Part 2 - Simplify Blue Ocean & Make Consultants __________!

“We do no market research. We don't hire consultants. The only consultants I've ever hired in my 10 years is one firm to analyze Gateway's retail strategy so I would not make some of the same mistakes they made [when launching Apple's retail stores]. But we never hire consultants, per se. We just want to make great products. “
– Steve Jobs

Ironically, when strategy/marketing/innovation consultants and Blue Ocean Strategy (BOS) black belts pitch for a project, Steve Jobs and Apple will probably be mentioned, or used as an example for creating value innovations, and making the competition irrelevant.

Steve Jobs, thanks for making that clearer! So, next time you want to create value innovations, perhaps hiring consultants to practically do everything (including help you to fill up all the magical templates) from conceptualization to a sizzling blueprint for innovation is perhaps not the best way to go.

“It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do. So you can’t go out and ask people, you know, what’s the next big [thing.] There’s a great quote by Henry Ford, right? He said, ‘If I’d have asked my customers what they wanted, they would have told me ‘A faster horse.’’’

– Steve Jobs

Thanks, Steve!



BLUE OCEAN WORKSHOP

A few weeks back, I attended a 2 day (free) Blue Ocean Strategy (BOS) at the UCSI Blue Ocean Strategy Regional Centre (1st - 2nd December, 2010), and during the process I got to meet and share ideas with several of the big shots in the UCSI BOS team.


Based on their e-mail invitation, the title of the workshop was “Blue Ocean Strategy Initiative for Education: Creating New Marketspace & Championing New Growth”, but then when I arrived I got to learn that we would not be talking much about education, and that made me furious. Also, I had pulled out a tooth a few days earlier (picture above), so my patience was obviously rather toothless. Luckily the BOS team had Yoann Sapanel (one of the facilitators) to cool me down, and clarify why they would not be talking much about education. Although, I didn't buy the good old 'We are teaching you how to fish..." excuse, I have to admit, he was the only BRILLIANT presenter and facilitator during the workshop, according to my high expectations.

Though, thanks to my outspoken frustrations, they did explore briefly two Universities that had used BOS to innovate, which were Limkokwing University (Rented a building in London, and brought the University (learning) experience to UK) and Universiti Sains Malaysia (Used BOS on their own, which resulted in getting the APEX Status). As the facilitator was mumbling with a bad accent, it was not easy to really understand what he was trying to say (But, at least some relevant points!).

During the workshop, we did explore several of the essential BOS tools, and worked through the BOS process, before presenting our BOS project.



1-MINUTE BOS CRASH COURSE
Here is a 1-minute Blue Ocean Strategy (BOS) visualization crash course:

1. Visual Awakening
   Use the 'as if' strategy canvas to compare your current strategy with competitors and see where it needs to change.
   
   
2. Visual Exploration
   Use the 'Six Paths Framework' to look across the six conventional boundaries of competition to systematically reconstruct market assumptions to create new market space. During this process, you observe your own products and/or services, and distinctive advantages of alternative products/services. To look beyond existing customers and develop insights on non-customers, use the 3 Tiers of Noncustomers'. Then, use the ERRC Grid to see which factors to eliminate, reduce, raise and create to find a leap in value (Value Innovation).
   
   
3. Visual Strategy Creation
   Draw your 'To Be' strategy canvas based on insights from the visual exploration phase. Then develop a clear-cut and compelling tagline, which captures the essence of the "to be" strategy in a way that speaks forcefully to both a company's employees and the target mass of buyers.
   
   
4. Visual Communication
   Apply the '4 Actions Framework', and present your strategic options to stake holders and fine tune. Then communicate your new BOS with existing strategy canvas, ERRC grid and 'To Be' strategy canvas. For easy comparison, show your before-and-after strategic profiles on one page, and make sure that the factors to eliminate, reduce, raise and create are clearly identified. Use 'BOS sequence' for strategic validation, and use 'Execution Hurdles', 'Tipping Point Leadership', and 'Fair Process' to execute effectively. What do you think?
   

During both days, each team (consisting of 5-6 members) worked on a BOS project. UCSI BOS team preselected a few industry segments to choose from, which included taxi, hospital, mall, and cafeteria. Personally, I wanted really to explore a BOS within education, but that was a big 'No-No', as they wanted to teach us how to fish, and since most of the participants were from the education sector it would not be appropriate to share University-Leaks. That is when I felt that there was a hidden agenda to this so called 'free' workshop. Where they using us to fish for new ideas for their on-going BOS projects?

But, since it was free, I suppose it was a win-win situation for all. We learned the BOS, and they discovered perhaps a few new useful ideas, which they could use elsewhere. If that was the case, they should have been upfront honest and professional about it. But then again, BOS and Value Innovation has never really emphasized (to my knowledge) the importance of social responsibility, protecting the environment, and caring about cultures, which are essential for long-term sustainability of mankind (and Earth).

Adam Werbach will clarify and enlighten you on what I am really trying to say:

THE i-WELLNESS VILLAGE
Our group worked on transforming an old non-performing hospital, and we conceptualized a brilliant BOS, entitled 'The i-Wellness Village' (Just added 'The' and 'Village'. Original BOS was just 'i-Wellness') with a compelling tagline 'Live Your Dreams!'. Basically, we sold the old hospital, and then bought and transformed a hotel resort (working with partners) into the perfect old-folks resort where they could live their dreams.

Today, populations around the world are getting older, governments are going bankrupt, and they are looking for ways to cut cost. At the same time, families are getting smaller, less to take care of older people, meaning the government must increasingly establish new old-folks hospitals and homes, which are extremely expensive in countries like Scandinavia, Japan, South Korea, and so on. While the cost is high, many old people are miserable with such arrangements, especially during winter.

'The i-Wellness Village' BOS solves all these issues, as old-folks get to live their dreams in amazing resorts (sun, beach, sea, swimming pools, restaurants, villages, shopping, golf, bus tours, etc.) that also provide all the necessary hospital support (value added), and governments (e.g. Norway) save tremendous cost by outsourcing it to Malaysia (cost savings). More importantly, old-folks gets to experience a happier ending to their lives.

At the end of the workshop, we had to pitch our BOS project to two real venture capitalists (each had 50 million simulated dollars to invest) and the other participants. At that time, our BOS project had many loopholes and my teammates were a bit worried that we would get slammed. Anyway, why worry? It is just some simulated fun, so I took up the challenge to present our BOS project. Little did I know that Dr. Robert Bong, who was one of the venture capitalist evaluators (Also a BOS champion!) would not only slam the project (loopholes), he would literally TKO us (or at least me!), and end with a damning, 'I will not invest in this project'. I wanted to challenge him on all points, but his sharpness and our loopholes were too deep, meaning if I did challenge I would probably get total brain damage. In short, I said 'That's all' and I sat down.

However, being up there knocked out on my first ever pitch to a venture capitalist, was a refreshing and valuable learning experience. Also, I learned a great BOS like 'The i-Wellness Village' will always initially have many loopholes, meaning great ideas need time to nurture, and one should never take 'No' for an answer (Tony Fernandes). Though, I do hope Dr. Robert Bong changes his mind, or at least consider investing in such a project. I suppose if I had pitched it today, he would have seen the big picture clearly. Anyway, the other venture capitalist invested 20 million (simulated) dollars, and told us this project could make a lot of money. 'The i-Wellness Village' will not only make a lot of money, it will empower old-folks to live their dreams and have a happier ending. AWESOME!

The 'The i-Wellness Village' is perfect for Malaysia, so I do hope other venture capitalists take it up. Perhaps such projects are already under development in Malaysia.

So, my final verdict on Blue Ocean Strategy tools is...

USEFUL for big projects, but USELESS for daily inspirational innovations.

Could we simplify BOS (tools), and make consultants irrelevant in the innovation process?

Part 3 - ZaidLearn's Blue Ocean Strategy for 2011

Part 1 - Would Nemo Survive Using the Blue Ocean Strategy?

Part 1 - Would Nemo Survive Using the Blue Ocean Strategy?

"Blue Ocean Strategy is a bestseller across five continents. It has been published in over 40 languages and sold over 2 million copies (since 2005). " - Source

BLUE OCEAN STRATEGY?

"Blue Ocean Strategy is a business strategy book first published in 2005 and written by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD, one of the top European business schools. The book illustrates the high growth and profits an organization can generate by creating new demand in an uncontested market space, or a "Blue Ocean", than by competing head-to-head with other suppliers for known customers in an existing industry." - Source

"Based on a study of 150 strategic moves spanning more than 100 years (1880 - 2000) and 30 industries, it provides us with a systematic approach to making the competition irrelevant and creating uncontested market space. " - Source


So, what is Blue Ocean Strategy exactly?

"It is the simultaneous pursuit of differentiation and low-cost to create new market space. Blue Ocean Strategy seeks to make the competition irrelevant by creating a leap in value for both the company and its buyers. Blue Ocean Strategy aligns the following three propositions:

1. Value proposition
   The utility buyers receive from the product or service minus the price they pay for it.
   
   
2. Profit proposition
   The price of the offering minus the cost of producing and distributing it.
   
   
3. People proposition
   The readiness of employees to execute the new strategy with all of their energy, to the best of their abilities, and voluntarily.
   

Beyond the alignment of these three propositions, six principles drive the successful formulation and implementation of Blue Ocean Strategy." - Source

Click here to read more and learn about BOS for free.

If the BOS theory still does not make sense, this should nail it:

"Go where profits and growth are – and where the competition isn’t."
- Kim & Mauborgne (PDF)

...And what is the likelihood of that?



TWO PART SERIES
In this two part series I will explore Blue Ocean Strategy (BOS), and reflect back on a 2-day BOS workshop I attended a few weeks back (1st - 2nd December) at the UCSI Blue Ocean Strategy Regional Centre. In Part 1, I will zoom in on BOS as a theory and share some insights that might have been overlooked by the authors. In part 2, I will focus on Blue Ocean as a systematic approach to gain insight, innovate and create value, and explore some of the useful tools that we can use to visualize our own Blue Ocean, whatever that might be.

Having read the book twice (first time in 2007), read dozens of related articles, and participated in a 2-day BOS workshop, I believe I am entitled to share my honest opinions regarding this approach next. Though, I might be wrong!



RED OCEAN VS BLUE OCEAN STRATEGY

While I kind of like the Blue Ocean idea (Exotically relaxing and hypnotizing!) and most of the BOS visualization tools (explored in Part 2), I kind of find the 'Read Ocean and Blue Ocean Strategy' mambo jumbo (graphic above) and several of the case studies used in the book both misleading and a whole lot of _____ (you guess?)!

The BOS theory has already been around for a few years, and it is NOT short of criticism either, so I am not going to go on a full-blown (reinventing the wheel) shark attack. However, being fair to BOS, it has also rebutted six misconceptions about BOS (PDF) reasonable convincingly.

CIRQUE DU SOLEIL

"Dramatic mix of circus arts and street entertainment." - Source

If you read the Blue Ocean Strategy (BOS) book, or listen to any consultant promoting BOS, they will for sure share with you the ultimate BOS example and pride Cirque du Soleil. No doubt the Cirque du Soleil (founder Guy Laliberté) is an inspiring, innovative and breathtaking story, but is it really a Blue Ocean?

First, Guy Laliberté never used BOS as a tool to innovate and create value. So, although it might be a Blue Ocean, it does not prove that the BOS as a theory is practical and implementable. Secondly, BOS like so many other theories often hijack success stories from a few angles (and hide others), and then absorb them into a portfolio of evidence of whatever they are trying to convince or sell.

Let's look a bit closer at the amazing Cirque du Soleil story, and explore whether it is really a Blue Ocean according to the 'Red Ocean vs Blue Ocean' framework:

• Break the Value-cost Trade-off?
  The authors would like you to believe that Cirque du Soleil grew out of the traditional circus act and then reinvented it by eliminating performing animals and star performers (cut cost), and shifted the buyer group from children (end-users of the traditional circus) to adults (purchasers of the traditional circus), drawing upon the distinctive strengths of other alternative industries, such as the theatre, Broadway shows and the opera, to offer a totally new set of utilities to more mature and higher spending customers (Source).
  
  In reality, Guy Laliberté (folk musician, busker and fire breather) never really worked with performing animals or so called star performers, and we could actually argue instead that he reinvented street entertainment by transforming a group of street performers into a "proper circus" (learning the circus act from Guy Caron). He didn't pick up the idea of telling a story from the theatre, but from the Moscow Circus method. His vision was to create a circus with neither a ring nor animals. The rationale was that the lack of both of these things draws the audience more into the performance (Source).
  
  Ironically, the book never mentions this, and the main reason is probably that these revelations would confuse their 'value-cost trade-off' idea. Yes, Cirque du Soleil enhanced the show value and entertainment as they innovated over the years, but it also made the Cirque du Soleil much more costly than most other street entertainment shows (which are often free, but you are encouraged to donate/give a token of appreciation), and that had nearly catastrophic consequences during the first few years. Did you know that Guy Laliberté or his company went nearly bankrupt several times during the first few years, and if it was not for government grants, his never-say-die attitude, connections, and bit of fortune (luck!) this amazing story would have ended in disaster, and this again was never mentioned in the BOS book. The BOS book gives us an impression as if it was a smooth ride to heaven, and that the BOS was the secret to its success. What baloney!
  
  
• Create Uncontested Market Space?
  Seriously, what does this really mean? How do you create an uncontested market space for adult entertainment? Give us a break! Cirque du Soleil explored, innovated, and has developed (after several financial failures) over the years several amazing and unique shows that consists of a theatrical mix of circus arts and street entertainment. You could have 10 other groups use similar Blue Ocean Strategies and they would have failed, unless they had people like Guy Laliberté to make it happen.
  
  The idea of creating an uncontested market space is an illusion, unless we simply define it as an uncontested market space, which is easy as the authors have provided no real measure (like so much else!) to prove this. That probably did not make much sense either, but then again the idea of creating an uncontested market space (perhaps on Mars!) in the 21st century, unless for an extremely short period, is highly unlikely. But, we should never stop dreaming. Anything is possible!
  
  
• Make the Competition Irrelevant?
  Very few companies and products throughout history have made competition irrelevant (e.g. Microsoft Office could be an example, but that cost millions, if not billions of dollars in research and development), and if they have made competition irrelevant, it has only been for short periods. But then again, can competition ever be irrelevant? Even the iPhone (Vs Blackberry Vs Android) has relevant competition, although it has been a tremendous success.
  
  If there is no competition in sight, perhaps the market is not worth embracing anyway. In short, I would argue that there is no harm with contested competition. For example, the iPhone entered a read ocean competitive smart-phone market (which had bad products!), but through its exceptional user experience and iTunes Eco-system it has managed to capture a healthy market share. As for the Cirque du Soleil story, they are not the first acrobatic story show to pop-up. The Chinese dragon show has been around for centuries. Also, Cirque du Soleil will always have relevant competition from other amazing traveling shows and acts (and other forms of adult entertainment!), but as long as their shows are unique, attractive and entertaining, they will amplify their reputation and attract an increasing global demand.
  
  
• Create and Capture New Demand?
  Perhaps on Mars or Pluto (the Moon is more likely)! There is and has always been a demand for new forms of adult entertainment (or ways of being entertained), and Cirque du Soleil has been successful in capturing this universal demand with their amazing shows (not necessarily because of their strategy!).
  
  
• Align the whole system of a firm's activities in pursuit of differentiation and low cost?
  Low cost for whom? The firm? The customer? Both? This idea has confused me until today. When I first read the book, I got the impression that Blue Ocean was about enhancing the customer value and at the same time lowering the product/service cost. But after attending the workshop, and scrutinizing some of the case studies, I get the impression that the lowering cost aspect, refers mostly to the firm, and not necessarily to the customer.
  
  If we go back to the Cirque du Soleil case, we see a pursuit of differentiation and lower implementation cost if we compare to the traditional circus act. But, that is rather misleading, because we could have and perhaps should have compared it to street performances, which it really originated from. And if we did, it would be differentiation, but at a higher cost. Moreover, had Cirque du Soleil used performing animals and star performers, it would have certainly gone bankrupt, because it nearly went bankrupt without them several times. Though, kudos to Cirque du Soleil for hiring over the years many amazing street performers, and providing them a healthy and stable living income beyond what they would have probably got from performing on the streets.
  

WHAT IS YOUR POINT?
Having said all this, we could go BLUE arguing whether Cirque du Soleil is really a Blue Ocean or not. No point wasting any more time on this issue, though please challenge me on all accounts (can always update my post).

Having always been attracted to business improvement books, or books that explore creativity and business value innovations (attracted to the stories rather than the formulas!), I see a common trend and pattern in many of the books I have read, which is the manipulation of past and existing success stories to prove their ideas and frameworks for ultimate success. In other words, they will look through their narrow lenses and highlight what fits their theory, and then hide does aspects that do not fit.

The secret to sustained success lies in the marketing strategy (BOS misses this point)! No, it lies in strong ethical practices (BOS misses this point)! No, the secret to success is strategic execution (RIP)! No, it lies in the strategy itself. BOS claims based on its research that the strategic move, and not the company or the industry, is the right unit of analysis for explaining the creation of blue oceans and sustained high performance...bla, bla (p. 10). They are all right in their own lenses.

Though, I would argue that all of the above mentioned ideas, do not really highlight the real essence of companies that have had sustained success over time, which is exceptional leaders working with amazingly talented people. What would Apple today be without Steve Jobs, or Air Asia without Tony Fernandes?

Exceptional leaders have the ability to visualize (ideas), inspire, empower, and attract talented people to work for them, and as importantly they have the ability to continuously attract the world attention needed (or hire people that can!) to make it a sustained success. So, if you want a real strategy that really works, hire exceptional leaders and talented people with the right attitude (to your needs). Even if you don't have a great strategy, these people will most likely do a better job on strategy development than any consultant, or consultancy firm out there.

You are wrong! Maybe, I am!


PART 2?
Although, I find all the exotic buzz words (that can easily be manipulated) and the Red/Blue ocean framework from BOS a load of ____ (the real Blue Ocean!), they do have some interesting tools we can use to acquire useful insights and help us create value innovations. Your results using these tools might not turn out to be real Blue Oceans according to their immeasurable and exotic framework, but nevertheless the tools are worth a try.

So, what about the Nemo puzzle? That will be explored in part 2 (if I can cook up an answer!), and I will also reveal the ultimate secret to success, which is...

Part 2 - Simplify Blue Ocean & Make Consultants __________!

Part 3 - ZaidLearn's Blue Ocean Strategy for 2011