The Tipping Point Leadership

When people talk about Blue Ocean Strategy they mention the four actions framework, the strategy canvas and the six paths of innovation. Not much is said on how to implement this strategy. The third part of the book of Chan Kim and Renee Mauborgne actually emphasizes how to overcome key organisational (cognitive, limited resources, motivation and political) hurdles for execution. Kim and Mauborgne recommend to overcome these hurdles by using the Tipping Point Leadership.

Radical change
The idea behind it comes from Malcolm Gladwell. He wrote 'The Tipping Point' in which he tells the story on the New York City Police Department (NYPD). The NYPD executed a blue ocean strategy in the 1990s in the public sector. Bill Bratton, police commissioner at the time, turned New York in less than two years and without an increase in his budget into the safest large city in the United States. He faces all four hurdles that managers consistently claim limit their ability to execute blue ocean strategy: the cognitive hurdle that blinds employees from seeing that radical change is necessary; the resource hurdle that is endemic in firms; the motivational hurdle that discourages and demoralises staff; and the political hurdle of internal and external resistance to change.

Tipping point leadership hinges on the insight that in any organisation, fundamental changes can happen quickly when the beliefs and energies of a critical mass of people create an epidemic movement toward an idea. Key to unlocking an epidemic movement is the right intervention - at just the right time - this can start a cascade of change. Little things can make a big difference. There are people, acts and activities that exercise a disproportionate influence on performance. If you want to implement change in your company Gladwell mentions to only focus on: connectors (extremely social people with a lot of connections), mavens (information brokers, always sharing and trading what they know) and salesmen (not necessary salespeople but charismatic people with powerful negotiation skills).

Cultural dimensions
According to me there is a lot more to if for implementing change than what is written above. In 2001 Geert Hofstede published a book on cultural dimensions. He indicates that an organisation with a culture that scores high on masculinity, power distance and uncertainty avoidance are in disadvantage in moving the organisation toward innovation and change. This might even create set backs in developing innovative products and services and being responsive in changes toward new customer values which will cause delays in generating competitive advantage.





When looking at the current globalisation trend as a company you better don't have a very rigid organisational structure. You want one that allows you to adapt and be flexible. "The idea of a standard operating procedure, which is decided at the top and then relentlessly executed and carried out by those on the bottom, doesn't make sense in an environment where you need a lot of flexibility and responsiveness"(Hammer, 1997: 96). A management culture is recommended with characteristics as ''an orientation towards innovation, change and personal responsibility, and at the same time group cooperation contains a certain degree of selflessness in order to focus on the customer" (Hammer, 1997: 101). This management culture we mainly see in the UK, in some of the Scandinavian countries and luckily in the Benelux.


Sources:
Kim, C. and Mauborgne R. (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.
Gladwell, M. (2000) The Tipping Point: How Little Things Can Make a Big Difference
Hammer, M. (1996) Beyond the end of management in Rethinking the Future: rethinking business, principles, competition, control, leadership, markets and the world, edited by Rowan Gibson
Hofstede, G. (2001) Culture's consequences: comparing values, behaviours, institutions and organizations across nations 2nd ed London: Sage

Blue Ocean Strategy, a chance to think more creatively on your business

On 13th November 2009 I will do a workshop on ‘Blue Ocean Strategy’ for Kansdenkdag. The Blue Ocean Strategy is the international bestseller written by W. Chan Kim and Renee Mauborgne. The core idea in the book is to extend your business while making your competition irrelevant since the focus has to move to non-customers. At the moment this strategy is extensively hyped by marketing advisors and consultancies. They bring it as the method to save your business from extinction. But to me, this is certainly not the idea behind the book. Red and Blue Oceans don’t stand apart, they exist next to each other. Red Oceans are the cash flows you need to keep your cash cow (see Boston Consulting Group-matrix) alive in your product/service portfolio and the Blue Ocean is the healthy cash flow you will need to invest in your stars to come.

What is this strategy about anyway?
Most companies are in the Red Ocean, trying to extend their business while focusing on the competition who aim at the same customers. This mostly leads to price wars and lowers the status of your brand. In order to get out of this conventional way of thinking the authors W. Chan Kim and Renee Mauborgne propose to draw a Strategy Canvas to see the big picture of your market space. This means you draw a X and Y-axis. On the X-axis you name the key success factors from your business and on the Y-axis you rate them. Then you draw a value curve to combine the rating with your success factors. In the same canvas you draw this value curve also for your competitor(s).
To start the creative thinking you need to utilize the Four Actions Framework to emerge the Blue Ocean Strategy from your canvas. This may sound difficult, but it simply means that you need to check which factors you can reduce or eliminate in order to gain insight how to drop your cost structure and which factors in your industry you can raise or create with the goal to lift buyer value and to create new demand. This should result into value innovation and the Blue Ocean of uncontested market space, making the competition irrelevant.

But what is so creative about lowering costs and higher customer value?
Therefore the authors suggested the six paths framework next to the framework mentioned above. This is quite a fun thing to do in a business environment during a brainstorm session. You will look at alternative (1+2+3) industries, across strategic groups within industries and across the chain of buyers you can approach for your business. Next to that you (4) look across complementary product and service offerings, and ask which products/services can I add to higher customer value? What are my customer doing before, during or after they utilize my product/service? Or you can think about strategic alliances, networks, co-creation opportunities which will enrich your business. The last two paths are (5) to look across functional or emotional appeal to buyers and (6) to look across time. With looking across time the authors mean to find insight in trends that are observable today. You need to ask yourself which trends have a high probability of impacting your industry, how will they do that and how can you open up for unprecedented customer utility? And that’s it!!

Red Ocean next to Blue Ocean
Of course in the book the authors explain far more about the above mentioned frameworks, but the essence is what I wrote just now. This will give you a start. The authors do realize there are quite some key organizational hurdles to overcome to execute Blue Ocean Strategy. But I think that you can at least start with a brainstorm and take the six paths framework step by step. To change everything at once is in my view too radical. And not taking the competition into account anymore is also an illusion. The competitive strategy theory of Porter is certainly not dead. I actually think that Blue Ocean is the combination of the differentiation and focus strategy of Porter with a pinch of cost leadership. They just gave another name to it. Smart indeed. The Red Ocean is the stuck in the middle position a business falls in when having no focus on the future cash flows.
Red and Blue Ocean do stand next to each other. The Red Ocean is your current position and the Blue Ocean is what you aim for in the future. For me this strategy is a combination of having passion for your business, to bring in some creative out-of-the-box thinking and to restrict the problems that keep your business from growing.

Sources:
Kim C. and Mauborgne R., Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, HBR Press 2005.
Interview with Chan Kim by Rick Nieman on RTLZ (introduction is in Dutch, interview is in English)