Blue Ocean Strategy – a review

51xtlczer7l-_sy344_bo1204203200_

BLUE OCEAN STRATEGY: How to Create Uncontested Market Space and Make the Competition Irrelevant, by W. Chan Kim and Renee Mauborgne, Boston: Harvard Business Review Press, 2015. 287 pages.        Reviewed by Melinda Johnston.

$32 list price. Available at Amazon by clicking here. 

 It takes a unique combination of business acumen and creative insight to see the similarities between the successful strategies of development and marketing of such diverse entities as Model T Fords, Cirque de Soleil, fighter planes and Novo Nordisk’s NovoPen insulin delivery system. Authors W. Chan Kim and Renee Mauborgne possess both, and have developed the blue ocean strategy to help others replicate the process of these business success stories. The two authors are co-directors of the INSEAD Blue Ocean Strategy Institute and professors at INSEAD, France, billed as one of the top business schools in the world. They wrote the bestselling book, Blue Ocean Strategy, in 2005, and updated it in 2015. Over the past eleven years, Blue Ocean Strategy has sold 3.5 million copies in 43 languages, and has been a bestseller across five continents.

The authors take the reader from the metaphor of a crowded, bloody red ocean filled with the competing products and services of rival companies, to that of an open, inviting blue ocean stocked full of new customers eager to patronize the new or newly revised company, product or idea that is being offered. The key, the authors claim, is incorporating blue ocean strategy each step of the way when looking at ways to start, expand, or improve a business. Throughout the book they include a number of case studies that demonstrate how following the blue ocean strategy can dramatically increase the odds of business success.

The overarching theme is to step away from the competition for existing customers, and look at fresh, new development and marketing efforts to gain non-customers, creating a whole new blue ocean teeming with potential new business. The authors lay out a step-by-step plan, or strategy, to do just that, complete with graphs and grids to further their point. As part of their research, they studied 150 strategic moves in 30 industries over the past 100 years to see what commonalities were present in those business success – and failure – narratives. From those commonalities, they developed the blue ocean strategy, a guide that, when followed, will bring home their premise that “the only way to beat the competition is to stop trying to beat the competition” (4). While the book will certainly be appreciated by mangers and business and marketing professionals, it is also valuable for communications professionals as much of the change required to move from a red ocean to a blue one involves strategic communication – with management, with employees, and with customers, both existing and new.

Consider the authors’ critique of Novo Nordisk, a company that plunged into a blue ocean with the creation of the NovoPen, a user-friendly insulin delivery system that does not require separate vials, syringes and needles. Through strategic planning, the company zeroed in on patient wants and needs, shifting its attention away from marketing insulin to doctors, its existing primary customer base. The wild success of the NovoPen helped changed the focus of the company from an insulin producer to a diabetic care company. Instead of competing head to head with other insulin producers, Novo Nordisk broke away from the competition by using blue ocean strategy: looking at who ultimately benefitted from the insulin, and determining how the company could appeal directly to the end user.

The authors cite Cirque de Soleil as another example of successful blue ocean strategy in action. Whereas traditional circuses competed with each other by offering big name acts in three rings, performing animals, concessions, and large tents, Cirque de Soleil managed to marry the circus atmosphere with the theatre, carefully selecting the best of both mediums and combining them into a unique performance category that attracted customers from all interests and backgrounds. By eliminating headline performers, animal acts, and concessions, they set themselves apart from a traditional circus. Incorporating more detailed storylines, lighting, dance and acrobatics, they adopted elements from traditional theatre. Though the audience for traditional circuses was dwindling, and the price of live theatre prohibited many would be theatre lovers from attending, Cirque de Soleil strategically priced their tickets higher than a traditional circus, but lower than most live theatre shows and were able to attract a more diverse audience than either of the traditional venues. They also established a strategic communication plan to market the new show to perspective sites and potential customers alike.

Consequently, in less than twenty years, Cirque de Soliel performances have been seen by more than 150 million people, and the company has achieved a level of revenue that took Ringling Brothers and Barnum & Baily more than one hundred years to realize (3). In simplified blue ocean terms, Cirque de Soliel used value innovation to make its mark. Instead of strategizing to “beat the competition” (13) the company created a “leap in value for buyers and their company by opening up new and uncontested market space” (13). Value innovation requires pursuing differentiation and low cost at the same time –hence, the creation of Cirque De Soleil, and with it a wide open blue ocean that is hard to replicate and continues to attract new customers.

Once a company has formulated a blue ocean strategy, it must be implemented carefully and deliberately to succeed. To emphasize the importance of effective communication, the authors quote Lieutenant General Christopher Bogdan, head of the Pentagon’s problematic F-35 program. According to the authors, the fighter jet program would have been much more effective if blue ocean strategy had been deployed. Bogdan took over the project after it was already in trouble, and was tasked with turning the situation around. Said Bogdan, “I’m encouraged by where we are today. I can tell you that when you start communicating and you start listening to each other, you start finding solutions to problems instead of finding blame” (187). His comments were in response to his efforts to require both Lockheed Martin and the Pentagon to face up to the problems each caused on the project, to start working together, and to come up with clearer agreements about what would be expected from each party. While the initial idea for the F-35 was blue ocean sound – building the same basic aircraft at a lower cost for all three main branch of the armed forces with the ability to make small tweaks for each – the project got bogged down in the execution details with poor communication within and between the two parties. In blue ocean terms, the two parties “violated fair process (engagement, explanation, and expectation clarity)” (175-176), among both internal and external stakeholders, a common mistake when trying something new.

Henry Ford successfully incorporated blue ocean strategy in all phases of development and execution when he made a car that was appealing to, and affordable by, the masses. Ford envisioned a blue ocean future where horses and buggies would be displaced by cars that would be attainable by the average person. In 1908 he introduced the Model T. By 1923, a majority of American households owned an automobile (228). Along the way, Ford differentiated his product from the custom made novelty automobiles of the time, created the assembly line process, put the horse and buggy companies out of business, and essentially spawned America’s love affair with the automobile. Creating a strategic plan that rendered the competition irrelevant by offering value innovation in transportation, and then following through with a strategy to create and market the Model T, is an example of using blue ocean strategy at its best. Though Ford’s initial blue ocean has turned red a number of times over the years, a common expected occurrence that the authors also address, the company’s blue ocean continues to pay dividends to shareholders more than 100 years later.

The book is packed full of numerous other examples of blue ocean strategy at work in companies and industries worldwide, and will take the reader on a step by step journey to employ that same strategy in their own company if they so desire. At thirty-two dollars, the book is a wise investment and certainly worth the read. However, if you want to take blue ocean strategy beyond the 287 pages of print, the authors also have a website, www.blueoceanstrategy.com , that offers a wide variety of free information including case studies, podcasts, articles and more that expounds upon blue ocean strategy. For those wanting more individualized help, the website also contains information about the Blue Ocean Network, a group of blue ocean practitioners that will make “house calls” to help businesses map out their own blue ocean strategy. In contrast to the many one-size-fits-all solutions to creating and executing a business strategy, the authors of Blue Ocean Strategy make it possible for each business to create its own individualized strategic plan, and they have the solid research and examples to back up their assertions. As the dust jacket claims, the book really does “present a systematic approach to making the competition irrelevant, and outlines principles and tools any organization can use to create and capture their own blue oceans.” I strongly recommend Blue Ocean Strategy as a must read for anyone interested in business, communications, marketing or public relations.

 

The Sky’s the Limit!

skybanner

Your organization is already working to stay current and relevant in today’s ultra competitive market. Your company is doing a great job of incorporating Senge’s learning organization into its daily routine by regularly practicing “system thinking where all members work together for a common goal; personal mastery where they make a personal commitment to learning and self-reflection; flexible metal models where they seek to understand then change their thinking based on what they’ve learned; a shared vision by all levels in the organization; and team learning where dialogue and intelligent decisions are the norm” (Eisenberg, Goodall, and Trethewey, 2015, p. 109). This puts you far ahead of the typical organization.

I would offer several suggestions to bolster that effort. The first is to recognize that, while most of your employees were born in the millennial age bracket (1979-1997), the profile of the centennial (born between 1997-present) is markedly different. Centennials do not share the same traits as their predecessors. For example, the centennials are described as more pragmatic and less idealist than millennials (Futures Company, 2015) and those types of generational characteristics must be taken into account in both design and marketing of new and existing products.

The second thing to be aware of is Weick’s concept of the enacted environment that says “one of the most critical but often overlooked keys to organizational success involves keeping abreast of current issues through scanning relevant articles in newspapers and journals and maintaining contacts with others. Many times businesspeople overlook the importance of environmental scanning and miss information that has a direct bearing on their company” (Eisenberg, Goodall, and Trethewey, 2014, p. 111). Your company needs to stay keenly aware of what’s going on not only in your particular market, but in the rest of the world, as even a small event several continents away can have a profound effect on this organization.

Finally, to continue to be successful, build on the talent and creativity you have assembled, and further encourage out-of-the-box solutions, make it a point to “acknowledge the openness and complexity of social organizations [i.e. your company] as well as the importance of relationships among individuals over time” (Eiseneberg, et al., 2014, p. 115).

Appreciate your employees and keep up the good work!

theskysthelimit

References:

Eisenberg, E. M., Goodall, H. L. Jr., and Tretheway, A. (2014) Organizational Communication Balancing Creativity and Constraint (7th ed.). Boston, MA: Bedford

The Futures Company. (2015). (Graph comparing/contrasting the millennial/centennial generations February, 2015). Centennial Graphic. Retrieved from http://www.krusekronicle.com/kruse_kronicle/2015/02/the-centennial-generation.html#.V_Dre5MrKlN

 

The “Drink Responsibly Campaign: Public Service or Self Serving?

Drink responsibly. That’s the advice of alcoholic beverage companies to their consumers, and their audience is wide. For most adults in the United States, alcohol consumption is a normal part of life playing an important role in both celebrations and relaxation. Ringold states that about “two-thirds of the American public ‘has occasion to use alcoholic beverages’ and that this has been the case since the Gallup Organization first began tracking alcohol consumption in 1939’” (Ringold, 2008). But just because alcohol consumption is prevalent, doesn’t mean it is without risk. On the contrary, Casswell says “an estimated 3.8% of all global deaths and 4-6% of global disability adjusted life-years are attributable to alcohol” (Casswell, 2012.) Alcohol consumption can be harmful both physically and socially as it “contributes to cardiovascular disease and cancers, but also to injury and mental health and, importantly, has significant impact beyond the drinker to those in the family and workplace” (Casswell, 2012.)

Major alcoholic beverage company websites have responsible drinking tabs to select, printed advertisements have the “Drink Responsibly” slogan somewhere on the page, and television commercials include the slogan as well. But the meaning of “drink responsibly” is never defined in the campaign. In fact, when other groups interpret the meaning of the slogan outside the beverage companies’ comfort zone, such as the “Don’t Drink and Drive” campaign supported by alcohol opponents, the beverage companies respond with contradictory advertisements. Ives refers to a television commercial that “encourages people to feel free to have a drink before driving home” (Ives, 2003.) Ives claims the spot was produced in response to the “Don’t Drive Drunk” message and quotes Paul Avery, president of the Outback Steakhouse and restaurant chain and the American Beverage Institute as saying, “these overly conservative messages tell responsible Americans that they’re wrong in going out and having a glass of beer, a glass of wine or a cocktail at dinner, or at a sports venue and driving home. We’re just trying to protect ourselves,” (Ives, 2003.) There appears to be a tension in alcohol advertisements between selling as much product as possible and encouraging drinking in moderation among consumers.

So what does “drink responsibly” really mean and are the alcohol beverage companies truly advising their customers not to use too much of their product? I propose to look at the “drink responsibly” campaign through the strategic-control perspective with a strategic ambiguity lens to see how the slogan is interpreted differently depending on the consumer. Through rhetorical analysis, I will also examine the “drink responsibly” campaign to see if it is making a real difference in alcohol consumption, as well as research why the companies are promoting responsible drinking. Casswell says “as is the case with the tobacco corporations, the alcohol corporations are producers and marketers of an addictive substance which causes significant harm” (Casswell, 2012). Yet, so far, the alcohol industry has persuaded government to let them be self-regulating. Is the “drink responsibly” campaign a true public service or just another way for the alcoholic beverage industry to promote their products and protect their companies from further government regulation?

b9_drinking

Note the small “Drink Responsibly” message in the lower right corner.

References:

Casswell, S. (2013). Vested interests in addiction research and policy. Why do we not see the corporate interests of the alcohol industry as clearly as we see those of the tobacco industry?. Addiction108(4), 680-685. doi:10.1111/add.12011

Ives, N. (2003, April 17). A campaign supports going out, having a drink and driving, as long as it is done responsibly. New York Times. Retrieved from https://ezproxy.queens.edu:2048/login?url=http://search.proquest.com/docview/432379618?accountid=38688

Ringold, D. J. (2008). Responsibility and brand advertising in the alcoholic beverage market. Journal of Advertising, 37(1), 127-141. doi:10.2753/JOA0091-3367370110

To find out more about this topic, please review my textual analysis paper at

https://1drv.ms/w/s!AkI64xxxUGe4hkduDjtCJZnDHiEA

 

 

 

 

 

 

 

 

 

When the “H” leaves “HR”

 

Was HR to blame?

In the early 1900s, classical management theories ruled organizational communications. In the mid 1920s, the Hawthorne studies prompted a new train of organizational thought, the human relations movement, that allowed managers to “shift from a belief that ‘workers work’ to a belief that ‘workers feel’” (Miller, 2009, p. 41). But employers found it frustrating to capture the human relations theories and put them into practice, and the human resources theories began to form suggesting that workers would be happier and more productive if allowed to take a more active role in their organization (Miller, 2009).

Today, most medium to large size organizations have a separate HR department and most small businesses have someone who handles HR responsibilities on a part-time basis. Ideally, an HR department acts as the conduit between management and employees and ensures that the two entities understand and tend to each other’s needs for the benefit of the organization. Unfortunately, in my experience, many modern HR departments have become bureaucracy laden compliance centers making sure that the organization complies with the myriad of laws and regulations placed on them by the local, state and federal governments. In some companies the entire HR department may find itself outsourced meaning there is no department in the organization dedicated to keeping the “human” in “human resources”.

Examples abound of business fails that possibly could have been prevented if the HR department had been able to do its job properly. The Enron and Bear Stearns debacles, for example, were at least partially a result of “reward systems that incented dangerous behaviors that easily overpowered the effect of control systems designed to prevent fraud and ethical breaches” (Sullivan, 2010). Sullivan goes on to make the case that Toyota’s massive recall problems resulted from a “failure by employees to make good decisions, confront negative news, and make a convincing business case for immediate action” (Sullivan, 2010). A healthy HR department could have foreseen these problems and helped defuse them before they happened or at least could have prevented additional damage in the aftermath. I wonder if they were too busy comparing insurance quotes for the coming year to notice?

References:

Miller, K. (2009). Organizational Communication: Approaches and Processes. (5th ed.). Boston, MA: Wadsworth Cengage Learning.

Sullivan, J. (2010, Feb 15). A Think Piece: How HR Caused Toyota to Crash. ERE. Retrieved from http://www.eremedia.com/ere/a-think-piece-how-hr-caused-toyota-to-crash/

Reflection One – Classical Management

Though many of Benjamin Franklin’s pithy quotes appear in one form or another on Pinterest sites and tchotchke catalogs – “there are no Gains without Pains”, “God helps those that help themselves”, and “Early to Bed, Early to Rise” – the notion of those sayings being posted in the break room of most modern day American workplaces is unimaginable (Eisenberg, Goodall, Trethewey, 2014, p.66). In many organizations, Weber’s idea of bureaucracy, though welcomed by workers in the early twentieth century to protect employees from particularism, has morphed into piles and piles of red tape that often times, unproductively consumes the precious time and energy of both management and employee (Eisenberg, et al., 2014).

In the early 1900s, Taylor’s theory of Scientific Management provided a blueprint for managers and employees that laid out precisely the roles and responsibilities of each individual in the corporation. Following Taylor’s plan would ensure who was to do what task, how it should be done, and that there would be no crossing of roles between worker and manager (Eisenberg, et al., 2014). Around the same, Fayol was fine tuning his theory of administrative science that defined how management should operate, created a distinct vertical chain of command, and, while recognizing the importance of worker retention and fair pay for a job well done, still advocated that workers should put the needs of the organization above their own interests (Eisenberg, et al., 2014).

But while these theories seem outdated when read through an enlightened 20th century lens, our text tells us that many of these ideas are in practice today, just cloaked in new terminology. For instance, “the classical management objective of fitting the right person to the right job is now called ‘individualizing the organization’ and in applications ranging from software design to fast-food sales . . .the goal of reducing the number of steps involved to reliably produce a quality result is still paramount” (Eisenberg, et al., 2014). Grow, Brady and Arndt tell us that Home Depot is still run with a classical management approach with dictates coming from the top down. Lower level managers and employees are given very little leeway over day-to-day operations and there is even a manual entitled “How to Be Orange Every Day” full of Franklin style advice that employees are expected to keep in their apron pockets (Grow, Brady, and Arndt, March, 2006).

Though this sort of management seems unnecessarily rigid, demeaning and demoralizing in modern times of employee rights and respect, the operations of some organizations necessarily depend on a strict chain of command and scientific design of every aspect of every task. A fire department is a good example of this type of organization. A strict hierarchy of command is necessary for both the rescuers and those needing help when the department is called to a scene. There is no time for debate or indecision, as firefighters must act as a seamless unit. Everything on the truck has to be in the proper place, used the proper way, and many hours are spent in training drills to analyze the quickest, most efficient way to attach and pull hoses, use the jaws of life to open a car, administer first aid, etc. Time is of the essence and can mean the difference between life and death – for both the rescuer and the victim – and it is important that firefighters follow tried and trusted rules and procedures that have been practiced until they are practically second nature.

For most of today’s organizations, I believe that the classical management approach is not the best approach. The workday is no longer dawn to dusk, the country’s workforce is diverse, and most employees expect employers to respect a balance between work and down time. Certainly the Home Depot method of management, patterned after the military, is out of step with current theories and practices (Grow, Brady and Arndt, March, 2006). However, as stated in the previous paragraph, there is still a need for many of the structured elements of the classic management approach in organizations, like fire departments, where life and death oft times hang in the balance.

I understand why the firefighting field is extremely competitive as there are many more candidates than positions to fill and the job comes with its own rewards far beyond financial compensation. But with a national unemployment rate hovering just below 5 percent, how do companies, like Home Depot, that seem to use the classical management approach to the extreme by treating employees more like robots than civilians, continue to maintain the staffing necessary to remain in operation?

References:

Eisenberg, E. M., Goodall, H. L. Jr., and Tretheway, A. (2014) Organizational Communication Balancing Creativity and Constraint (7th ed.). Boston, MA: Bedford

Grow, B, Brady, D. and Arndt, M. (March, 2006). Renovating Home Depot. Bloomberg. Retrieved from http://www.bloomberg.com/news/articles/2006-03-05/renovating-home-depot

Inquiry Project Vlog

Welcome to my Vlog titled Keeping a Church Alive: Dwelling Place and Community Memory in Religious Institutions. I enjoy creating Vlogs – I hate listening to my strong southern accent. I hope you can understand what I am saying when I inadvertently draw one syllable words out to two syllables or more. I know what it is supposed to sound like – but when I open my mouth the southern tumbles out! Regardless, I hope you enjoy my Vlog, and I really appreciate you taking the time to watch it!