TL;DR – Blue Ocean Shift thrive to go beyond competing. As we sail through it, Prof W. Chan Kim and Renee Mauborgne shares with winner of Global Blue Ocean Shift Award what it takes to get it going.
Professor Renee Mauborgne, Co-Director of the INSEAD Blue Ocean Strategy Institute opened the presentation by stating her excitement to see what the Malaysian Government is doing and what it has become since 2010, when the Blue Ocean strategies were implemented.
She then explained that the Blue Ocean strategies are a systematic process to move from red oceans of competition to blue oceans of creativity and innovation in a way that brings people along. The statistics of success have always been low for entrepreneurs and this was what spurred Mauborgne, and her colleague Professor W. Chan Kim to look for a solution.
Kim and Mauborgne started studying organisations around the world, to see how they were succeeding. After years of research, the Blue Ocean Strategy was published in 2005. The book detailed how up-and-coming entrepreneurs weren’t interested in competing anymore, like the ones that came before them. They were more interested in creating such compelling products and services that the competition simply ceased to exist.
After the book was published, organisations started coming to them, telling them that they were stuck in the red, and asking how do they get to into the blue – and that was the beginning of Blue Ocean Shift, published this year.
The new book details examples of Blue Ocean Strategies globally, in various sectors. Mauborgne pointed out that the last place one would expect to find entrepreneurship is in the government, but the Malaysian government proves otherwise.
In 2010, the Malaysian government was struggling with persistently high crime rates and overpopulated prisons where the mixing of petty and hardcore criminals were prevalent. The police force struggled to find a solution. The conventional remedy of hiring more policemen and building more prisons would have been too slow and expensive.
The Malaysian government decided to implement Blue Ocean Strategies, which later were subsumed into National Blue Ocean Strategies, to end this cycle. This was the start of the Community Rehabilitation Programme (CRP). They brought in other parties, such as psychologists, trainers, micro-credit agencies, agricultural ministries and religious teachers to assist petty criminals into becoming high-functioning citizens. The programme also allowed their family members to visit and upon release, inmates were supported by job-matching services.
Surprisingly, this became a great success. The ministries realised that it was 85% cheaper to build and 58% cheaper to operate than conventional prisons. Not only that, this programme effectively broke down silos between agencies, such as the Ministry of Defence and the other various ministries.
During the Plenary session, moderated by Mauborgne, the Blue Ocean Strategists were asked about their biggest challenge in implementing the strategies to move into a blue ocean. Joao Damato, former CEO of Kimberly-Clark mentioned,
“It wasn’t so much that we were swimming, we were literally drowning in the red ocean,” he explained. The company was in bad shape when he came in and Damato spent a lot of time on endless cost-cutting programmes, but made little progress. Around that time, he met a friend who introduced him to the Blue Ocean Strategy book and encouraged him to read it.
The solution came in the form of eco-paper. The new product used recyclable fibre and was environmentally friendly. It could also be compressed into a smaller size and would pop out once released from its packaging, which made it easy to carry and store. Kimberly-Clark’s new toilet paper was launched in three months to resounding success.
citizenM, on the other hand, revolutionised the entire hotel industry. Michael Levie, CEO of citizenM explained that most hotels compete with each other, and usually within their own sectors. Opening its doors in 2008, citizenM strove to create its own classification.
“Combining the quality characteristics of three-star prices and five-star luxury hotels, we eliminated many inefficiencies of the hotel industry. For instance, we eliminated restaurants because all our locations are in major metropolises. When it came to staff, we did away with front desk, bell men and others. We introduced only one kind of staff, known as ambassadors. That contributed to 50% reduction in cost,” said Levie.
In a country where the future was looking bleak, a young pianist in Baghdad had a dream to create a National Youth Orchestra, in order to bring her musician friends together. The problem was, as pointed out by the conductor Paul MacAlindin that most youth orchestras had the best of everything when it came to equipment, players and teachers, and most importantly, had not grown up with the war.
The young musicians of taught themselves Bach by imitating players from YouTube, because all of their teachers had fled the country. They were teaching themselves how to survive, learn music and instil national pride by being proud of their culture.
“My problem was to compete effectively and internationally. That was when we came up with our strategic arc that honestly kept us alive. We decided we were not going to copy other musicians. We were going to perform music from Kurdish, Armenian and other Middle Eastern countries, said MacAlindin.
This gave them a message of reconciliation, hope and peace. Utilising the humanness component of the Blue Ocean strategy, they changed people’s hearts and minds about who they really were.
Chey Tae Won, chairman of the SK Group made a brave decision himself with his huge Korean conglomerate. He applied the blue ocean approach to the concept of Corporate Social Responsibility, which he believes is outdated.
“Everybody talks about CSR, even at the time, my group spent about few hundred millions a year on this. What they always talk about is the input, but nobody talks about the output. People didn’t really accept big corporation behaviour as they were more focused on Public Relations, not creating social value” said Chey.
His solution lay in innovating the current system of social value metrics – by creating a social accounting system for his corporation, he was able to measure and also produce better social output. Chey also brought in the idea of Social Progress Credit, partnering with hundreds of Social Enterprises for more than three years. He is also credited for providing safe channels for other social enterprises, nurturing their Research and Development faculties, and production capabilities.
Blue ocean strategies are all about creating win-win situations. Howard Stoeckel, Vice Chairman of Wawa Inc. explained how his company did just that by innovating their offerings.
“The market place was becoming a bloody red sea and we knew we needed to do something. We took the tools from the Blue Ocean Shift and created a new strategic plan. We were once a gas and convenience product retailer, but to get into uncontested market space, we felt like we needed to become a restaurant, that also sells those goods,” said Stoeckel.
Wawa Inc. completely re-engineered their systems and processes, expanding on what was offered with fresh and healthy food. Also, following the humanness component of Blue Ocean Strategy, Wawa Inc. places high importance on their people. As a result, the company is selling more food than McDonalds and was given awards by the restaurant industry.
Kwek Leng Beng, Executive Chairman of Hong Leong Group Singapore was another leader who was inspired by the Blue Ocean strategies. Instilled with the entrepreneurial spirit since young, passed on by his father who is the founder of Hong Leong group, he believes that entrepreneurs constantly on blue ocean shifts, but don’t necessarily have the tools or plans to implement them.
“I believe the Blue Ocean strategies are the right strategies, but to change a culture of a large organisation is not easy. However, with determination, I think we can overcome, especially with the blue ocean shift – where you can find online learning, and step-by-step guides,” said Kwek who is particularly inspired by Malaysia’s example with the CRP.