Transcript Blue Ocean Strategy Chapter 8

Team 3
Mason Mitchell
Randy Greinert
Sarah Yelverton
Alec Cooper
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Executing Blue Ocean Strategy
Removing roadblocks is key, we are starting
with a blank canvas. Want everything right
the first time.
A company is not only top management.
 All members, top to bottom, are aligned
around a strategy and support it.
 You must create a culture of trust and
commitment that motivates people to
execute the agreed strategy.
 People don’t like stepping out of their
comfort zones, so implement the
strategy from the very beginning.
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To build people trust and commitment deep
in the ranks and inspire their voluntary
cooperation, companies need to build
execution into strategy from the start.
Management risk is greater for blue ocean
strategy because its execution often requires
significant change.
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Water Based Liquid Coolants
Great Strategy, significantly reduced
the purchasing gap. Lead time.
Cut Failure rate from 50%-10%
Doomed from the start.
Never worked with their sales force so it
interfered with the sales process.
Had to pull the system and work on building
trust with its sales representatives.
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Fair process’ direct theoretical origin dates
back to John W. Thibaut and Laurens Walker
In 1970 created procedural justice by
combining psychology of justice with the
study of process
They sought to understand what makes
people trust a legal system so that they will
comply with laws without being coerced
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Established that people care as much about
the justice of the process through which an
outcome is produced as they do about the
outcome itself
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When fair process is exercised in the strategy
making process, people trust that a level
playing field exists
This inspires them to cooperate voluntarily in
executing the resulting strategic decisions
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More than mechanical execution, where
people only do what it takes to get by
Involves going beyond the call of duty,
wherein individuals exert energy and initiative
to the best of their abilities
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Consist of engagement, explanation, and
clarity of explanation
Whether people are senior executives or shop
floor managers, they all look to these
elements
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Means involving individuals in the strategic
decisions that affect them by asking for their
input and allowing them to refute the merits
of one another’s ideas and assumptions
Engagement communicates management’s
respect for individuals and their ideas
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Means that everyone involved and affected
should understand why final strategic
decisions are made as they are
An explanation allows employees to trust
managers’ decisions even if their own ideas
have been rejected
Serves as powerful feedback loop that
enhances learning
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Requires that after a strategy is set, managers
state clearly the new rules of the game
Employees should clearly be able to know the
standards they are being judged by
The understanding of the goals are more
important than the goals themselves
Demonstrates
how the three E principles of fair
process play a role in a companies ability to
implement a new strategy into an organization
As domestic demand fell in the elevator
industry, sales for Elco, an elevator systems
manufacturer, began to decline
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Elco set out to implement a blue ocean strategy
that would offer customers a greater value
product while lowering its costs
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Elco replaced its batch-maufacturing system
with a cellular approach
 The first step was to implement the new
system at Elco’s Chester plant
- “They were the ideal work force”
 The company then planned to implement the
new system into the High Park plant
- They had created a strong union and were
expected to “resist change”
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Chester Plant
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Ignored Engagement: Consultants were told to
work quickly with little disturbance to employees
and the plant manager was gone often
The Chester plant failed to Explain why the
strategic changes were needed and being made
Managers didn’t clearly communicate with
employees their Expectations under the new
manufacturing process
“Trust and commitment at the Chester plant
deteriorated quickly.”
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High Park Plant
Plant managers Engaged employees by
introducing them to consultants
Plant meetings were held to discuss the
declining business conditions, and the
company Explained how they had seen
other companies improve from
implementing the cellular manufacturing
system
Goals and Expectations were made clear to
employees
Managers discovered:
- Violating fair process can result in employee
distrust and resistance to change
- Practicing fair process builds employee trust
and gives them the ability to adapt and
execute the most difficult strategic shifts
Intellectual
Individuals seek
recognition that their ideas
are sought after and given
thoughtful reflection, and
that others think enough
of their intelligence to
explain their thinking to
them.
Emotionally
Not as labor, personnel, or
human resources but as
human beings who are
treated with full respect and
dignity and appreciated for
their individual worth
regardless of hierarchical
level.
There is an eagerness to trust and cherish the individuals as well as
a deep-seated confidence in the individuals knowledge, talents,
and expertise.
When individuals feel
recognized intellectually They
are willing to share their
knowledge. Creating active idea
and knowledge sharing
When emotionally recognized
they feel emotionally tied to the
strategy and inspired to give
their all.
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People will hoard ideas
They will also reject others intellectual worth
People will drag their feet
And my even sabotage the project
Fair
Process
Violation
of Fair
Process
Intellectu
al and
emotional
recogniti
on
Intellectu
al and
emotional
Indignati
on
Trust and
commitme
nt
Distrust
and
Resentmen
t
Voluntary
Cooperatio
n in
Strategy
Execution
Refusal to
Execute
Strategy
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Commitment, trust, and voluntary
cooperation