Blue Ocean Strategy
Chapter 7
“Overcome Key Organizational
Hurdles”
• EXECUTION for a profitable business
model is key, although it can be very
challenging.
• Blue oceans represent a significant exit from
the status quo…..They hinge on a shift from
convergence to divergence in value curves at
lower costs.
• This raises the execution bar.
4 Hurdles
• 1. Cognitive.
• 3. Motivation
• 2. Limited Resources.
4. Politics.
5th Principle of Blue Ocean Strategy
* Overcome key organizational hurdles to make
blue ocean strategy happen in action.
Tipping Point Leadership
• This allows you to overcome the four hurdles
fast and at a low cost, while winning
employees’ backing in executing a break from
the status quo. (pg. 148)
New York City Police Department
(NYPD)
• In the early 1990s, New York City was heading
toward anarchy. (Crimes and Murders were at
an all time high)
• Bill Bratton was police commissioner of NYC
during the time, with a very small budget to
utilize.
Bill Bratton’s
Blue Ocean Strategy
• In less than 2 years and without an increase in his
budget, Bratton turned NYC into the safest large city in
the U.S.
• Used a blue ocean policing strategy that revolutionized
U.S. policing as it was then known.
• “Profits” jumped and “Customers” won.
• Crime rates have continued to fall due to this.
• Defying conventional wisdom, Bratton achieved these
results in “record time” with few resources, lifting
employee morale, creating a win- win for all involved.
The Four Organizational Hurdles to
Strategy Execution
• Cognitive Hurdle- An organization wedded to
the status quo
• Resource Hurdle- Limited resources
• Motivational Hurdle- Unmotivated staff
• Political Hurdle- Opposition from powerful
vested interests
The Pivot Lever: Disproportionate
Influence Factors
“ Key to unlocking an epidemic movement is
concentration, not diffusion.” (pgs. 150-151)
The Pivot Lever: Disproportionate
Influence Factors
• Tipping point leadership builds on the rarely
exploited corporate reality that in every
organization, there are PEOPLE, ACTS, and
ACTIVITIES that exercise a
DISPROPORTIONATE INFLUENCE on
performance. (pg. 151)
The Pivot Lever: Disproportionate
Influence Factors
KEY QUESTIONS ANSWERED BY TIPPING POINT
LEADERS:
- What factors or acts exercise a disproportionately
positive influence on breaking the status quo?
- On getting the maximum bang out of each buck
of resources?
- On motivating key players to aggressively move
forward with change?
- On knocking down political roadblocks that often
trip up even the best strategies?
Break Through the Cognitive Hurdle
• “There are only two performance alternatives: to
make the performance targets or to beat them.”
• Figures can be manipulated
– Even when the numbers are not manipulated, they can be
misleading
• Stretch goals encourage abuse
– Which leads to hostility and suspicion among the parts of
the organization
Tipping Point Leadership
• Does not rely on numbers to break through
the organization’s cognitive hurdle
– “Seeing is Believing”
• Builds on insight to inspire a fast change in
mindset that is internally driven of people’s
own accord
Ride the Electric Sewer
• Employees must come face-to-face with the
worst problems
– Showing the worst reality to your superiors can
shift their mind-set
New York Subway
• Was feared by New Yorkers
• Citizens boycotted the system
• Only 3% of the city’s major crimes happened
on the subway
Massachusetts Bay Transportation
Authority
• Squad Car Problem
– MBTA
– Bratton’s Strategy
Meet with Disgruntled Customers
• Don’t rely on market surveys
• Do you ever wonder why sales don’t match
your confidence in your product?
– There is no substitute for meeting and listening to
dissatisfied customers
Boston’s Police District 4
• High crime rates
• People were moving out of the neighborhood
• Bratton’s strategy
Jump the Resource Hurdle
• How do you get an organization to execute
strategic shifts with fewer resources?
– Hot Spots: activities that have low resource input
but high potential performance gains
– Cold Spots: activities that have high resource input
but low performance impact
– Horse trading: involves trading your unit’s excess
resources in one area for another unit’s excess
resources to fill remaining resource gaps
Jump the Resource Hurdle Cont.
• What actions consume your greatest
resources but have scant performance
impact?
• What activities have the greatest performance
impact but are resource starved?
Redistribute Resources to Your Hot Spots
• Bratton achieved the sharpest drop in subway
crime and disorder in Transit’s history by
placing police officers at targeted Hot spots.
– Resulted in decrease in crime, while the size of the
police force remained constant
• Bratton identified the Hot spots in the
narcotics department and reallocated staff
and resources to those Hot spots
– Resulted in decrease in drug related crime
Redirect Resources from Your Cold Spots
• Leaders should free up resources by searching
out Cold spots
• New York subway example
Engage in Horse Trading
Overcome Key Organizational
Hurdles
Jump the Motivational Hurdle
Executing Blue Ocean Strategy
• Alert employees of the need for change
• Identify how strategy can be achieved
• People must not only recognize the need for
strategic change but they must also act on
insight in a meaningful way
Do Mass Reactions Require Mass
Actions?
• Many business leaders think massive reaction
to strategy change requires massive action.
• This is often cumbersome and expensive.
• Is there an easier way?
• Yes- Zoom in on Kingpins, Place Kingpins in a
Fishbowl, and atomize to get the organization
to change itself.
Zoom in on Kingpins
• Kingpin = Key influencer in the organization
• As in bowling, when you hit the kingpins, the
rest of the pins come tumbling down…which is
a good thing in this case.
• Basically, a change catalyst within the
organization should start with kingpins and
eventually trickle down.
Place Kingpins in a Fishbowl
• Kingpins’ actions and inactions are made
transparent to others within the organization
like a fish in a bowl of water.
• By doing this you greatly raise the stakes of
inaction.
• Those who lag behind are exposed and a fair
stage is set for rapid change agents to shine
Fair Process
• In order for the fishbowl to work effectively,
the playing field must be level…that is
responsibilities and expectations are clearly
stated for everyone to hear/see.
• This means engaging all the affected people in
the process and explaining reasoning
associated with promotions and demotions.
Atomize to get the Organization to
Change Itself
• Atomization = framing of the strategic
challenge
• Unless people believe the challenge is
attainable, the change is not likely to succeed.
Secure a Consigliere on Your Top
Management Team
(A highly respected insider)
** Tipping Point Leaders engage one role few
other executives think to include: a
CONSIGLIERE.
Example ~ NYPD
• Bratton from the NYPD always ensured that he had a
respected senior insider on his top team who knew
the challenges he would face in implementing the
new policing strategy.
• He appointed John Timoney as his “number two”
(basically a cop’s cop).
• Timoney dramatically changed the guard by
reporting the likely attitudes of the top staff to the
NYPD’s new policing strategy, identifying those who
would fight or “silently sabotage” the new initiative.
Leverage Your Angels and Silence
Your Devils
To knock down the political hurdles,
ask yourself 2 sets of questions:
1. Who are my devils? Who will fight for me?
Who will lose the most by the future blue
ocean strategy?
2. Who are my angels? Who will naturally align
with me? Who will gain the most by the
strategic shift?
Example ~ NYPD
• One of Bratton’s most serious threats with his
new policing strategy came from New York City’s
courts.
• They believed that his new strategy of focusing
on quality of life crimes would overwhelm the
system with small crime cases.
• Bratton clearly illustrated to his supporters that
the court system could handle the quality of life
crimes and that focusing on the, would in the
long term, actually reduce their caseload.
• “ Key to winning over your detractors or devils
is knowing all their likely angles of attack and
building up counterarguments backed by
irrefutable facts and reason.” (pg. 168)
Important Questions to Ask Yourself
• Do you have a
consigliere in your top
management team?
• Do you know who will
fight you and who will
align with the new
strategy?
• Have you built
coalitions with natural
allies to encircle
dissidents?
• Do you have your
consigliere remove the
biggest challenges?
Challenging Conventional
Wisdom
Conventional Wisdom vs. Tipping Point
Leadership
Important Strategies to Remember:
• Don’t follow conventional wisdom.
• In order to execute a strategic shift with
limited resources, use tipping point
leadership.
• By addressing the hurdles to strategy
execution and focusing on factors of
disproportionate influence, this leads to
actualizing a strategic shift.
Important Strategies to Remember:
• Focus on acts of disproportionate influence.
~ This is a critical leadership component
for making blue ocean strategy happen.
~ It aligns employees’ actions with the new
strategy.