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Blue Oceans StrategyChapter 7
John ParkerKyle Kunkel
Thor FinkTeddy Lathrop
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Overcome Key Organizational HurdlesOnce a company has developed a blue ocean
strategy with a profitable business, it must execute it.
Getting started in the blue ocean is a big differentiation from the status quo
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4 challenges (hurdles) that Managers face1. Cognitive: waking employees up to the
need for a strategic shift2. Limited Resources: The greater the shift
in strategy, the greater it is assumed are the resources needed to execute it
3. Motivation: how do you motivate key players to change away from the status quo
4. Politics: “You get shot down before you stand up.”
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Overcome Key Organizational Hurdles 5th concept covered in the bookCompanies must abandon perceived wisdom
on effecting changeConventional wisdom: asserts that the
greater the change, the greater resources, and greater the time needed to do so
Tipping point leadership: this allows you to overcome the 4 major hurdles fast and at a low cost while winning employees
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Tipping Point Leadership in ActionNYPDExecuted a blue ocean strategy in the 1990sBad times in New York City (high crime)Police Commissioner Bill Bratton had to act
fastEmployees were underpaid and unmotivated
and some were even corrupt
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NYPD cont.Bratton executed a shift in strategy which
lead to very quick results for the cityFelony crime fell by 39%Murders by 50%Theft by 35%
He did so by defying conventional wisdom and shifted the strategy because it was not working
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The Pivotal Lever: Disproportionate Influence FactorsChanges can happen quickly when the beliefs
and energies of a critical mass of people create an epidemic movement toward an idea
The key to unlocking an epidemic movement is concentration, not diffusion
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Cont…Tipping point leadership builds on the rarely
exploited corporate reality that in every organization are people, acts, and activities that exercise a disproportionate influence on performance.
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Key questions answered by Tipping pointWhat factors or acts exercise a
disproportionate positive influence on breaking the status quo?
On getting the maximum bang out each buck of resources?
On motivating key players to aggressively move forward with change?
And on knocking down political roadblocks that often trip up even the best strategies?
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Breaking Through the Cognitive HurdleMost CEOs will try to make a case simply on
numbers, but don’t really stick with people They could not take it seriously, for example
if they are doing well they may not think that the numbers apply to them
Tripping Point leaders do not rely on numbers to break through the cognitive hurdle they believe in a more “Seeing is Believing” approach and also use positive stimuli. (NYPD used a zoom in approach)
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Facing Organizational Problems To break the status quo, employees must
come face to face with the worst organizational problems.
Numbers can be uninspiring to employees, but facing the issues directly will influence more.
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New York Subway SystemNew York City Subway system was filled with
gangs, graffiti, homeless, etc in the 1990s.
Subway System earned the epithet “Electric Sewer”
Police felt nothing needed to be changed due to the low percentage of major and violent crimes.
Citizens and Police Commissioner Bill Bratton felt differently.
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Riding The Electric SewerTo make changes, Bratton made all brass,
including himself ride the “Electric Sewer.”
Police realized that the numbers were misleading, and that a change needed to be made.
New York subway system is now much safer after Bratton applied these methods.
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Changing the mindset of SuperiorsSome alternatives are available in changing
the mindset of superiors, but the best way is by showing them the absolute worst in and organization.
Bratton used this method once again to change the mindset of Mass Bay Transportation Authority board.
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New Squad CarsMBTA began purchasing new and smaller
squad cars.
In order to change the mind of top brass Bratton took MBTA’s General Manager on a tour of New York in one of the cars.
Several hours later the GM demanded that Bratton let him out of the car, and ordered the board to buy larger squad cars.
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Meeting with Disgruntled CustomersDon’t just listen, or review surveys, actually encounter
disgruntled customers.
Bratton once again changed the mindset of NYPD by arranging town hall meetings with officers and neighborhood residents.
Town meetings led to overhaul of police priorities to focus on the blue ocean strategy of “broken windows”
Making all brass come face to face with organizational problems, key issues, and disgruntled customers will influence the need for organizational change.
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Jump the Resource HurdleHot Spots
Activities that have low resource input but high potential performance gains
Cold SpotsActivities that have high resource input but
low performance impactHorse Trading
Involves trading your unit’s excess resources in one area for another unit’s excess resources to fill remaining resource gaps
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Redistribute Resources to Your Hot SpotsHotspots are activities that have low resource
input but high potential performance gains
You want to relocate your resources to hot spots to improve efficiencyEx. New York Transit Police subway hot spots
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Redirect Resources from Your Cold SpotsCold spots are activities that have high
resource input but low performance impact
Leaders need to free up resources by searching out cold spotsEx. “Bust Buses”
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Engage in Horse Trading• Horse trading Involves trading your
unit’s excess resources in one area for another unit’s excess resources to fill remaining resource gaps
Tipping point leaders skillfully trade resources they don’t need for those of others that they do needEx. New York Transit Police
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Jump the Motivational Hurdle
Employees must be aware of the need for a strategic shift
Identify how to achieve a strategic shift with limited resources
Don’t diffuse change efforts widely, seek massive concentration
Kingpins, fishbowl management, and atomization
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Zoom in on Kingpins
Key influencers in the company
Focus efforts on them to create a ripple effect
NYPD example
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Place Kingpins in a FishbowlShine spotlight on
kingpins in a repeated and highly visible way
Exposes those lagging behind and those who are fairing well
Must establish a level playing field
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Atomize to Get the Organization to Change ItselfRelates to the framing of the strategic
challenge
People need to believe the strategic challenge is attainable
Break down the strategic challenge to attainable scale, relatable to all levels of an organization
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Knock Over the Political HurdleAge/treachery > youth/skill
Organizational politics will exist
Negative influencers exist and will protect their stances more fiercely the more strategic changes become likelytheir resistance can damage or even derail the
strategy execution process
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Leveraging Angels, Silencing Devils, and getting a ConsigliereAngels: have the most to gain from the
strategic shift
Devils: have the most to lose from it
Consigliere: politically adept but highly respected insider who is aware of potential threats and opportunitiesTipping point leaders put one on their top
management team
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Challenging Conventional WisdomConventional theory of organizational
change rests on transforming the massesRequires steep resources and long time frames
Tipping point leaders focus on transforming the extremes (people, acts, and activities) that exercise a disproportionate influence on performanceFast strategic shift at a low cost