BLUE OCEAN LEADERSHIP QUESTION & ANSWER
Chan Kim and Renée Mauborgne, the authors of Blue Ocean Strategy & Blue Ocean Shift, answer some of the most common questions they receive on blue ocean leadership from around the world. We hope these will be of interest to you too!
Questions about Blue Ocean Leadership
Can blue ocean leadership be applied to small organizations?
Chan Kim & Renée Mauborgne: Yes, definitely. Blue Ocean Leadership works equally for large, medium and small organizations. In fact, one of the strengths of blue ocean leadership is its scalability – the process can be launched at all management levels or deployed at one of these levels. In the case of small companies or startups, this process can well be applied to the one or two management levels that are present. As long as an organization has its deliverables and performance goals, blue ocean leadership has a key role to play in uplifting performance by converting disengaged employees into engaged ones and motivating people to excel and act with commitment. As blue ocean leadership allows an organization to achieve high-impact results fast and at low cost, it offers a particularly practical method for small companies to achieve rapid organizational turnarounds while saving money, given the fact that small organizations often face resource constraints.
Does the blue ocean leadership process require a deep belief and buy-in to be successful?
Chan Kim & Renée Mauborgne: For any strategic or organizational transformation to be implemented effectively, a deep buy in is a must. Without an intellectual and emotional understanding of the logic for change, people will not engage in voluntary cooperation, and execution will be in doubt. The four-step blue ocean leadership process itself nurtures deep belief and strong buy in. The process is founded upon the principles of fair process: engagement, explanation and expectation clarity. Senior managers spearheading the process conduct interviews and draw canvases themselves. During the course of these exercises, they develop a strong belief in the need for change and in how changes should be made. On the other hand, their engagement signals the importance of the initiative, making people at all levels feel respected. Since the to-be profiles are generated with employee’s own input, people have confidence in the changes to be made. As the process allows employees to develop a deeper relationship with their leaders, they also feel more deeply engaged with the leadership. Finally, at the leadership fair, a slice of the organization across the three management levels gets to vote in selecting the new leadership profiles. While the top managers have the final say on which to-be profile to go with, they are required to provide a clear, sound explanation for their decision in front of attendees. Each of these steps helps to create buy in as well as trust and voluntary cooperation for the successful implementation of the new leadership practice.
How do you evaluate blue ocean leadership performance?
Chan Kim & Renée Mauborgne: First, there is no one single or generic formula for evaluating leadership performance. Depending on the market reality an organization faces, different organizations will have different criteria for evaluating what makes effective leadership. That said, there are a number of indicators – both quantitative and qualitative – that are frequently used in evaluating blue ocean leadership performance. On the quantitative side, these include reducing – often significantly – the rates of employee turnover and absenteeism as well as recruitment and training costs and achieving a jump in customer satisfaction scores. On the qualitative side, improved employee satisfaction as well as boosted motivation and talent pull can be expected. And of course, in the mid-to longer term an organization should achieve improved financial performance.
Is blue ocean leadership really ‘new’ in essence?
Chan Kim & Renée Mauborgne: First, traditional leadership development programs and theories normally look at the supply side and focus on who leaders need to be. Factors they examine include values, qualities and personality traits, and also behavioral patterns or styles. Behaviors, however, are not the same as acts and activities. Behaviors are about the way someone conducts himself or herself in general. To be kind, for example, is a behavior that can manifest itself in myriad ways such as the way a person greets others, interacts, gives feedback, or even listens. It is indeed important, but it is broad and unspecified, and hence often difficult to measure and internalize because a leader is being asked to alter their basic, fundamental conduct. Blue ocean leadership by contrast does not focus on broad behaviors or ways of conduct, but instead focuses on specific acts and activities that leaders need to undertake like ‘explain the strategy clearly’ or ‘deal with underperformance.’ Moreover, whereas traditional leadership programs often treat “behavior” as a general pattern or style, blue ocean leadership focuses on acts and activities that are determined against the specific organizational performance goals and market realities of each given leadership level. Hence, the acts and activities are what we refer to as being ‘market connected.’ They are atomized items that are more precise and easier to adopt and achieve than general behavioral changes prescribed by traditional leadership approaches.
How do you establish the links between a certain activity and high value?
Chan Kim & Renée Mauborgne: First, through interviewing the heads of and subordinates of leaders at each management level, we can identify acts and activities that are critical to the specific market reality and performance goals of each management level through the consistency of comments and feedback across the leaders’ customers. The analytical results are expressed on the as-is leadership canvases, which allow organizations to visually understand how much time and energy leaders are currently investing in those acts and activities. Step two of the blue ocean leadership process then drives the organization to conduct a second round of interviews that seeks further confirmation of the major roadblocks to high motivation and engagement due to the existing leadership practice and what new pathways to high performance should be opened up. We call the former ‘cold-spots’ and the latter ‘hot spots.’ Using the blue ocean leadership grid to analyze the input, we finally determine which acts and activities are conducive to uplifting organizational performance and market results. These are high-value activities that should be raised or created. Those that add little or no value should be either reduced or eliminated. Accordingly, the results are expressed visually on the to-be leadership canvases.
What happens when leaders aren’t capable of expected actions?
Chan Kim & Renée Mauborgne: No change can happen without pain. Capabilities can be developed, but only when people feel there is a need to do so. The as-is leadership profiles help leaders wake up to reality and see the need for change. The to-be leadership profiles set specific targets for leaders to attain and zoom in on key acts and activities that leaders need to cut back on to free up time and space for those they should focus on to dramatically uplift leadership performance. By focusing on acts and activities, the tasks for change are atomized. Instead of asking leaders to be fair, supporting and facilitating, for example, the profile lists specific items such as “align rewards with performance,” “set performance goals together,” “share best practices across teams,” etc., giving leaders a clear guideline to reorient their acts and activities. Compared with traditional leadership programs that often focus on attitudes and behaviors that can take years of dedicated effort to cultivate, this approach offers leaders a relatively straightforward way to make high-impact changes happen fast and at low cost. As our research has shown, it is far easier to change what you do than who you are.
How can disengaged employees be trusted to help chart the company’s future?
Chan Kim & Renée Mauborgne: There will always be some people who are disengaged with no intent to change. These are the people an organization may rightly be cautious to trust. That said, our experience shows that they are the minority, not the majority. Our research has found that most disengaged people in an organization do not want to be disengaged. They would be happy to be engaged, make contributions to the organization and have a successful career for themselves if properly motivated. The purpose of implementing a blue ocean leadership process is precisely to turn disengaged employees into engaged ones by removing major roadblocks to motivation and identifying key pathways to high performance, thereby helping those disengaged people get back on track and succeed at work. Instead of treating disengaged employees as people with low morale, blue ocean leadership sees them as noncustomers to the existing leadership practice. We believe that when people value your leadership practice they ‘buy’ your leadership and are inspired to excel and act with commitment. When they don’t buy your leadership, they disengage, becoming noncustomers of your leadership. The key therefore is to find out from these noncustomers, which acts and activities – good and bad – their leaders spend most of their time on, and which are key to motivation and performance but are neglected by their leaders. The four steps of blue ocean leadership not only offer a robust mechanism to collect and analyze employee input, but also a fair process which builds trust, commitment and voluntary cooperation. By engaging employees in this way, a company may hope to improve their morale during the blue ocean leadership process and create strong support and buy-in for the company’s new leadership practice.
How are the activities of leaders linked to their markets?
Chan Kim & Renée Mauborgne: By connecting to market realities, we mean that under blue ocean leadership the people who face market realities in an organization are asked for their direct input on how their leaders hold them back from meeting the market reality and what those leaders could do to help them best serve customers and other key stakeholders. This is different from traditional leadership development programs that tend to be generic and detached from what firms stand for in the eyes of customers and from the market results people are expected to achieve. Of course, this does not mean that leaders themselves need to engage in activities that deal with the market on the frontline. Blue ocean leadership focuses on acts and activities that are determined against the specific organizational performance goals and market realities of each given leadership level. Hence, the acts and activities are what we refer to as being ‘market connected.’
What metrics and efforts are used to sustain blue ocean leadership?
Chan Kim & Renée Mauborgne: First off yes, the factors on the x-axis of the to-be leadership canvas tend to remain relatively stable. These factors are determined during the four-step blue ocean leadership process by subteams of senior managers, based on analyses of consistent findings from interviews at each management level. Unless an organization goes through a major organizational change such as a large M&A or faces a new strategic reality that introduces a host of new performance metrics and requirements, in our experience new leadership practices set by an effective process of blue ocean leadership normally remain relatively stable for several years. When such a situation does occur, the organization would need to go through another round of the four-step process during which the new to-be profiles would be explored and identified. The feedback and dialogue mechanism established between leaders, their bosses and their subordinates is key to monitoring whether employees continue to be engaged and whether the current to-be leadership profile meets the requirements for a high-performing organization.
Are the change management tools the same as those you offer in the blue ocean strategy book?
Chan Kim & Renée Mauborgne: Yes, largely. In blue ocean strategy, tipping point leadership and fair process are two key frameworks that allow companies to build execution into strategy making and overcome key hurdles to strategic transformation. These frameworks equally apply to the implementation of blue ocean leadership with some degree of natural adaptation to the context.
Have many blue ocean strategic moves failed due to the lack of blue ocean leadership?
Chan Kim & Renée Mauborgne: First, while blue ocean strategy and blue ocean leadership are complementary, we should be clear that the implementation of one does not necessarily require the implementation of the other. All organizations are different with different needs. Some face more pressing challenges on the leadership front. State-owned organizations that have been recently privatized, organizations that have come out of a recent large merger, or organizations that have been effectively run into the ground by a prior poor leader tend to be classic examples. In these situations, the leadership challenge can be so daunting and the level of disengagement so high, that senior management decides to get all hands on deck to focus with laser-like precision on creating a step-change in leadership strength by singly focusing on blue ocean leadership. There are other organizations, by contrast, whose market challenge is so pressing that their focus is directed to breaking out of the red ocean and applying blue ocean strategy straight out. It’s important to note that blue ocean strategy also has a built-in mechanism for creating a strong people proposition, needed for the successful implementation of a strategic move. Tipping point leadership and fair process, the key execution frameworks of blue ocean strategy, help organizations build execution into strategy and overcome key organizational hurdles that stand in the way of the intended strategic transformation.
What we have found is that most organizations have a fairly good sense of how steep the leadership challenge they face is and tend to make the right call on whether applying blue ocean strategy with their current state of leadership can work. If we feel in meeting the company and speaking with people that their judgment may be off here, we will usually advise rethinking their judgment. In this case, it is advisable for the company to use blue ocean leadership to turn around leadership practice and organizational performance first before pursuing a blue ocean strategic move.
Can you move disengaged employees to become engaged ones?
Chan Kim & Renée Mauborgne: In any organization there are disengaged people. Some of them you can never expect to turn into engaged ones. That is an unrealistic goal and blue ocean leadership doesn’t aim at it. What blue ocean leadership strives to do is convert the vast majority of disengaged employees into engaged ones, thereby achieving a high-impact organizational transformation. This requires leaders to eliminate and reduce acts and activities that add little or no value to this overarching goal, and raise and create those that contribute to effective leadership. With “eliminate” and “reduce,” leaders cut back on the resources and costs spent on those cold-spot acts and activities and gain the time and space they need in order to raise and create those desired ones. Overall, this allows an organization to achieve high-impact results fast and at low cost.
How does blue ocean leadership differ from tipping point leadership mentioned in the book?
Chan Kim & Renée Mauborgne: Tipping point leadership is about how to execute strategy fast and at low cost. It provides companies with a specific framework to be used, together with fair process, for overcoming the four key organizational hurdles that block implementation; namely, the cognitive, resource, motivational, and political hurdles. The subject of study of blue ocean leadership, by contrast, is leadership itself and it is about applying the concepts and logic of blue ocean strategic thinking to redefine the ‘what’ of leadership – that is, what acts and activities leaders should invest their time and talent in to unlock the energies and capabilities of the people they lead on an ongoing basis. Its four-step process guides leaders to systematically explore and develop the content of the new leadership practice that will result in a leap in leadership strength fast and at low cost.
How do you initiate change management in an organization?
Chan Kim & Renée Mauborgne: For the blue ocean leadership process to be applied to an entire organization, the buy-in and support of the top management is indispensable. When the top management is not ready to undertake the challenge, the best solution is for advocates of blue ocean leadership to apply the process to their own level of management, and to the department or unit they are responsible for. Once the effects of blue ocean leadership manifest themselves in such a department or unit, it is time for the manager to share the results with other departments or units as well as with their own bosses. Usually, witnessing the high energy and motivation generated by the process and the performance outcomes that come with them, other managers are often intrigued to try out the process in their areas of responsibility. As more and more people sign on to the blue ocean leadership process, and as the process uplifts performance in more and more areas, the top management will have more interest and confidence in a complete rollout of the process at all management levels throughout the organization. However, this can take time.
Does blue ocean leadership work in every culture?
Chan Kim & Renée Mauborgne: Broadly speaking, leadership cultures differ across the globe. In Asian companies leadership culture tends to be more vertical or hierarchical. In North America it is more horizontal. And in Europe it is a mixture of the two. Yet for those organizations that have applied our methodology, blue ocean leadership worked for all of them despite their diverse geographical locations and cultural contexts. In fact, blue ocean leadership on the one hand, enables employees to participate in and contribute to the process of building effective leadership, thereby creating strong engagement and a sense of ownership. On the other hand, it is designed as a controlled process where senior managers drive the exercises and make the analyses and top management makes the final decision based on a thorough assessment of organizational realities and various proposals for change. This is probably why this approach fits into the value systems of both horizontal and vertical organizational cultures and is therefore generally well-received by different organizations around the world.