Blue O cean Strategy Ch. 7: Overcome Key Organization Hurdles

1. Blue Ocean Strategy Ch. 7: Overcome Key Organization Hurdles Team 6 Andrew Etlinger Blake Green Ashley Haris Carolynn Schnaubelt David Styers

2. Key Concepts • Tipping Point Leadership in Action • Disproportionate Influence Factors • The Four Hurdles • Cognitive • Resources • Motivation • Politics

3. Tipping Point Leadership • Conventional wisdom says that the greater the change, the greater the resources and time it will take to bring about desired results • Tipping Point leadership turns conventional wisdom upside down • Tipping Point Leadership allows companies to overcome The Four Hurdles quickly and at a low cost • Ex: Bill Bratton

5. Break Through the Cognitive Hurdle • In many corporate transformations and turnarounds the hardest part is making your people aware of change and convincing them that it is necessary. • Most CEOs will make their case for change by saying its about the numbers. • This just makes the line managers uneasy, it can cause the managers who’s units are doing well to blame upper management for the current problems. • Likewise, this can cause line managers who’s units that aren’t doing well to be afraid of losing their jobs.

6. Break Through the Cognitive Hurdle • According to Bratton, to break through this hurdle you must go after the act of disproportionate influence, making people see and experience reality firsthand. • Science has found that people respond and remember most effectively to what they see and do. i.e. seeing is believing. • So in the business world this means that positive stimuli will reinforce behavior. • However, on the other hand negative stimuli change attitudes and behavior.

7. “Electric Sewer” • In the 1990’s New York’s subway system started getting bad publicity for being dangerous which lost the city a lot of money. • However, only 3% of crime was committed on subways, so the police felt no need to change their ways and did not disrupt their status quo. • Then, however, Bratton was appointed chief and in a matter of weeks he changed the police’s status quo. • He did this by having all the top and middle brass, including himself, ride the subway day and night.

8. “Electric Sewer” (cont.) • No one else had thought to do this before Bratton, and they saw what their statistics could not show them. • They realized that the subway was in complete chaos and that the status quo needed to be changed immeadiately.

9. Listening to Disgruntled Customers • Another way to tip the cognitive hurdle is to listen to their most disgruntled customers. • You can’t just rely on surveys and polls. • Ex: In the 1970’s, Bratton’s Police district was experiencing a serious surge in crime and people were leaving the neighborhood. • This was happening despite the fact that Bratton’s police force felt they were doing a fine job according to statistics.

10. Listening to Disgruntled Customers • So Bratton, in his infinite wisdom decided to hold a town meeting between his officers and the residents. • Through this meeting, the police force found that their perception of the job they were doing was far different than that of the residents. • They found that the residents thought the police were overlooking the minor crimes. • This meeting allowed the police to re-focus their priorities to better meet the needs of the people.

11. Jump the Resource Hurdle • Most leaders are faced with limited resources and they usually do 1 of 2 things: • Demoralize their work force • Fight for resources from their bankers or shareholders which is a very timely process. • What leaders should do is focus on multiplying the value of the resources they already have by using these 3 factors: • Hot spots • Cold Spots • Horse Trading

12. Redistribute Resources to Your Hot Spots • Hot spots are activities that have low resource input but high potential performance gains. • Ex. The New York Transit Police did this by placing police officers at their biggest hot spots or places with the most crime. They also put police officers on duty at more practical times like on the weekends when most of the crime is taking place.

13. Redirect Resources from Your Cold Spots • Cold spots are activities that have high resource input but low performance impact. • Ex. The New York Police freed up resources by searching for cold spots. Their biggest cold spot was processing criminals in court. This would take 16 hours, so instead they started using old buses and then the officer was only needed for 1 hour.

14. 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. • Ex. The New York Police did this by noticing the Transit unit needed office space and The New York Division of Parole needed cars, but had an excess amount of office space. The trade was obviously perfect for each department.

15. Jump the Motivational Hurdle • For a new strategy to be implemented people must not only recognize what needs to be done but they must also act on that insight in a sustained and meaningful way. • To motivate employees most business leaders issue grand strategic visions and turn to massive top-down mobilization initiatives but this is expensive and time-consuming. • Another way is to focus on 3 factors of disproportionate influence: • Kingpins • Fishbowl management • Atomization

16. Zoom in on Kingpins • Kingpins are the key influencers in the organization. • These are the ones that are natural leaders, respected, and persuasive. • For example in bowling, when you hit the kingpins straight on the others fall down too. • It’s relatively easy for the CEO to identify the kingpins because of the small number of key influencers.

17. Place Kingpins in a Fishbowl • Fishbowl management is where kingpins’ actions and inaction are made as transparent to others as are fish in a bowl of water. • For this to work it must be based on transparency, inclusion, and fair process. • Bratton created Compstat, a review meeting, that brought all the kingpins in twice a week to discuss their performance. • These meetings resulted in an intense performance culture which reached down the ranks. • Fair process is a must because it lets people know that there is a fair playing field and leaders value employees’ intellectual and emotional worth despite all the changes.

18. Atomize to Get the Organization to Change Itself • Atomization relates to the framing of the strategic challenge which is one of the most subtle and sensitive tasks of the tipping point leader. • People need to believe the challenge is attainable for it to succeed. • For example, Bratton made the challenge attainable by breaking it into bite-size atoms that officers at different levels could relate to. By doing this responsibility for executing the strategy is shifted from just Bratton to all officers.

19. Preserving Strategic Execution Processes • Being attacked by everyday politics, plotting plans, and intrigue is not at all uncommon • In one’s best interest it is a good idea to seek the stronger and wiser to become your ally known as a Tipping Point Leader • These leaders often help one decipher who is an “Angel” a ”Devil” or a ”Consigliere” • Angel- Those who have the most to gain from the strategic shift • Devil - Those who have the most to lose from a strategic shift • Consigliere - Politically adept but highly respected insider who is knowledgeable about who will attack you and who will not

20. Consigliere on Your Side • When backed into a tough spot, you should never fight alone • Having a well aware, respected insider on your right side is very vital to have • Smart managers surround him or herself with experienced well spoken insiders • Your strategy’s survival depends on the defense that you and your top level team can provide when facing obstacles and or adversity • Consiglieres can help you decipher whether people are political angels or political devils • Who will be the best for the strategic objective or who will bring down the strategic effort

21. Challenging Conventional Wisdom • Executing a disproportionate influence on performances instead of the traditional proportionate influences • Going against the grain of the mass of the employees • Performing at the very extremes by leveraging tipping point leadership • By ignoring conventional wisdom patterns, you can achieve a new strategic plan also improving your competitive advantage

22. Take Aways • Tipping point leadership in action • The pivotal lever: disproportionate influence factors • Hurdles • Break through the cognitive hurdle • Jump the resource hurdle • Jump the motivational hurdle • Knock over the political hurdle • Challenging conventional wisdom