Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

Chapter 8 argues that the successful execution of a blue ocean strategy hinges upon the willingness of its members. In other words, people at all levels of the organization must be willing to cooperate and even volunteer their efforts toward realizing the new objective. This is why businesses must include execution as a pivotal factor in their strategy-making—it allows managers to minimize risks, such as lack of employee cooperation or outright attempts at sabotage. 

Businesses should motivate their employees by first promoting a culture of trust and commitment. The top executives must make sure lower-level employees, who are usually entirely removed from the strategy-making process yet must carry it out in their daily tasks, properly understand the new direction by building trust and commitment. For example, Lubber, a company that supplies liquid coolants, designed a strategy that helped their customers—metalworking industries—streamline the selection process for various types of coolants. However, despite being a good strategy, it failed to generate growth because the sales force, who thought their expertise as advisers to coolant selection was threatened, actively worked against the new strategy.

Businesses can implement a second strategy that inspires voluntary cooperation: a system of fair process. Executives must look to engage individuals at lower levels into the strategic decision process by taking into account their ideas. Executives should also explain the reasoning behind making changes in strategy, and they must do so in an honest and clear manner. This builds trust and allows employees to understand the decision-making process, which was made without their input. Finally, executives should make their expectations clear by delineating the new standards and rules in the office. These three elements combined contribute to making the execution of new strategy a fair process. 

Firms have seen their best employees turn into their worst when they attempt to roll out new initiatives without a fair process. This is because humans fundamentally seek intellectual and emotional recognition. They feel appreciated when their ideas and feelings are taken into consideration, and they are inspired to work for people who treat them with respect and dignity and recognize their worth. In other words, if their intellectual abilities are acknowledged, they are more likely to work to impress. When their emotions are recognized, they are more likely to relate to the strategy and contribute their all. A violation of the fair process therefore tramples human dignity and can easily turn model employees into saboteurs. 

The same system of fair process must be extended to stakeholders too, especially now that external stakeholders increasingly affect an organization’s success. Without engagement, communication, and expectation clarity, stakeholders not committed to the new strategy may sabotage the process by missing deadlines, compromising on the quality of the product they deliver, or even create cost overruns. The authors conclude that fair process is an intangible capital that can affect success rates as much as quantifiable factors, and therefore must be considered at the start of the strategy-making process.

This chapter explains how alignment of all three strategy propositions explored in the previous chapters—providing a significant jump in buyer value to attract customers, innovating a new business model without incurring high costs, and using fair process to motivate employees—is crucial to breaking through blue ocean spaces. Alignment allows businesses to pursue a holistic approach to formulating and executing blue ocean strategies in the long-term; failure to balance the three strategy positions often results in short-lived success or outright failure. 

A company’s top executives are the best candidates for ensuring alignment, because leaders that head a specific department—such as marketing or manufacturing—typically have a functional bias that benefits their responsibilities but not the big picture.  

Whereas red ocean strategy typically focuses on either cost optimization or differentiation, blue ocean strategy asks for both differentiation and low cost in all three propositions. This allows for any surplus to go toward mutual reinforcement, creating a positive cycle of productivity. For example, if a company has a stellar value proposition, it may generate more profit, which it can in turn pour into strengthening its people—and this circular process of value creation can be difficult to imitate, thus creating a barrier to entry for potential competitors.

Comic Relief, a UK charity organization, rose above the competition and broke into blue ocean markets by pursuing low cost and differentiation in all three strategy propositions. First, it fundamentally redefined the problem with charity foundations. Whereas traditional charities look for big and recurring donations from well-to-do people at expensive galas, often using images depicting misery and sadness to encourage them to give, Comic Relief broke free from these value curves by making donation events fun, administratively cheap to organize, and by allowing all donation sums, no matter how big or small. They created Red Nose Day, a community “fun”draising event that gathered volunteers to perform fun antics in exchange for donations.

Unlike traditional charity galas, Red Nose Day is organized mainly by volunteers, so Comic Relief can guarantee that none of their proceeds will be kept to fund their operational costs—all will be donated. Since a young child’s $1 allowance could help feed seven children in Africa, the event attracted a much wider range of people, including noncustomers of traditional fundraising events. This ultimately allowed Comic Relief to raise over 950 million euros since its founding, all of which were from direct public donations rather than government or corporate grants.

Thus, Red Nose Day became a sensation and created a platform to inspire staff members and volunteer fundraisers to buy-in their people proposition. Since the event is fun, raises funds to better the world, and allows performers to find exposure, the value proposition is unbeatable. Furthermore, the event only happens once every two years, so staff members do not need to donate too much of their time to the project. This differentiated and low-cost proposition generates a lot of free publicity, with press volunteering to cover the event for the tremendous buzz it creates. Its profit and people propositions were therefore also incredibly attractive. Comic Relief’s success is thus a perfect example of strategic alignment along the value, profit, and people propositions, which allowed it to achieve 96% national brand awareness in a very short amount of time.