This article is the first in a series of 6 common pitfalls to implementing a Blue Ocean Strategy — and how to avoid them. Sign up for my newsletter so you don’t miss any of them.
Everyone is talking about innovation these days. We know we need to innovate in order to grow our business and stay ahead of the competition – but how do we get ourselves and our organizations to adopt an innovative mindset?
12 years ago, W. Chan Kim and Renée Mauborgne published their bestselling book Blue Ocean Strategy. The book introduced frameworks and practical tools to challenge conventional business thinking and offer an alternative strategic approach. It set out to shift the focus from competing with other companies for the same market to creating unprecedented value for existing customers and attracting new customers, known as “non”-customers in Blue Ocean lingo.
The problem? Reading a book and implementing its ideas are two different things.
In this article, you’ll learn about one of the most common pitfalls companies face when actually implementing Blue Ocean Strategy thinking – and how to avoid it.
This mistake — and the others I’ll explore throughout this blog series — come from 12 years of my personal experience implementing Blue Ocean Strategy thinking. Working inside the pharmaceutical industry and then as a Blue Ocean Strategy coach in several other industries, I’ve seen firsthand how these pitfalls can derail a project. Over the years, people have often asked me to tell them what mistakes to avoid and what can go wrong, in my experience – read on to find out!
Before we look at the pitfall, let’s start with a case study.
The cost of incorrectly setting up a Blue Ocean Strategy project
When starting a Blue Ocean Strategy project, generating some curiosity and enthusiasm from at least a few people besides yourself can make all the difference. Let’s look at what can go wrong when that doesn’t happen.
After participating in the Blue Ocean Strategy Executive Development Program at INSEAD where I regularly join the teaching team, one student was extremely keen to go back to her organization and start making changes. She immediately started implementing her initiative, convinced that her colleagues would see the value, only to find that her enthusiasm was not shared by her colleagues. They hadn’t attended the course and didn’t understand Blue Ocean Strategy, so she found herself alone in trying to make significant changes to her organization. Without some early advocates by her side, her initiative failed. Even simply organizing a few Friday lunch sessions over sandwiches to generate discussion and interest in the approach, like another one of my clients did, could have provided a few allies to support the effort.
Once you have some willing colleagues, the next step might be to consider including them as Sponsors or on a Steering Committee for the project. Once again, there is a pitfall to avoid! Take the case of one of my consulting clients, a large pharmaceutical company.
The Head of Business Development was sponsoring a Blue Ocean Strategy project to identify new opportunities for growth. Given the complex healthcare environment that was anticipated in the coming years, figuring out new ways to grow the business was critical. He set up a Steering Committee, according to the usual practices in his organization.
During the project, the teams identified non-customers to visit that were outside of the usual customer targets of the company – as per the Blue Ocean Strategy approach – and carried out dozens of field interviews. They were excited to present their insights and learnings to the Steering Committee, only to be told that the “non”-customers were irrelevant – the project needed to contribute to increasing sales by the end of the year and that they should align themselves to the existing strategic business plans for the remainder of the project.
The Steering Committee had assumed that the project would focus on growing current business, whereas the team was exploring potential for real growth outside of existing businesses. As time-to-market in the pharmaceutical industry can be quite lengthy due to a long product development process and regulatory review, the team had to shift focus in the middle of the initiative. They lost time and motivation — and the company wasted money — by having spent half of the project going in a direction that the Steering Committee didn’t sanction.
In both cases, two critical steps were missed.
Getting the right people on board and training them in Blue Ocean Strategy before the project starts
Like most strategy projects, Blue Ocean Strategy needs buy-in from leaders and colleagues to oversee progress and provide feedback at key milestones.
But unlike most other projects, just setting up a steering committee and relying on members’ existing experience and expertise isn’t enough. The project sponsor needs to ensure that colleagues are properly briefed and trained on Blue Ocean Strategy– regardless of the size of your organization.
Whether you have an informal group of three people or a more structured committee of a dozen, it’s essential to not only identify the right people to bring on board, but also properly introduce them to the new and challenging way of thinking that Blue Ocean Strategy requires.
Why is this so important?
Value innovation comes from doing things differently and doing different things — which can feel counterintuitive. Blue Ocean Strategy goes against “the way we’ve always done it.” It flies in the face of traditional business strategy — the same strategy many business leaders learned and used throughout their careers.
If the steering committee and business leaders aren’t conversant with the key tenants of Blue Ocean Strategy and its strategy thought process, they will be confronted with ideas that fall outside of the usual boundaries of the industry. They won’t see when progress is being made– and risk killing ideas that have real potential.
Everyone involved in the project needs to know that the Blue Ocean process will challenge current assumptions about the business. They need to be open to the fact that some of the ideas generated will venture into unknown territory outside of their comfort zone. Understanding and anticipating this will allow them to better understand the results being shared and give more constructive feedback at critical stages.
What’s more, training the leaders in the Steering Committee also initiates the organizational mindset shift necessary for successfully implementing an innovative strategy. It starts planting the seed of doing things differently at the highest levels of the organization — which can spur innovation well beyond the end of the project.
Setting expectations with the Steering Committee and project team by clearly defining the scope
Setting expectations before a project is nothing new. But it’s especially important with value innovation.
Because Blue Ocean thinking can be applied both inside and outside the current organizational structure and existing markets, it is essential to clearly define the scope of the project in advance.
To do so, those involved must challenge and agree upon certain parameters before the start of the project.
- Will the Blue Ocean strategy approach be applied to new or existing markets?
- What is the guidance regarding the “non”-customers that will be approached?
- Which business units and functions will be involved?
- What are the expected results in terms of budget and time-to-market?
As we saw in the second case study, not agreeing upon these points ahead of time can create serious risks for implementation. If senior management is not expecting the project to venture into unknown territory, the opportunities identified will be considered failures. Securing this buy-in at the beginning of the process will ensure the project team does not waste time going in the wrong direction.
The bottom line
When setting up a Blue Ocean Strategy project, identify the colleagues who can help implement a value innovation mindset, train them in Blue Ocean thinking, and explicitly agree upon the do’s and don’ts of the project scope before getting started. By doing so, organizations can uncover truly innovative opportunities while also ensuring a successful implementation of the strategic ideas further down the line.
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