable consequences. For example, salespeople who receive a commission on sales rarely pay particular attention to the costs of their transactions.

Moreover, an idea expressed through numbers rarely sinks into a person's soul. The reason for change seems abstract and out of touch with line managers, and it is their commitment that must be won by the head of the organization. Managers whose divisions are performing well feel that criticism is not theirs and that this is all a problem for top management. Managers of poorly performing units think that they are being “put on display”, and those who are worried about the guarantees of their own employment will rather study the job market than seek to solve the company's problems.

Purposeful leadership does not rely on numbers to overcome employee misunderstandings about the need for change. To quickly tackle this obstacle, purposeful leaders like Bratton focus on harnessing disproportionate influences: empowering people to experience the brutal reality. Research in neurophysiology and cognitive psychology shows that people remember and respond more effectively to what they themselves have seen and experienced: "Seeing is believing." As we gain experience, positive stimuli reinforce certain behavior, while negative stimuli change attitudes and behavior. Roughly speaking, if a child sticks his finger in the jam and then licks it, then the tastier the jam is, the more times the child will repeat this action. He does not need parental advice to reinforce this behavior. Conversely, by touching the hot stove, the child will never repeat the experiment. Having received a negative experience, children of their own free will change their behavior, and again, here they do not need any parental teachings. On the other hand, if during the acquisition of experience a person did not see, did not feel, did not experience the direct result of his actions, but, for example, he was simply shown a number of abstract figures, this will not have any effect on him and the experience gained will be easily forgotten.

This is what purposeful leadership is based on. His task is to quickly make changes in the mind of a person that this person will make solely of his own free will. Rather than relying solely on the impact of numbers to combat misunderstandings, focused leaders make people feel the need for change in two ways, which are discussed below.

Take a ride in the "electrical sewer"

To disrupt the status quo, employees themselves must face the worst job challenges. Don't let the top, middle, or any other bosses begin to theorize about the current situation. Numbers are debatable, numbers are not inspiring, and a direct encounter with ineffective work is shocking, you can't run away from it, it requires action. Such direct experience has a disproportionate impact on helping to quickly deal with misunderstandings.

Let's consider an example. In the 1990s, the New York subway smelled so intensely of fear that it was nicknamed the "electrical sewer." The townspeople boycotted this form of transport, and profits fell rapidly. At the same time, the employees of the New York City Transportation Police Department did nothing. Why? Only 3% of major urban crimes occurred in the subway. Therefore, no matter how many citizens appealed to the authorities, they remained deaf. No one realized the need to rethink police strategies.

Bratton was then appointed Chief of Police, and after just a few weeks, he completely changed the mindset of the city police, aiming at changing the situation. How did he do it? Not by force or by numbers. He simply ordered that the top and middle bosses - starting with himself - go only to the "electric sewer" at any time of the day. This practice did not exist before Bratton.

While the statistics may have convinced police officers that the subway was safe, they now saw with their own eyes what every New Yorker faced on a daily basis: the underground transportation system on the brink of anarchy. Gangs of youngsters dangled around the carriages, people jumped over turnstiles, passengers had nowhere to go from graffiti, aggressive beggars and drunks spread out on the seats. The police could no longer remain in the dark about such an unsightly truth. No one else had any doubts that it was necessary to urgently change the strategy, disrupt the status quo, and as soon as possible.

Show your managers the worst side of reality can quickly change their perceptions of the status quo. Likewise, leaders can get the leaders above them to agree to their demands. However, very few leaders use this quick and powerful awakening tool. More often than not, they do the opposite. They try to get support with digital computations that don't create an impression of urgency or emotional boost. Or they resort to stories about their most successful projects. While these alternative methods may work, none of them can help address the prevailing lack of understanding of the need for change as quickly and efficiently as demonstrating the worst.

For example, when Bratton ran a police department at the Massachusetts Bay Transparency Authority (MBTA), the MBTA decided to buy small police cars that would be cheaper to buy and operate. This was not in line with Bratton's new strategy. But instead of challenging the decision or demanding an increase in the budget - a proposal that would take months to consider and that would probably have been rejected in the end - Bratton invited the general manager of the MTA to tour the area under his division's responsibility.

To give the general manager a taste of the horrors Bratton was trying to fight, he put him in a small car, very much the size of those ordered. Bratton pushed the seats all the way forward to give the manager a little legroom for a six-foot cop. Bratton rode his boss for a long time, driving around all the holes that could be found in the area. He also put on a belt, handcuffed it and a pistol holster so that the general manager could see how little space was left for police equipment. Two hours later, the manager asked to go outside. He stated that he did not understand how Bratton could drive in such a cramped car for a long time, even alone - what if a criminal was sitting in the back seat? And Bratton got the more spacious cars that he needed in accordance with the new strategy.

Chat with unhappy customers

To overcome misunderstandings, you should not only get managers out of the office, give them the opportunity to see all the inconveniences at work, but also make them listen to what the most dissatisfied customers have to say. Don't rely on market research. How often does your senior management personally observe what is happening in the market and communicate with the most dissatisfied customers, listening to their complaints? Have you ever wondered why sales don't match your confidence in your own product? Simply put, nothing can replace a face-to-face meeting and conversation with an unhappy customer.

In the late 1970s, Boston Police Station # 4, which housed the Symphony Hall, Christian Science Mother Church and other spiritual and cultural institutions, experienced serious crime problems. The inhabitants of the area were in fear; many sold their houses and left, thereby only further complicating the situation. However, despite the massive exodus of residents, the police, led by Bratton, believed they were doing well. The performance metrics that police have always relied on to compare their own performance with those of other police stations were quite good, with 911 calls falling and violent arrests rising. To deal with this paradox, Bratton organized a series of police meetings with residents of the area at the town hall.

The reason for the misunderstanding became clear quickly. Although the police took great pride in their quick response to incidents and their lists of major crimes, the townspeople did not notice or appreciate their efforts; only a few feared large-scale crimes. Much more fear and anxiety caused them constant petty irritants: drunkards, beggars, prostitutes, graffiti on the walls.

As a result of the meetings with the townspeople, the priorities of the police were completely redefined, and the police activity focused on the blue ocean strategy called "broken windows" 2. The crime rate has dropped and the residents of the area have regained their peace.

When you need to “wake up” an organization with the need for strategic change and change in the status quo, do you rely on numbers? Or do you force managers, employees, and management (and yourself as well) to face your most pressing work issues? Do you get managers to personally get to know the market and listen to complaints from dissatisfied customers? Or do you outsource your own eyes and send out market research questionnaires?

Overcoming lack of resources

Once people in the company have realized the need for a change in strategy and more or less agree with the outline for a new strategy, most leaders are faced with the same thing — limited resources. Do they have the money to implement the necessary changes? At this stage, most reformer leaders do one of two things. Either they are limiting their ambitions and demoralizing workers again, or they are trying to get additional resources from bankers and shareholders - a process that can take a long time and distract attention from priority problems. This is not to say that this approach is unnecessary or meaningless, but obtaining additional resources is often time-consuming and politically challenging.

How can you change the strategy of a company with only limited resources at your disposal? Rather than focusing on finding additional resources, targeted leaders focus on adding value to those they already have. When it comes to a lack of resources, there are three disproportionate factors that a manager can use to, on the one hand, free up a significant amount of resources, and on the other, increase their value. These factors include hot spots, cold spots, and profitable exchanges.

Hot spots are activities in which few resources are invested, but which have a high potential for return. Cold spots, on the other hand, are activities in which a lot of resources are invested, but they have little effect on performance indicators. In any organization, hot spots and cold spots are usually abundant. In the course of the exchange, you give away the surplus resources available in one of the areas of your unit, and for this you get the surplus resources of another unit, allowing you to make up for your existing resource deficit. Having learned how to use the available resources correctly, a company can often easily cope with their scarcity.

What activities consume the most resources, but have little impact on work efficiency? Conversely, which activities have the greatest impact on performance but require the least resources? By asking questions in this way, a company quickly learns to free up resources with low returns and redirect them to areas of greatest impact. Thus, it simultaneously achieves lower costs and higher value.

Redirect resources to hotspots

In the New York City Transit Police Department, Bratton's predecessors argued that subway safety required a police officer on every line and a patrol at every entrance and exit. An increase in "profits" (reduction in the number of crimes) would mean an increase in "costs" (police officers) in quantities impossible within the framework of the available budget. The logic of this approach was obvious: efficiency gains can only be achieved through a proportional increase in resources. A similar logic drives many companies' opinions on how to achieve better performance.

Bratton has managed to achieve the record reduction in crime, fear and unrest in the entire history of the transport police, not by increasing the number of police officers, but by distributing them to hot spots. From his analysis, it became clear that, although the underground system is a maze of lines, entrances and exits, most of the crimes occurred at only a few stations and on a few lines. In addition, Bratton found that these hotspots received insufficient attention, although they had a disproportionate impact on overall crime rates, while lines and stations, where almost never reported violations of order, were staffed with the same number of police officers. The solution was the redistribution of police forces with their concentration in hot spots in order to suppress crime. Crime began to decline rapidly, while the total number of police officers did not change.

It was the same way in the Department of Drug Enforcement until Bratton came to the NYPD. The department worked from nine to five and only on weekdays, less than 5% of the human resources of the police department were involved in it. To identify resource hotspots, in one of his first meetings with NYPD chiefs, Jack Maple, Bratton's deputy for crime strategy, asked those around the table what they believed to be drug-related crimes. The majority answered that 50%, some 70%; the lowest estimate was 30%. Maple noted that based on these numbers, one cannot but agree that the Enforcement Division, which employs less than 5% of NYPD employees, is seriously understaffed. Moreover, most of the anti-narcotics squads were found to operate from Monday to Friday, despite the fact that the vast majority of drugs were sold on weekends and drug-related crimes were usually committed at the same time. Why is that? Because it has always been this way; it became the traditional modus operandi that nobody questioned.

With these facts outlined and hot spots identified, Bratton's proposal for a major redeployment of staff and resources at the NYPD was quickly accepted. Accordingly, Bratton redirected personnel and resources to the hot spot, and drug-related crimes plummeted.

Where did he get the resources he needed for this? Simultaneously, Bratton assessed the cold spots of his organization.

Free resources from cold spots

The leader looks for cold spots to free up resources. Again, in the subway case, Bratton found out that one of the coldest points was escorting criminals to court. On average, it took a police officer sixteen hours to drive a person to the city center, even if it turned out to be related to some minor offense. During this time, the policeman could not patrol the subway and thus add value.

Bratton changed the whole system. Instead of taking criminals to court, on the contrary, he began to deliver the center for pre-trial processing of small criminal charges to criminals using mobile police stations - old buses converted for these needs and parked near metro stations. Now, instead of transporting the criminal across the city to the court, the policeman only had to take him out into the street and escort him to the bus. This reduced the time for filing charges from sixteen hours to one hour and freed up more police officers to patrol the subway and apprehend criminals.

Get a profitable exchange

In addition to reallocating available resources within the department, focused leaders successfully trade resources they don't need for those they need. Let's remember Bratton again. Anyone who has led a public sector organization knows that there is always a heated debate about the size of its budget and the number of employees, as the limited resources of the public sector are notorious. Therefore, leaders of organizations in this sector do not like to talk about their excess resources, and even more so to allow other departments of the organization to use them: this creates the risk of losing control over these resources. As a result, some organizations are simply overwhelmed with resources they do not need, while they lack the necessary resources.

After Bratton became Chief of the New York City Transportation Police in 1990, his chief adviser and strategy consultant, Dean Esserman (now Chief of Police for Providence, Rhode Island), played a major role in organizing the exchange. Esserman discovered that the traffic police, which lacked office space, had a mass of unmarked cars that outnumbered the department's needs. On the other hand, New York's parole control department did not have enough vehicles, but it had a surplus of office space. Esserman and Bratton offered to carry out a quite profitable exchange, the idea of ​​which was received with gratitude by the members of the parole control department. The traffic police were happy to have the first floor of a beautiful building in the city center at their disposal. This deal strengthened Bratton's credibility in the organization, which further facilitated his process of much more serious change. At the same time, his politically influential bosses saw him as a problem-solver.

In fig. Figure 2 shows how Bratton radically reallocated the resources of the Transport Police Department in order to break out of the scarlet ocean and implement his blue ocean strategy. The vertical axis shows the relative level of resource allocation, while the horizontal axis lists the various elements of the strategy that have been invested in. By making some areas of the traffic police less important, if not completely abandoned, while at the same time increasing the importance of others or creating new ones, Bratton has made significant changes in the allocation of resources.

Rice. 2. The Transformational Framework: How Bratton Regrouped Resources

If the steps taken to abolish or reduce entail a reduction in the organization's costs, then the increase of certain elements or the creation of new ones, on the contrary, requires additional investment. However, as can be seen in the strategy canvas, the overall level of resource investment remained virtually unchanged. At the same time, the value offered to the townspeople began to grow. Moving away from the practice of wide coverage of the subway and replacing it with a targeted strategy of concentration on hot spots has allowed the transport police to more effectively and efficiently fight crime in the underground transport system. Reducing the involvement of police officers in making arrests or staying in cold spots, as well as the creation of mobile police stations, significantly increased the value of the police force, as it allowed officers to concentrate time and attention on patrolling the subway. The increase in investments directed towards the fight against violations of the law that affect the quality of life, rather than those directed towards the fight against major crimes, has allowed the reallocation of police resources, focusing on the crime that constantly affects the daily life of citizens. With these techniques, NYPD has dramatically improved the efficiency of its employees, who are now freed from pesky administrative activities and have clear responsibilities and instructions on what to do and where to tackle the crime.

Are you allocating resources based on outdated considerations, or are you trying to identify hot spots and concentrate resources there? Where are your hotspots located? What activities have the greatest impact on performance, but at the same time are experiencing a lack of resources? Where are your cold spots? What activity has surplus resources, but has little effect on work efficiency? Do you have a person who knows how to organize an exchange, and do you have something to offer in exchange?

Taking a motivational barrier

For your organization to reach its “point of no return” and implement a blue ocean strategy, you need to “wake up” employees to understand the need for change, and to clearly define for them how it can be done in a limited resource environment. For a new strategy to be implemented, people must not only understand what should be done, but also act on this knowledge, continuously and consciously.

How can employees be motivated quickly and inexpensively? In an effort to disrupt the status quo and transform their company, most business leaders create an ambitious strategic vision and initiate massive top-down mobilization initiatives. Leaders act out of the belief that appropriate massive steps must be taken to get a massive response. However, such steps are often laborious, time consuming and costly, given the variety of motivational needs in most large companies. A strategic vision from above usually results not in the taking of necessary actions, but in an insincere expression of dedication. Is there another way? Rather than scattering the effort to bring about change everywhere and everywhere, the focused leader does differently and builds mass concentration. In motivating employees, he focuses on three disproportionate factors, which we will give the following names: "head pins", "aquarium management" and "atomization."

For strategic change to bring real results, people at every level must move together. However, in order to launch an epidemic movement of positive energy, efforts should not be scattered. You should concentrate your energy on working with head pins, that is, with those who have the most influence in the organization. Head pins are company employees who are born leaders, respected, endowed with a gift of persuasion, or those who are able to open or close access to key resources. It turns out like in bowling: if you hit the head pin, everyone else falls with it. Thanks to this, you do not have to deal with everyone individually, and yet in the end everyone and everyone will go through changes. And since most companies have only a very small number of people who are able to influence and share common problems and concerns, it is not difficult for a leader to identify and motivate them. For example, in the NYPD, seventy-four police chiefs became Bratton's main sources of influence and head pins. Why? Under the command of each of them were from two hundred to four hundred police officers. Thus, as a result of the "electrification" of each of the seventy-four chiefs, a natural chain reaction occurred, and already three thousand six hundred police officers of the next level were motivated and "charged" to implement a new strategy.

Place the head pins in the aquarium!

For long-term and conscious motivation of the head pins, it is necessary to highlight their actions especially brightly, constantly and in all details. We call this aquarium management, in which the actions and inactions of the head pins are as clearly visible to everyone else in the company as everything that happens to the aquarium fish can be clearly seen. By placing the head pins in the aquarium, you will greatly reduce the likelihood of them being inactive. Those who stay behind come under scrutiny, and those who are quick to push for change have every chance of becoming a star. Aquarium management will only work when it is based on transparency, involvement and fair process.

At the NYPD, Bratton's Aquarium was a fortnightly strategic crime-fighting meeting called CompStat (CompStat - Computerized Statistics), which brought together city leaders to discuss the effectiveness of the new strategy being pursued by all seventy-four police chiefs. plots. All heads of police stations were required to attend meetings; in addition, they required the mandatory attendance of all three-star police chiefs, deputy commissioners of police chiefs in all five New York boroughs. Bratton himself was there as often as he could. As each police chief responded to questions from management and staff about the rise or fall of crime in line with the organization's new strategic directives, huge, computer-generated maps and graphs were displayed to illustrate their progress in implementing the new strategy. The head of the section had to give explanations to the maps, tell how his subordinates solved certain issues, and explain why the efficiency of work increased or decreased. Thanks to these comprehensive meetings, the results of the work and responsibilities of each of the heads of the police stations became transparent and clearly visible to everyone in the organization.

As a result, in a few weeks - not months, let alone years - an intense work culture was created, since none of the head pins wanted to embarrass themselves in front of others, but wanted to distinguish themselves in front of colleagues and superiors. In such an aquarium, the incompetent section managers could no longer hide their miscalculations, blaming the poor results of the work of the area entrusted to them on the neighbors' shortcomings, since these neighbors were present in the hall and could answer the accusation thrown at them. The front page of the handouts featured a picture of the head of a police station being grilled during a crime strategy meeting, emphasizing that the head is accountable and accountable for the station's performance.

On the other hand, the aquarium allowed high-performing workers to be recognized for doing well on their own site and for helping others. In addition, the meetings provided an opportunity for police leaders to exchange experiences; prior to Bratton's arrival, lot heads seldom got together and worked in a group. Over time, aquarium management was applied to the next level, when the heads of the sites tried to conduct their own versions of the Bretton meetings with their subordinates. Thanks to extensive coverage of their work, site managers were highly motivated to lead their subordinates to implement the new strategy.

For this to work, companies need to ensure that they implement fair business processes at the same time. What it is? This involves engaging all stakeholders in the work, explaining to them what lies at the heart of certain decisions, what are the criteria for promoting an employee in the service or removing him from work, as well as a clear statement of expectations regarding the performance of employees. At the NYPD's crime-fighting meetings, no one could complain that the game was being played unfairly. All the head pins were in the aquarium. The assessment of the performance of each chief, as well as the promotions or demotions made on its basis, were completely transparent; at each meeting, a precise statement of what was expected of all staff in terms of performance was given.

In this way, fair process shows employees that the game is fair and that leaders value the intellectual and emotional merit of their subordinates, regardless of any change that may occur. This largely eliminates the suspicions and doubts that employees almost always have when a company tries to change its strategy. The support that ensures a fair process that aquarium management achieves, coupled with a focus on performance, propels people to take action and supports them along the way, demonstrating the intellectual and emotional respect of managers towards employees.

Break the task down so the organization can change itself

The last factor of disproportionate influence is the division of the strategic task into its components. In essence, “disaggregation” is the formulation of a strategic task that requires the appropriate skills from the focused leader. If people do not believe that the strategic objective is feasible, the necessary changes will never be implemented. Outwardly, Bratton's strategic task in New York looked so impracticable that it was hard to believe in it. Indeed, who would have believed that one person could transform a huge city from the most dangerous place in the United States to the safest? And who would want to waste time and energy trying to accomplish the impossible?

To make the task feasible, Bratton broke it down into small pieces that were within the power of police officers at every level. As he put it, the challenge for the NYPD was to make the streets of New York City safe "block by block, block by district, county by county." The task, framed in this way, looked both all-encompassing and quite doable. For the police on the streets, it was about keeping them safe on their route or in their neighborhood. For the heads of the police stations, the task was to ensure security at the station, and nothing more. New York City Chiefs of Police were also given a specific task within their capacity: to provide security in the district, and nothing more. No one could say that they were asking too much of him or that the completion of the task was practically independent of the performer: "This is beyond my capabilities." Thus, responsibility for the implementation of Bratton's blue ocean strategy was shifted from Bratton himself to each of the thirty-six thousand NYPD police officers.

Are you trying to motivate all employees without exception? Or are you focusing on the influencers - the head pins? Are you covering how the work is going, and setting up a fair process aquarium for the head pins? Or do you demand high performance, and then “knock on wood” in anticipation of the results of the next quarter? Are you creating an ambitious strategic vision for your employees? Or are you breaking down the task into parts so that you can make it doable at every level?

We destroy political intrigues

Will youth and talent always triumph over old age and treachery? Is it true or not? Wrong. Even the best and brightest are thrown overboard every now and then as a result of political intrigue and insidious plans. Politics is an integral part of corporate and social life. Even if the organization has reached a point of irreversible change, there are still powerful entrenched interests that stand in the way of change. (See also Chapter 6 for a discussion of the difficulties of adopting a new strategic idea.) The more likely change is, the more violently and vociferously these sources of negative influence - both internal and external - will fight to defend their positions. and their resistance can seriously damage the strategy implementation process, or even completely destroy it.

To cope with these political forces, purposeful leaders focus on factors of disproportionate influence: resorting to the help of angels, pacifying demons, and looking for a consigliere among the top leadership. Angels are those who should benefit from the change in strategy. Demons are the ones who will lose the most from this. And the consigliere is a politically sophisticated insider who is respected and influential in the company, who is aware of all the pitfalls in advance and knows who will fight against you and who will support you.

Provide yourself with a consigliere in the top management team

Most leaders focus on building a senior management team with strong functional skills, such as marketing, operations, finance, and this is important. However, the focused leader also includes another “job” on the list that other leaders tend to forget — consigliere. For example, Bratton has always ensured that there is a respected person on the top management team who knows all the obstacles that will have to be faced in implementing a new police strategy. At the NYPD, Bratton appointed John Timoney (now the Miami Police Commissioner) as his deputy. Timoney was a police officer who was respected and feared for his loyalty to the NYPD, as well as the sixty-plus orders, medals and crosses he has been awarded. Twenty years of service have taught him not only to recognize the main players, but also to be well versed in how they conduct their political games. One of Timoney's early tasks was to report to Bratton on the likely attitudes of top management toward the NYPD's new police strategy - specifying who would fight the innovation or quietly sabotage it. This brought about major changes.

Summon angels and pacify demons

To overcome political obstacles, it is helpful to ask yourself the following two sets of questions.

Who are they, my demons? Who will go against me? Who will lose the most in the future because of the blue ocean strategy?

Who are they, my angels? Who willingly will become my ally? Who will benefit the most from the change in strategy?

Don't fight alone. Enlist the support of influential superiors to fight. Determine who will go against you and who will support you - forget about those in the middle - and try to ensure a mutually beneficial outcome for everyone. However, hurry up. Without waiting for the start of the battle, isolate your opponents and unite with your angels. This way, you will end the war before it even starts or begins to gain momentum.

One of the most serious threats to Bratton's new police strategy came from the New York courts. Believing that Bratton's new strategy to tackle quality-of-life crime could overwhelm the system with litigation of minor offenses such as prostitution or drunkenness in public places, the courts opposed. To overcome this resistance, Bratton graphically illustrated to all those who supported him, including the mayor, district attorneys and chiefs of prisons, that the judicial system can handle the increased number of cases and that if you pay more attention to these crimes, then in the long term on the contrary, it will help to relieve the courts. The mayor decided to intervene.

Then the Bratton coalition, led by the mayor, through the press addressed their opponents with a simple and clear message: if the courts do not cope with the required load, the crime rate in the city will not fall. By forging an alliance with the mayor and the press, Bratton successfully isolated the courts. They would no longer be able to publicly oppose an initiative that would not only make New York a more attractive place to live, but would ultimately lead to a reduction in the number of crimes they themselves considered. With the mayor's strong press on the need to tackle quality-of-life crime, and with the city's most respected - and liberal - newspapers backing the new police strategy, any opposition to the Bratton initiative would have been prohibitively expensive. Bratton won the fight: the courts lost. And he won the war: the crime rate began to fall.

The key to defeating opponents, or demons, is to know all their possible attack vectors and be able to build counterarguments backed up by irrefutable data and logic. For example, when the heads of New York City police stations were first asked to collect detailed data on the facts and geography of crimes, they resisted, arguing that it would take too long. Anticipating such a reaction, Bratton himself did a similar job beforehand to check how long it took; it turned out to be no more than eighteen minutes a day, which he told police station chiefs was less than one percent of their daily workload. Armed with indisputable facts, he managed to overcome the political obstacle and end the battle before it even began.

Do you have a consigliere - a highly respected insider - or just the chief financial officer and other senior executives in charge of core functions? Do you know who will fight you and who will support the new strategy? Have you managed to create a united coalition with your allies to surround the dissidents? Has your consigliere helped to neutralize the largest "infantry mines" so that you yourself do not have to waste energy on those who do not want and will not change?

Challenging traditional perspective

As shown in fig. 3, the traditional theory of organizational change is based on the transformation of the masses. Therefore, efforts to bring about change are geared towards getting the masses out of place, and this requires enormous resources and time — a luxury that very few leaders can afford. But a purposeful leader, on the contrary, chooses the opposite course. To transform the masses, he focuses on transforming extremes: people, actions, and activities that disproportionately affect performance. By transforming these extremes, a focused leader can quickly and cost effectively change the core to implement a new strategy.

Rice. 3. Traditional point of view versus purposeful leadership

It is always difficult to implement a change of strategy, and it is even more difficult to do it quickly and with limited resources. However, as our research shows, this is quite feasible if you master the skills of purposeful leadership. You can overcome obstacles to implementing a new strategy if you consciously direct your strength and energy to combat them, while focusing on the factors of disproportionate influence. Don't obey the traditional point of view. Not every difficult obstacle requires proportionate action. Concentrate on cases of disproportionate influence. It is a critical component of leadership required to implement a blue ocean strategy. She aligns the actions of subordinates in accordance with the new strategy.

In the next chapter, we will go deeper, to the next level, to show how a new strategy can take over the minds and hearts of people by creating a culture of trust, commitment and volunteering in its implementation, and support for the leader. The solution to this problem allows you to see the difference between the involuntary embodiment of the strategist and the voluntary, when people act of their own free will.

Integration of the implementation process into the strategy

The company is not only top management and not only middle management. The company is all of its employees, from the director to those who receive phone calls from customers. And only when all employees of the organization unite around the strategy and support it "in trouble and in joy", then the company stands out from the crowd and declares itself as an outstanding and consistent implementer of ideas. Overcoming organizational barriers to strategy implementation is very important when moving to the finish line. This removes the difficulties that could stall even the best strategy. Ultimately, the company needs to activate the most fundamental foundation for action: the attitudes and behavior of all people in the organization. You must create a culture of trust and dedication that motivates people to implement the agreed strategy - not the letter of it, but the spirit. It is necessary for the strategy to take possession of the minds and hearts, so that it is accepted by each individual employee, who, in the course of its implementation, would go beyond the forced performance of duties and would start working on the principles of voluntary cooperation.

When it comes to blue oceans strategy, the challenge is increasing. As soon as you ask employees to leave their comfort zone and work differently, tension begins to build. People are wondering: what are the true reasons for the change? Is management telling the truth about future growth as a result of the strategic change? Or is it trying to make us redundant and fire us?

The further away from the management of the company an employee is and the less he was involved in the process of creating the strategy, the more the tension that owns him grows. Those who work at the forefront, that is, at the very level where the strategy should be implemented, day after day, may reject the new course, the indication of which was issued from above, without any regard for their opinions and feelings. As soon as you think that everything is done correctly, a problem suddenly arises at the forefront.

This brings us to the sixth principle of blue ocean strategy: you need to embed the implementation process into the strategy from the beginning in order to gain the faith and dedication of employees and inspire them to volunteer to cooperate. By implementing this principle, the company will be able to minimize the management risk associated with the manifestation of distrust in people, unwillingness to cooperate and even sabotage. This risk arises in the implementation of the strategy in both the scarlet and blue oceans, but in the blue ocean strategies, the likelihood of its occurrence is higher, since its implementation requires more significant changes. Reducing this risk is imperative in the implementation of the new course. To do this, companies need to go beyond their usual carrot and stick policies and rise to the level of fair process.

Our research has shown that it is the fair process that is the main variable by which one can distinguish successful strategic steps towards the blue ocean from unsuccessful ones. Depending on whether there is fair process or not, the very best efforts a company can make to implement the strategy can be successful or even totally ruinous.

Bad process can ruin strategy execution

Take for example the case of a large company, one of the leaders in the supply of water-based coolants for the metalworking industry. Let's call this company Lubber. Since there are many different types of processing in the metalworking industry, there are hundreds of different complex refrigerants. Finding the right variety is not an easy task. First, before purchasing, the product should be tested on production machines, and the further decision is often based on very vague logic. As a result, machine time and money are wasted on samples, and this is costly both for the customers and for Lubber itself.

To offer customers a leap in value, Lubber developed a strategy that aimed to eliminate the complexity and cost involved in the testing phase. Taking advantage of artificial intelligence developments, Lubber developed an expert system that reduced the number of errors in the selection of coolant to less than 10%, while the industry average was 50%. In addition, the system has reduced wasted machine time, simplified control and improved the overall quality of the processed parts. For Lubber, its sales process has become significantly easier, allowing sales reps to free up time to close new deals and reduce sales-related costs.

Yet such a strategic move that delivered mutually beneficial value innovation was doomed from the start. The problem was not that the strategy turned out to be bad or the expert system did not work - it worked perfectly. The strategy was doomed because the sales force rebelled against it.

Sales representatives who did not participate in the creation of the strategy and did not receive information about the reasons for the change in strategy saw a threat in the expert system that none of the strategy developers or managers thought about. The sales representatives considered their most valuable contribution to the work in the endless search for the right coolant during testing. All the great advantages - the ability to get rid of the hustle and bustle, get more time to sell, sign more contracts by gaining a special status in the industry - none of the sellers appreciated.

Feeling threatened, sales reps often worked against the expert system, expressing doubts to clients about its effectiveness. As a result, sales did not grow. Cursing their arrogance, having experienced in the most severe way how important it is from the very beginning to take steps to remove management risk by introducing an appropriate process, the management was forced to remove the expert system from the market and start restoring trust among sales representatives.

The power of fair trial

So what, then, is called a fair trial? And how does this process allow companies to integrate the implementation process into the strategy? The theme of fairness and impartiality has thrilled the minds of writers and philosophers for centuries. However, the just process owes its origins directly to two social scientists, John W. Tibaut and Lawrence Walker. In the mid-1970s, they combined their interest in the psychology of justice with the study of process, creating the term "procedural justice." Taking lawsuits as a subject of their research, scientists tried to understand what makes people trust the law in order to obey its requirements without coercion. In the course of research, it turned out that people care about both the court's decision itself and the fairness of the process during which it is made. People’s satisfaction with a decision and their willingness to comply with it increased when there was procedural justice.

Fair process is the practice of procedural fairness theory by managers. As in the legal arena, fair process builds implementation into strategy by engaging employees from the outset. When fair process is already in place at the strategy stage, people believe in fair play. This inspires them to volunteer together to implement the final strategic decisions.

Voluntary collaboration is more than mechanical work, where people only do what is necessary. With voluntary cooperation, a person goes beyond responsibilities, gives up the maximum of his strength and abilities - and even subordinates his personal interests to this - in order to act in accordance with the strategy. In fig. Figure 4 shows the causal relationship that we have observed in the areas of fair process, attitudes and behavior of people.

The Principle of the Three Es of Fair Process

There are three reinforcing elements of fair process: Engagement, Explanation, and Expectation. Both the senior executive and the salesperson in the store all pay attention to these elements, which we have combined into the Principle of Three E's of Fair Process.

Engagement means involving employees in making strategic decisions that will influence them. They not only give their suggestions, but also have the opportunity to meet and discuss the ideas and suggestions of their colleagues. Engagement communicates the manager's respect for employees and their ideas. Encouraging discussion hones the thinking process and allows a collective effort to find a wise decision. As a result of involvement, management makes informed strategic decisions, and everyone who has to implement them becomes committed to the chosen course.

Rice. 4. How Fair Process Affects Attitudes and Behavior

Explaining means that all participants and stakeholders need to understand why those final strategic decisions are being made. When people are explained about the motives behind decisions, people can feel confident that managers have taken their views into account and made a fair decision that is in the common interest of the company. Explanation allows employees to believe in the intentions of managers, even if their own ideas have been rejected.

In addition, explanation serves as a powerful feedback loop that spurs learning.

Clarity of expectations requires that, after choosing a strategy, managers clearly articulate the new rules of the game. While expectations can be quite high, employees need to know exactly what standards they will be judged against and what penalties will follow if they fail to meet their objectives. What are the strategic goals? What are the tactical goals and milestones of the plans? Who is responsible for what? To ensure a fair process, it is not so important what the new goals, expectations and responsibilities might be; it is much more important that they are fully understood by employees. When people clearly understand what is expected of them, then political machinations and favoritism become less, and nothing prevents them from quickly concentrating on implementing a new strategy.

Taken together, these three elements provide an indication of the existence of a fair trial. This is important because no combination of fewer of these elements provides this opportunity.

A story about two factories

How does the Principle of Three E's of Fair Process affect strategy implementation within an organization? Consider the example of an elevator manufacturer we will call Elco. In the late 1980s, sales in the elevator industry began to decline. The surplus of vacant office space in some major US cities was up to 20%.

As domestic demand fell, Elco decided to offer customers a leap in value while lowering its costs in order to stimulate new demand and break away from competition. In the process of looking for opportunities to create and implement a blue ocean strategy, the company realized that it needed to replace the mass production system with a flexible one, which would allow self-governing teams to work extremely efficiently. The management team agreed on this issue among themselves and was ready to start acting. To realize a key element of the strategy, top managers decided to take a path that seemed to be faster and better than others.

Initially, they planned to implement the new system at Elco's Chester plant and then extend it to a second plant in High Park. The logic was simple. The management of the Chester plant developed an exceptional relationship with the staff - so good that the workers abandoned their own union. The management was confident that they could count on their cooperation in implementing the new production strategy. According to the company itself, "these were ideal workers." Elco then intended to extend the process to the High Park plant, which had a powerful union that was supposed to discourage this or any other change. Management hoped for a run-up in Chester that would likely have a positive impact on the High Park plant.

In theory, everything seemed fine. In practice, things have taken on an unpredictable turn. The introduction of a new manufacturing process at the Chester plant quickly sparked riots and protests. In just a few months, both cost and quality metrics began to deteriorate incessantly. Employees started talking about reviving the union. After losing control, a desperate plant manager turned to an industrial psychologist at Elco for help.

In contrast, at the High Park plant, despite the poor reputation of its workers, the shift in strategy in the production process went smoothly. The plant manager was expecting a protest every day, but he didn’t wait. Even when the workers did not like the decisions, they felt they were being treated fairly, and therefore willingly participated in the rapid implementation of the new production process - a central component of the company's new strategy.

A closer look at how the change of strategy took place reveals the reasons for these apparent anomalies. At the Chester plant, Elco managers violated all three basic principles of fair process. First, they failed to involve employees in making strategic decisions that directly affect them. Lacking experience in flexible automated manufacturing, Elco approached a consulting firm with a request to develop a conversion master plan. The consultants were asked to work quickly and to ensure that the plan was as less of a hassle for employees as possible and that the new strategy was implemented quickly and painlessly. The consultants strictly followed the instructions received. Upon arriving at work, the employees of the Chester plant found strangers who were not only dressed in unusual clothes - in dark suits with ties and white shirts - but also quietly talking among themselves. In order not to interfere, these people did not communicate with the workers. Instead, they quietly popped up behind them, taking notes and drawing graphs. There was a rumor that in the evening, when the workers went home, the aliens crawled around the plant, looking for something in the workplace and fierce disputes.

All this time the head of the plant was at his work less and less. He spent most of his time at Elco headquarters, conferring with consultants — the meetings were deliberately held outside the plant so as not to distract workers. However, the absence of a supervisor from work had the opposite effect. As people became more and more anxious, not understanding why the captain of the ship abandoned his ship, rumors grew and spread. The workers were convinced that the consultants intended to reduce the size of the plant. People had no doubt that they were about to lose their jobs. The fact that the plant manager was absent from the site without any explanation was probably hiding from his subordinates! - could mean only one thing: the management, as the workers believed, "wants to deceive us." The trust and loyalty of the employees of the Chester plant was melting before our eyes.

Soon, people began to show each other newspaper clippings about how other factories in the country were closed after the arrival of consultants there. The workers decided that they would inevitably fall prey to management's hidden drive to downsize the plant and carry out mass layoffs. In reality, Elco's managers had no intention of closing the plant. They wanted to get rid of unnecessary operations by creating conditions for workers to quickly and cost-effectively produce high-quality elevators and thus break out of the competition. Unfortunately, the staff did not know anything about this.

Among other things, the managers of the Chester plant did not explain the reasons for making these, and not other strategic decisions, and also did not tell how these decisions would affect the accepted working methods and the future careers of employees. The master plan for the changes was presented to the workers during one thirty-minute meeting. The audience only heard that the time-tested ways of organizing work will be abolished, and in their place will be something called "flexible manufacturing". No one has explained why a change in strategy is necessary, how a company can break away from competitors to stimulate new demand, and why a change in the production process is a key element of the strategy. The stunned workers were silent, not understanding the meaning of all these changes. Managers mistook this silence for agreement, forgetting how long it had taken them themselves in previous months to embrace the idea of ​​moving to agile to implement the new strategy.

With the master plan in hand, the managers rushed to remodel the plant. When employees were asked what the purpose of this activity was, the answer was one: "increase efficiency." The managers did not have time to explain why they needed to improve efficiency, and they did not want to worry the employees. However, not being able to explain what was happening to them, some employees, coming to work, did not feel the best way.

In addition, managers did not begin to explain in detail to the workers what would be required of them in the new production process. They only said that now not individual work efficiency will be assessed, but the work efficiency of the group. The managers also said that those who work faster or have more experience will have to take “in tow” their less experienced and slower working colleagues. However, the managers did not go into details and explain the principle of working in groups.

The violation of fair process principles undermined employees' confidence in the change in strategy and in management. In fact, the new grouping gave the workers great benefits - now, for example, the distribution of vacations became easier; there was an opportunity to expand skills and do more varied work. However, the workers themselves saw only the negative side of the matter. They began to take out fear and anger on each other. Fights broke out at the factory - people refused to help “lazy people who could not finish their work,” or cut off those who “intervened”, offering help: “This is my business. You have your own place, and work there. "

The exemplary staff of the Chester plant was degraded before our eyes. For the first time in the entire time of the plant manager in this position, his subordinates began to refuse to follow his instructions, declaring that they would not do this, "even if you fire me." They felt that they could no longer trust the once popular leader, and so they began to bypass him, filing complaints directly with the head office. Due to the lack of fair process, employees at the Chester plant resisted change and were reluctant to participate in the implementation of the new strategy.

By contrast, the High Park plant management adhered to all three principles of fair process in implementing the new strategy. When the consultants arrived at the plant, the plant manager introduced them to all the workers. Management engaged employees in the process by organizing a series of general meetings, during which executives openly discussed the deteriorating business environment and the need for the company to change its strategic course in order to break away from the competition while creating higher value and lower costs. They talked about visiting other companies and seeing how productivity can be improved by dividing workers into groups. The executives explained that this will have a decisive impact on the company's ability to implement its new strategy. To save workers from the quite natural fear of dismissal, a policy of proactive action was introduced to try out innovations. Since the old ways of measuring performance were no longer suitable, managers worked with employees to create new ones, as well as to establish new responsibilities for each group. The goals and expectations were explained to the staff.

Implementing all three principles of fair process together allowed management to gain understanding and support from the plant workers, who, in turn, spoke respectfully of their plant manager and sympathized with the difficulties Elco faced in implementing the new strategy and moving to work on groups. Workers realized that the impending change brought essential, valuable, and rewarding experiences.

Elco's managers to this day recall this situation as one of the most difficult of all their time. They made sure that the lower-level employees care as much as their superiors to ensure that the process goes properly. By disrupting the fair process in the design and implementation of a new course, managers can turn their best employees into the worst, cause them distrust and resistance to the new strategy, the successful implementation of which depends entirely on them. On the contrary, if managers introduce a fair process, then the worst workers can become the best and willingly, faithfully work on changing the strategy, more and more faith in it.

Why is fair process so important?

Why does fair process play such a role in shaping people's attitudes and behavior? In particular, why is it that ensuring a fair process during strategy development can lead to the success or failure of its implementation? All of these issues ultimately boil down to the intellectual and emotional recognition of employees.

Each employee emotionally seeks recognition of their value not as a “workforce”, “personnel” or “human resource”, but as a person who is treated with respect and dignity and evaluated on the basis of individual qualities, regardless of position in the service hierarchy. On the intellectual plane, each individual seeks recognition for his ideas; he needs to be interested in his thoughts, discuss them carefully, and those around him would have a high enough opinion of his intellect and would discuss their ideas with him. Such frequently encountered phrases in answers to our questions, such as “this is so with everyone I know” or “everyone wants to feel this”, as well as constant references to “people” or “person” once again confirm the opinion that the manager must be aware of the almost universal value of intellectual and emotional recognition that fair process serves to create.

Intellectual and emotional recognition theory

Using fair process in strategy building is closely related to intellectual and emotional recognition. In a fair process, management by concrete actions proves its commitment to trust and care for people, as well as a deep faith in the knowledge, talents and experience of each employee.

When people feel recognized for their intellectual potential, they willingly share knowledge; in fact, they themselves want to impress and actually confirm a high opinion of their intellectual abilities by actively proposing ideas and sharing knowledge. Likewise, when employees experience emotional recognition, they emotionally feel their involvement in creating and implementing the strategy and are ready to use all their strength. Frederick Herzberg's classic study on motivation notes that recognition generates strong intrinsic motivation, which drives a person beyond what he or she is supposed to do in order to engage in voluntary cooperation. Therefore, because fair process is aimed at ensuring intellectual and emotional recognition, then in these conditions employees will more effectively apply their knowledge and experience, as well as seek voluntary cooperation in order to successfully implement the company's strategy.

However, this phenomenon also has a downside that deserves no less, if not more attention: the violation of a fair process and the accompanying non-recognition of the intellectual and emotional merits of a person. This type of thinking and behavior can be described as follows. When people's knowledge is not valued, it causes "intellectual outrage", expressed in the fact that people do not want to share their ideas and experiences; rather, they will hide their best designs and creative ideas, not finding it necessary to make them public. Moreover, they will deny that other people have intellectual merit. As if they said: "You do not value our ideas - so we do not value yours, do not believe in your strategic decisions and are not interested in them!"

In the same way, if there is no recognition of the emotional merits of employees, then this leads to anger, reluctance to invest energy in their actions; most likely, they will slow down the work and create all possible obstacles, including sabotage, as happened at Elco's Chester plant. Oftentimes, a lack of emotional recognition can push people to reject strategies that are unfairly introduced, even if the strategies themselves are sensible — the success of the company depends on them, or they benefit both employees and management. If people do not have confidence in the process of creating a strategy, then they will not have confidence in its results. This is the emotional power of fair trial. In fig. 5 provides a pictorial representation of these causal flows.

Rice. 5. Consequences of the presence and absence of fair process in the implementation of the strategy

Fair Process and Blue Ocean Strategy

Loyalty, trust and voluntary cooperation are not just attitudes or behaviors. It is intangible capital. When there is trust, people are more confident in each other's intentions or actions. If there is dedication, they are even willing to sacrifice personal interests for the sake of the interests of the company.

If you ask about the reasons for the success of any company that has created and successfully implemented a blue ocean strategy, then its managers will first tell you about the invaluable role this intangible capital has played. And managers of companies that have failed to implement the blue ocean strategy will likewise first draw your attention to their lack of this capital and the fact that it is because of this that they suffered a failure. These companies failed to make the shift in strategy because they lacked the trust and loyalty of their employees. Through the dedication, faith and voluntary collaboration of employees, companies are able to stand out from the crowd with the speed, quality and consistency of the strategy implementation process. They are the ones who manage to change the strategic course quickly and at low cost.

This is the question that all companies are struggling to solve: how to build trust, loyalty and voluntary cooperation deep in the bowels of the organization? Separating strategy creation from implementation will fail. While this approach is common to most companies, it is a sure sign of slow and hesitant adoption and, at best, mechanical progress. Of course, traditional incentives, power and money - the carrot and the carrot - can help. However, they are not able to inspire a person to do something that goes beyond the satisfaction of purely personal interests. Where there is no reliable monitoring of behavior, there is room for laziness and sabotage.

Ensuring a fair process avoids this dilemma. By organizing your strategy creation according to fair process principles, you can build implementation into your strategy from the start. Through fair process, people tend to loyally support the resulting strategy, even if it doesn't look good or is at odds with their understanding of what is strategically correct for their particular business unit. People understand that building a strong company requires compromises and sacrifices. They accept the need for short-term personal sacrifice to advance the long-term interests of the corporation. However, this is only possible in a fair process. Whatever the context in which the blue ocean strategy is being implemented - whether it is working with a joint venture partner to outsource parts manufacturing, reorienting sales, transforming the manufacturing process, relocating a call center from the United States to India - this dynamic works that we have observed more than once.

Conclusion. Sustainability and renewal of the blue ocean strategy

The creation of blue oceans is not a one-time achievement, but a dynamic process. After creating a blue ocean and examining its powerful impact on operational efficiency, the company is faced with the fact that sooner or later imitators appear on the horizon. The question is: how soon (or not soon) will they appear? In other words, how easy or difficult is it to imitate the blue ocean strategy?

As the company and its early imitators succeed and expand the blue ocean, more and more companies are breaking into it. This raises a second question related to the first: When should a company create the next blue ocean? In this final chapter, we look at sustainability and blue ocean strategy renewal.

Barriers to imitators

The blue ocean strategy contains serious barriers to copycats. Some of these barriers are purely operational, others are cognitive. Most often, for the first ten to fifteen years, the owners of the original blue ocean strategy do not face any serious problems; this has been the case with Cirque du Soleil, Southwest Airlines, Federal Express, The Home Depot, Bloomberg and CNN. This resilience is due to the following obstacles in the path of imitators, rooted in the blue ocean strategy itself.

Value innovation does not make sense in terms of traditional strategic logic. For example, when CNN was launched, NBC, CBSHABC scoffed at the idea of ​​a 24/7 live news feed without popular anchors. CNN is nicknamed Chicken Noodle News. For those who ridicule, imitators do not appear soon.

The resulting conflict with brand image prevents companies from emulating the blue ocean strategy. For example, the strategy of the firm The Body Shop, which abandoned beautiful models, promises of eternal beauty and youth and expensive packaging, forced the largest cosmetics companies in the world to stay idle for several years, since imitation would be a sign of failure of their business models.

If the market, due to its small size, cannot accommodate another player, natural monopoly prevents imitators. For example, the Belgian film company Kinepolis created the first megaplex cinema in Brussels and, despite its huge success, had no imitators for more than fifteen years. The reason was that the size of Brussels simply would not have allowed for a second megaplex - its appearance would have been disadvantageous for both Kinepolis and its imitator.

Patents or legal barriers block imitation.

Large volumes resulting from value innovation lead to a rapid decrease in costs, in connection with which potential imitators find themselves in a deliberately disadvantageous position, clearly inferior to the leader in this indicator. Wal-Mart's significant economies of scale in merchandise procurement were the reason other companies abandoned the idea of ​​imitating its blue ocean strategy.

Network externalities also prevent companies from easily and accurately copying the blue ocean strategy - this is how eBay, which organizes online auctions, is protected. The bottom line is that the more online customers eBay has, the more attractive the site becomes for sellers and buyers of various goods, which, in turn, discourages them from wanting to go to a potential copycat.

Because imitation often requires a company to make significant changes to its own business practices, there are often political reasons that delay the decision to imitate a blue ocean strategy for years. So, for example, when Southwest Airlines created a new service - offering customers the speed of an airplane for the price of a car ride - mimicking this blue ocean strategy would require major re-routing, retraining, and a shift in marketing and pricing, not to mention culture. - that is, significant changes that a rare company is able to implement in a short time.

By offering a leap in value, a company quickly builds brand awareness and loyalties in the marketplace. Even aggressive copycats with large ad budgets rarely have the strength to beat the value innovator brand hype. For example, Microsoft has struggled for many years to get out of the Quicken market - the result of Intuit's value innovation. Ten years wasted — despite all the effort and expense, Microsoft was not successful.

In fig. 6 is a short list of these barriers to imitators. As shown in the figure, these barriers are high.

Rice. 6. Blue Ocean Strategy: Barriers to Simulation

Value innovation is meaningless in terms of traditional company logic.

The blue ocean strategy conflicts with the brand image of other companies.

Natural Monopoly: The market often cannot accommodate a second player. Patents or legal barriers to copycats.

High volumes lead to the rapid emergence of a cost advantage for the value innovator company, which prevents copycats from entering the market.

Network externalities discourage imitators.

Imitation often requires significant political, operational and cultural changes.

Value innovation companies generate big buzz for their brand, and their loyal customers tend to reject copycats.

This is why we have rarely seen the rapid emergence of copycats among those who created blue ocean strategies. Plus, the blue ocean strategy is a systematic approach that requires not only the correct implementation of each element of the strategy, but also combining them into a single system to obtain innovation of value. Simulating such a system is a rather difficult task.

When value innovation is needed again

Eventually, however, virtually any blue ocean strategy will have its copycats. When they try to conquer part of your blue ocean, you usually go on the offensive to protect your hard-won customer base. However, imitators are often persistent. Obsessed with the idea of ​​maintaining your market share, you can fall into the trap and go into competition, seeking to defeat new rivals. Over time, the competition, not the customer, can become the backbone of your strategic intentions and actions. If you follow this stream, your value curve will start to resemble the value curve of your competitors.

To avoid falling into the trap of competition, you need to keep an eye on the value curves on the strategy canvas. By tracking the value curve, you can know when to innovate and when not to. That way, once your value curve begins to blend in with your competitors, you can determine it's time to move to another blue ocean.

In addition, this method will keep you from leaving for another blue ocean, when your current proposal can still bring enough profit. If the company's value curve still has focus, divergence, and an attractive slogan, then resist the temptation to re-innovate value. Instead, the focus should be on lengthening, expanding and deepening revenue flows through operational improvement and geographic expansion in order to maximize economies of scale and marginal market coverage. You should swim as far as possible into the blue ocean, become a moving target, move away from the first imitators and interfere with them along the way. The goal is to maintain a dominant position in the blue ocean for as long as possible, surpassing your imitators.

As competition intensifies and demand exceeds supply, fierce competition will unfold and the ocean will turn scarlet. When your competitors' value curves merge with yours, you should start on the path to a new value innovation to create a new blue ocean. Thus, by reflecting your value curve on the strategy canvas, periodically reconstructing the competitor's value curves and comparing them to yours, you can clearly see how close your copycats are to you, figure out how exactly your curves match, and understand to what extent blue the ocean turned scarlet.

For example, The Body Shop has dominated the blue ocean it created for over a decade. However, now this company is already in the bloody crimson waters and its efficiency is declining. She did not pursue a new value innovation when the competitor's value curve merged with her own. Still floating in the clear blue waters of the new market. This company managed to break out of the circle of competition and, as a result, began to grow, and its profits - to increase. However, the real test of Casella Wines' long-term profitable growth will be its ability to innovate new value when its copycats compete aggressively and accurately to replicate its value curve.

The six principles of blue ocean strategy proposed in this book should be important beacons for any company considering its future development - if, of course, this company wants to become a leader in the increasingly overpopulated business world. We do not want to say that companies should suddenly abandon competition, or that competition will suddenly stop. On the contrary, competition will grow more and more and will remain the most important factor in market reality. What we propose boils down to this: To be highly efficient in a crowded marketplace, a company must not compete for market share, but go beyond and create a blue ocean.

Since, however, blue and scarlet oceans have always existed side by side, the practical reality requires a company to succeed in both oceans and master the strategies that are suitable for each of them. But since companies are already familiar with the competition in the red oceans, they need to learn how to break out of the competition. This book is written to balance the scales so that the creation and implementation of a blue ocean strategy becomes as systemic and real as the competition in the red waters of the famous market space.

Here we have people with approximately the same type of needs.

And here are the companies that satisfy this need in about the same way.

Commercial relationships develop between people and companies: people pay,
companies provide a service or sell a product.

It turns out the market.

There is a market for Internet providers and a market for mobile communications. There is a food market. There is a market
pizzerias and a separate market for Japanese restaurants with delivery. And the common market “Where to eat to
do not cook? " Oil market. The market of educational services. There are an incredible amount of markets.

If you are the only company in the market and you have a lot of clients, you are fine. You dictate prices and determine
rules of the game. Clients come only to you, because only you solve their need. It is blue
ocean: a market without competition.

Soon other companies will see how good you are and will come to your market. They start to provide the same services
the same people, but cheaper, faster or better. Competition begins, blood is spilled. Now
this is a scarlet ocean: a competitive market.

The essence of the blue ocean strategy is to come up with a product or service that will create blue for you.
Ocean.

Don't compete

The essence of "Strategy ..." is to stop competing with other companies, that is, to play by their rules. Stop
try to do what they do, but cheaper, faster, or better. Just don't do that.

Instead of fierce competition, Vichan and Mauborgne propose to change the rules of the game and create new markets - blue
oceans in which there is no one yet. And be there first.

The computer was considered an office tool. Apple invented that the computer
should be homely and personal.

A small family bakery made bread for the entire area. But here in the area
opened a chain supermarket, which began to bring bread from the plant. The bakery started to bake fresh
buns for restaurants.

The company helped with the move between apartments, but saw that there were too many
other firms do the same. We began to help with moving between offices, became successful.

Blue oceans are created all the time, although no one thinks about them in this way. But every time
a revolutionary product appears on the market - welcome to the blue ocean.

January 28, 2010: Steve Jobs unveils the first iPad to be sold under the slogan
"Revolutionary device". Despite the fact that tablet computers existed before the "iPad", namely
Apple turned the idea of ​​a tablet computer into a commercially successful product. Source - LA Times.

How to create a blue ocean

In the book "Blue Ocean Strategy" there are no provocative phrases from the series "Do one, do two!" Book
thorough, detailed and with reservations. I will try to summarize the main approaches to opening blue
oceans. The list is incomplete and not precise enough, but it gives a general idea.

New demand is needed to create a blue ocean. Where to get it from:

1. REVIEW PORTRAIT OF THE BUYER

Focus not on those who are already in your market, but on those you don't. Think who
yet does not buy your item and why.

Before Bloomberg financial news, stock data and analytics
supplied by different companies. And they were guided not by the stockists themselves, but by their CIOs,
who made the decision to purchase computers and programs. Therefore, the systems for stock exchange traders are actually
were done for IT specialists and took into account their interests: so that they could easily unfold, set up
and were supported.

Bloomberg said "Enough!" and made a system for stock traders. This is the one
the most legendary computer with two screens and special programs. These computers were flocked
all analytics, stock data and news, and it was primarily targeted at traders,
not their directors.

Bloomberg terminal for stock traders. Source - New York Times

Australian winemakers Casella Wines see who doesn't drink in America
wine. It turned out that almost the entire middle and working class does not drink it - and this is a huge market. Why
don't drink? Because they cannot choose, do not understand the taste of wine and do not distinguish all these geographical
designations. The wine market is too complex for the average American. Winemakers compete before
the other is that for 90% of people it doesn't matter.

Australians have made a simple democratic wine: with fresh fruit
taste, no geographic problems, with little choice. This wine is easy to choose and just the same
easy to drink. You don't need to be a sommelier to enjoy it. For a year, a new
the Australian brand has become the fastest growing wine brand in the United States. With incredible
overcrowded wine market.

The secret of Casella Wines is not to fight for those who already drink wine, but for those who do not drink it yet.

2. REVISE THE STEREOTYPES OF THE MARKET

The blue ocean is easy to spot if you catch yourself looking at the market with a blinkered eye.

We produce expensive high-quality luxury cars. Class
"Lux" - that is, with all the little things: leather interior, heated steering wheel, charger for
telephone and panoramic sunroof. Why not break the rules of the game and make an inexpensive car
with all these things?

Airplane travel is a big journey. It is important to
passengers felt comfortable everywhere: at the airport and on the plane. Good. But why
not making a flight a simple move, like a bus? You don't need comfort, you need to quickly
and simple, without transfers and waiting. American airline Southwest made flights
simple, fast check-in, removed all luxury items and reduced prices. And they did a lot
direct flights to small airports in America, so that you do not need to transfer to large
terminals.

The sports company Curves looked at the situation in the fitness market:
expensive fitness centers, spas, showers with saunas, expensive exercise equipment, classes at least
for an hour. Going to this kind of fitness is a whole business. “We’re breaking everything,” said Curves. Made
small inexpensive halls, simple showers, the easiest to use exercise machines
and came up with a circuit training system so that everyone has enough space and time. Half an hour
worked - and you go on about your business.

Competition is heightened where people think in the same terms. Fitness club opened
spa and juice bar. The neighbor looked at him and opened two spas and a restaurant
healthy eating. The third opened all this plus a supplement store. Everybody looks at each other
and nobody looks at the consumer. This is the path to the scarlet ocean.

3. VIEW RELATED PRODUCTS

Track the entire chain of use of your product and service. With what goods do they often
buy? What are the problems? How to solve them? Look beyond what
traditionally considered your product. Look at it from the buyer's perspective.

Kettles were not always equipped with a scale filter. They were invented when
saw that scale gets into the cup. It's impossible to see if you only think
about what shape and size your kettle should be.

Ikea is, in fact, a furniture salon. But it sells everything for
at home: knives, cups, bulbs, soft toys, slippers, flowers, and stems
bamboo. How interesting it would be in Ikea if only
sofas?

The American department of transport is buying regular buses. Competition,
of course, the market is huge: everyone wants to serve municipal contracts
and supply buses for budget money. There is tough price competition.
Manufacturers are trying to reduce the price of one bus in order to win tenders.

But besides the bus itself, departments are spent
for anti-corrosion treatment of the body, maintenance and fuel for powerful engines.
Expensive service is a problem in the bus market.

Here comes a Scandinavian company that offers
buses with a body made of fiberglass. It is durable, easy to repair, not subject to
corrosion resistant and lighter than metal. Lighter body - less powerful engines. Smaller
fuel. As a result, the bus itself is more expensive, but it is much cheaper to service it.
Fiberglass buses are taking over America.

Another example with a problem that lay a bit outside the product's border:

American moms and dads want to go to the movies, but kids
many films are not interesting to watch. There is no one to leave the child with, so families go
only for children's films. If the child had someone to leave with, the parents would go
in the movies more often. The solution is to open a playground at the cinema, where the animators
look after the children during the sessions.

When a manufacturer deliberately goes beyond the scope of his product, he falls
into the blue ocean.

4. CHANGE THE EMOTIONAL COMPONENT OF THE PRODUCT

Some products are sold through emotion and ritual - beauty salons, teahouses
ceremonies, expensive restaurants, expensive watches and exclusive clothing. One of the methods
create a blue ocean: dramatically change, add or subtract emotional
component of the product.

There was a beauty salon - there was a fast eatery, where
accurately and accurately cut in 15 minutes. This is "QuickBeauty" and "Chop-chop"

There was a coffee shop - it became a local club
by interests with board games. This is Starbucks.

There were expensive elite watches - they became simple youth watches.
This is "Swatch".

Blue ocean discovery technology

In a criminally abbreviated form, the technology looks like this:

Understand the market: what are the rules it plays
and why, where is our place in it.

Conduct field research. Understand how people
use the product in life, not in our dreams.

Focus not on "how", but on what
"Like not". How is it not used? Who doesn't use? Why not use it? What kind
Are there any problems with this?

Set a big goal: do it in a new way. To convey
this goal is up to everyone who will participate in the project.

Realize the goal.

In a future installment, we will focus on this fifth point. The book is worthy
second approach.

29.08.2018

The book was published more than 10 years ago, but in my opinion, nothing better has been written on the topic of innovation strategy. Of course, critics can say that the ideas of the authors are not new, and the beautiful title provided the book's popularity. But what is definitely certain is that the book helps to organize everything clearly on the shelves and provides a toolkit for finding an innovative strategy.

"The only way to beat the competition is to stop trying to win."

Without going into the depths of the ocean: the authors of the book propose to represent all existing markets in the form of two large oceans in which entrepreneurs swim and make money.

Schematically:

It is obvious that the overwhelming majority of entrepreneurs flounder in the first reservoir - relentless competition, the constant pursuit of profit, indeed sometimes takes on a scarlet color.

The second ocean is much calmer - there is peace, grace and, in principle, the same money ... but how to get there?

To answer this question, the strategy canvas method was proposed, which can be clearly described by the following example.

Imagine the 1940s, a small Scandinavian country. In the existing furniture market, a typical example of the scarlet ocean has developed - healthy competition, but in general the entire range is pretty uniform. Expensive furniture made of fine wood, beautifully presented assembled in central city stores. The furniture is almost eternal, so it will even serve grandchildren - choose, buy, everything will be packed and delivered.

If we disassemble everything into several parameters, then in a disassembled form the activity can be represented by the following graph:

Since there was a lot of competition in this situation, then, apparently, it suited the needs of local buyers. You could, of course, try your hand at eating a common cake, but there are other options. If you place the "dots" in the opposite direction, you get a separate market segment.

That's right - inexpensive and not very durable furniture made of questionable materials, sold in shops on the outskirts of the city, disassembled and not delivered to the buyer (at least not delivered free of charge).

It would seem, who needs all this?

However, the fortune of a person who was once visited by a bright thought is currently about 23 billion dollars - this is Ingvar Kamprad and he is rightfully considered one of the richest people in the world. What is the name of his company, you probably already guessed. This is IKEA.

How to create a blue ocean

To create a blue ocean does not require opening a new industry at all, as most often companies create blue oceans within scarlet ones, pushing existing industry boundaries in the way that Cirque du Soleil or The Body Shop did.

At the heart of the blue ocean strategy is value innovation. Value innovation is not a competitive advantage, but something that makes competition simply unnecessary due to the company's reaching a fundamentally new level.

In contrast to the classical competitive approach, a value innovation strategy does not require a choice between low cost and high value. This strategy allows you to simultaneously create high value at low costs.

Principles for creating blue oceans

Six principles are required to create blue oceans.

Principle 1: redefining the boundaries of the existing market

It can be implemented in several ways:

1. Pay attention to alternative industries.

Examples of alternative industries are restaurants and cinemas. These are different industries, but from the point of view of a pleasant pastime for the client, they represent alternatives.

The key to finding a suitable alternative is to see and understand the factors that lead buyers to choose between alternative industries.

2. The second way is to consider the so-called strategic groups - companies and industries that have similar strategies.

For example, in the automotive industry, there is a strategic group of luxury cars and a strategic group of cheap ones. Competition takes place within these groups: luxury and cheap cars compete only between companies in their respective categories.

The key to creating a blue ocean in such an environment is to find out how customers are guided when choosing between a particular group.

3. The third way is to pay attention to the customer chain. In certain industries, companies target certain segments of customers - some focused on large sales, and some on individual sales. Often, the buyer and the user are different persons, which makes it possible to target the group of buyers with which competitors do not work. Thus, the Danish insulin manufacturer Novo Nordisk, thanks to its NovoPen product (insulin pen-injector), was able to work directly with diabetics, bypassing the usual scheme of selling products through doctors.

4. The fourth way is to consider the possibility of introducing additional products or services. For example, major bookstores Borders and Barnes & Noble have made shopping more enjoyable by equipping their rooms with sofas and armchairs and opening café bars.

5. The fifth way is to analyze the functional and emotional attractiveness of the product to customers. The opportunity to create a blue ocean here arises by disrupting the usual ways of competition, which refer to either price and function (functional attractiveness) or the feelings and emotions of the buyer (emotional attractiveness).

It is possible to create a blue ocean by adding an emotional component to a functionality-oriented model, or vice versa, and thereby pushing the boundaries of the market and stimulating new demand.

6. The sixth and most difficult path is to try to look into the future. Its essence is not to simply predict and adapt to future changes, but to analyze how the current new trend will change the market in the future and how it can affect the company's business model and the value of its offer to customers.

Principle 2: focus on the big picture, not the numbers

This is not easy to do, since the strategy for building the strategy of most companies is strongly associated with the red oceans of existing markets.

For the chosen strategy to have potential for growth, it must meet three parameters:

1) The strategy should be focused on a specific factor of the industry, and not be scattered over everything;

2) The strategy should be different from the competitors 'strategies and, accordingly, the company's value curve should not overlap with the competitors' value curves;

3) The strategy can be expressed in the form of a clear and attractive slogan.

Principle 3: going beyond existing demand

Most companies focus on meeting the needs of a traditionally established type of customer. However, as the authors emphasize, such a strategy ultimately leads to deeper market segmentation, which naturally slows down business growth.

Therefore, for a company aiming to create a blue ocean, it makes sense to pay attention to the non-customers of the industry. And instead of striving to satisfy all the possible needs of existing customers, it is necessary to find something in common that could be appreciated by those who do not belong to the industry's customers at the moment. Thus, Cirque du Soleil switched from children - habitual clients of circuses to paying adults, and Cassella Wines began selling wine to those who had not drunk it before.

Principle 4: correct strategic sequence

The essence of this principle is to test the commercial viability of a blue ocean idea and determine whether your proposal is not just an innovation, but an innovation of value to the customer.

In order to structure this process, the authors propose to ask ourselves four questions in order:

1. Is your offer of exceptional value to the customer?

2. Is the price you set suitable for the bulk of buyers?

3. Do costs allow you to make a profit?

4. What are the obstacles to the implementation of your proposal? Is it possible to think them through in advance

A successful blue ocean strategy implies positive answers to all four questions.

Principle 5: Overcoming organizational contradictions

Implementing any strategy comes with significant challenges, and implementing a blue ocean strategy is even more challenging as it involves changing the way we approach transformation. Naturally, in such cases, companies, among other things, have to face internal resistance to innovation.

1. Internal resistance of employees who need to be convinced of the correct change in strategy.

To overcome this contradiction, the authors recommend the use of "focused leadership", which allows for faster and less costly implementation of fundamental changes. The essence of purposeful leadership is the ability to motivate others to adopt a new strategy, not through schedules, plans, numbers and abstract categories and appeals, but through their own experience.

2. Limited resources. This refers to the common belief that major changes require large expenditures.

In order to change the company's strategy, having only limited resources, it is necessary to concentrate on the resources already available and direct them to the so-called hot spots - those areas of activity that bring the greatest return at the lowest cost (the opposite is the "cold spots").

3. Motivation - it is necessary to motivate key employees to take actions that contribute to the implementation of the strategy.

To overcome the problem of motivation, the authors recommend focusing on three tasks:

First, to find among the employees of the companies born leaders who enjoy respect and authority.

Third, in order for tasks to appear more doable, complex tasks must be broken down into small ones.

4. Political intrigues - there is opposition from those whose interests are affected by the transformations. "The main principle in dealing with intrigue is not to fight it alone."

In order to overcome this serious obstacle, you need in advance:

Seek help from those who benefit from the change in strategy;

Neutralize and isolate those who lose the most from it;

Enlist the support of experienced staff who are skilled in political intrigue.

Principle 6: Build Implementation Process into Strategy

Without the support of company employees, any strategy, no matter how good it is, is doomed to failure. Therefore, it is necessary to overcome the possible mistrust of the company's employees. Standard methods of positive and negative motivation will not work in this case. The alternative proposed by the authors is “fair process”.

Its essence is to attract employees to their side even at the stage of creating a new strategy due to the principle of three "E":

Engagement - means that employees are involved in making strategic decisions;

Explanation - means that all interested employees of the company must understand the reasons for the implementation of the new strategy;

Clarity of expectations (Expectation) - means that employees must clearly understand their goals, responsibilities and responsibility for their implementation arising in connection with the implementation of a new strategy.

Blue ocean life cycle

Of course, competitors and imitators are not asleep, and you need to be prepared for their appearance, and for the fact that the blue ocean will sooner or later become scarlet.

In order not to overlook this process, the authors recommend that you regularly monitor the value curves. If your curve starts to merge with the curves of your competitors, then it is a sign that your performance is declining and it is time to look for ways to create new market spaces.

It should always be remembered that the search for a blue ocean is not a one-time process, but a dynamic one.

Simulation on the MBA program IBDA RANEPA
The first and only MBA program in Russia, which includes a simulation computer game "Strategy of the Blue Ocean", created by INSEAD specialists to develop and practice the skills of making non-trivial managerial decisions in non-standard situations and used at the Harvard Business School.

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The book “Blue Ocean Strategy. How to find or create a market free from other players ”is a unique work dedicated to. She clearly describes the high profitability and rapid development of companies that are able to generate effective business ideas by creating previously non-existent demand in a new market (called the "blue ocean"), in which there is practically no competition. This strategy avoids competition in low-profit markets (they are called the "red ocean").

The book is based on fifteen years of research, and as examples, the authors cite 150 productive strategies that have been used for 120 years in 30 industries. It was these strategies that made the overall blue ocean strategy real.

Authors

Jang Kim is one of the world's most renowned business consultants, professor and chair of strategy and international management at the French business school and research institute INSEAD, as well as a member of the board of directors of Value Innovation Action Tank and a member of the European Union with advisory functions. In the past, he was a consultant to international companies around the world. He is also the author of numerous articles that are dedicated to the management of multinational corporations and are published in the most famous business magazines.

René Mauborgne is a distinguished researcher and professor of strategy and management at the aforementioned INSEAD, a member of the World Economic Forum and the author of a number of papers on the topic of management in international companies.

A summary of the book “Blue Ocean Strategy. How to find or create a market free of other players "

The book consists of a preface, a section of thanks to authors, three large parts, including nine chapters in total, a section of appendices and notes, a bibliography and a block dedicated to the authors.

Below are some interesting ideas from the book by Chan Kim and Rene Mauborgne.

Creation of "blue oceans"

The creation of blue oceans can be illustrated by the famous circus show Cirque du Soleil. Initially, the company decided not to compete with conventional circus shows, but set about creating an unoccupied market segment in which there was no competition. The market was aimed at a new target audience. The success of the circus is due to the fact that its organizers understood that in order to win in the future, it is necessary to get rid of competition.

From a company and an industry to a strategic step

A strategic step is a set of decisions and actions by the management team aimed at developing a large business proposal that can form a new market.

There are no companies that are consistently successful. But the strategic moves that have resulted in blue oceans and new trajectories of skyrocketing profits are remarkably similar.

The difference between winners and losers in blue ocean building is that they each have a different approach to strategy. Those stuck in the red ocean took the traditional approach in hopes of outrunning the competition and gaining a comfortable defensive position in the current market environment. Those who created the “blue oceans” did not focus on other industry players - they acted according to a different strategy called value innovation, according to which an equal emphasis is placed on both innovation and value.

Reconstruction of market boundaries

The first principle of the blue ocean strategy is the reconstruction of market boundaries, aimed at getting out of the world of competition and creating a new industry. And, conducting their studies, the authors were able to identify specific patterns of the process of creating "blue oceans", namely: six ways to reconstruct markets.

The first way is to explore alternative industries. The second way is to study the strategic groups of the industry. The third path focuses on the customer chain. According to the fourth way, it is necessary to study additional services and products. The fifth way points to the analysis of the functional and emotional attractiveness of the product for consumers. And the sixth way calls to look closely at tomorrow.

Focusing on the big picture, not numbers

This principle can be called the main one when it comes to reducing the risk associated with. It is distinguished by the development of an alternative approach to existing strategic planning, according to which, first of all, a strategic outline is created. This approach leads to strategies that reveal workers and help the organization consider blue oceans.

Creating a strategic canvas involves four steps:

• Visual awakening
• Visual exploration
• Visual Strategy Fair
• Visual communication

Going beyond existing demand

This principle maximizes the size of the blue ocean being created, which is key to achieving value innovation. To achieve a successful outcome, it is necessary to overcome two traditional strategic practices - focusing on an existing customer base and striving for maximum segmentation to accommodate differences among customers.

Maintaining the correct strategic sequence

Once the ways to create “blue oceans” have been studied, a strategic framework has been developed that forms the future strategy, and ways to attract the maximum number of consumers have been identified, you can begin to create an effective business model. Its basis is the correct strategic sequence, expressed in the usefulness of the product for the buyer, price, cost and implementation.

Overcoming major organizational hurdles

Companies must overcome four major hurdles.

The first is the employees. Workers must be convinced that a strategic change is right and necessary.

The second obstacle is limited resources. The more serious the changes in the company, the more resources are needed to implement them.

The third obstacle is. It is required to understand how key actors can be quickly and clearly motivated to change the current situation.

And the fourth obstacle is political intrigue. This should take into account the attitude of officials and dignitaries to innovation in business.

Each case may differ in its degree of complexity, but many companies face only some of the obstacles in practice. However, it is simply necessary to be able to cope with all these difficulties in order to ensure that organizational risk is reduced.

Building the implementation process into a strategy

The organization is not only the middle management. Only when the entire staff is united around the strategy and shares it in all situations, the company can stand out from the competitors.

The implementation process should be built into the strategy from the beginning - this ensures the faith and dedication of employees, and also motivates them to volunteer to cooperate. Only a fair process can be the main variable indicating the difference between successful strategic steps in moving towards the "blue ocean" from unsuccessful ones. Depending on whether there is a fair process, the actions of the organization lead to success or failure.

Conclusion

The creation of blue oceans is not a one-time achievement, but a dynamic process. If a company creates a "blue ocean", at some point in time, imitators will surely appear on its way. And the question is, when exactly will they appear? In other words, how difficult is a blue ocean strategy to follow? With the success of the organization and its early imitators, new players enter the blue ocean.

And here the next question arises: when should an organization create a new "blue ocean"? To avoid competition, you must monitor the value curves on the strategic canvas. The moment your company's value curve merges with your competitors' value curve is an indicator that a new blue ocean should be created.

The idea of ​​the blue ocean is not new at all and has been touched upon in one form or another by many marketing professionals. But it is precisely this name that has become entrenched in the minds, instead of "new niches", "free cells", "unoccupied segments". And it sounds, you see, much better. So what is a blue ocean strategy? This issue is discussed in detail in the book of Chan Kim and Renee Mauborgne in the book of the same name.
The authors regard all markets as scarlet, i.e. highly competitive (associated with bloody battles in highly competitive markets) and blue, i.e. free, deep, where there is no one but you.

What is the idea of ​​a blue ocean, and what are you the smartest? It is clear that anyone wants to find such an ocean. Why do some find it while others get more and more bogged down in competitive wars? The point is that it is necessary to move away from the usual views, and assess the situation as a whole, from the outside.
Well, for example, in the book I really liked the example with wines. Wine, as you know, is a noble drink and a very small number of people can truly appreciate it. When evaluating a wine, they look at the year, grape variety, aftertaste, aroma and much more. And if you consider that there are also many varieties of each species ... in general, it's easier to take beer.
One company decided to do just that - they made just a few types of simple wine, in simple bright bottles. Now the buyer did not have to walk long between the rows, from one variety and producer to another. They took one of two types (sweet or dry) and went to the checkout.
Creating a new blue ocean requires a clear understanding of the consumer value scale and where each competitor is. To better understand this situation, consider a hypothetical example.
Let's say we have a task to find a blue ocean in the market of printing services in our city. First of all, the key customer values ​​should be highlighted:

• order processing speed;
• print quality;
• information about the status of the order;
• transparency of settlements;
• - price;
• work with the customer;
• layout approval process;
• quality assurance.

Let's say there are several competitors in the market (often similar competitors with the same strategy can be combined into one group).
Each of the characteristics can be divided into scales (high / medium / low), and competitors can be displayed on this graph. It will turn out something like this:

Those. for each of the competitors, we set points for these parameters and look at the free niches. As you can see, at the moment in this market, no one is engaged in urgent low-cost orders. At the same time, the calculations are not transparent, and customers do not know about the status of the order until it is fully ready. This may be our blue ocean. The main thing is not only to declare these values, but also to convey them to our clients and actually implement them.
As you can see from the example, there is nothing complicated about it. The main thing is a competently drawn up map of competitors and a real assessment of your values ​​in the eyes of customers. When in doubt or guesswork, do additional research. Just don't ask closed questions. Let your client talk. They will surely tell you where to look.
Another option is to look at adjacent areas: what can you borrow from there? Or perhaps how to apply their achievements to your market (wine as beer).
Of course, one should calculate everything, and not rush to every vacant niche (for example, the niche of low-quality and very expensive goods is probably free. But is there a demand for such goods?). In other words, the blue ocean strategy shows you the possibilities. And already their implementation is completely on your shoulders.
I hope this article will help you decide on your strategy, and it will help you find your blue ocean.
By the way, you can buy a book for Russians here.

 

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• Anna Wintour. The devil wears Prada. Anna Wintour's style How does Anna Wintour look at the sea;
• I Want to Disappear: A Scary Honest Bulimia Photo Project;
• What things no trip can do without;
• Tips for girls how to take a beautiful selfie;
• Worst group in the world. Canadians are offended? (Nickelback is the worst band in the world);
• New Year window dressing New Year window dressing collection;
• The best New Year showcases!;