Blue Ocean Strategy BUILD EXECUTION INTO STRATEGY Team 3 Riley Drummond Kara Vickers Andrew Rich...
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Blue Ocean Strategy BUILD EXECUTION INTO STRATEGY Team 3 Riley Drummond Kara Vickers Andrew Rich James Everett Ann-Marie Nanny Rick Henson Brittany Fowlkes
Blue Ocean Strategy BUILD EXECUTION INTO STRATEGY Team 3 Riley
Drummond Kara Vickers Andrew Rich James Everett Ann-Marie Nanny
Rick Henson Brittany Fowlkes
Slide 2
Build Execution into Strategy How to execute your strategy? How
important is frontline to your strategy? -having everyone
understanding strategy is crucial but isnt everything to executing
your strategy zzzzzzz
Slide 3
6 th Principle of Blue Ocean Strategy 6 th Principle: To build
execution into strategy from the start, management must build
peoples trust and commitment deep in the ranks and inspire their
voluntary cooperation Believing NOT Following -Trepidation builds
in frontline if no belief or feeling of irrelevancy Minimizing
managements risk -distrust, noncooperation, sabotage -exist in red
oceans but more prevalent in blue oceans Fair Process -Presence or
absence can make or break your strategy
Slide 4
Poor Process A poor process can ruin strategy execution EX:
Choosing the right coolant for metalworking industry Devised a
system that used artificial intelligence which cut failure rate to
less than 10% from industrial average of 50%. This reduced machine
downtime, eased coolant management and raised the overall quality
of work. Simplified the sales process which gave representatives
more time to gain new sales.
Slide 5
Poor Process Even though this system worked very well it was
doomed from the start because the sales force fought it. Sales
representatives saw this as a direct threat to what they considered
their most valuable contribution. The benefits of the new strategy
went unappreciated and management was forced to pull the expert
system from the market and work on rebuilding trust with its sales
representatives.
Slide 6
Poor Process Even if a strategy is more effective it must be
implemented in a way that does not affect the process in a bad way
especially the people. EX: Nike can make soccer balls cheaper in
Pakistan with child labor, but some people boycott these soccer
balls because of this. This process has a negative affect on sales
and they way some people look at Nike.
Slide 7
The Power of Fair Process John W. Thibaut and Laurens Welker
Sought to understand what makes people trust a legal system so that
they will comply with laws without being coerced. Research results:
Procedural Justice Theory People trust that a level playing field
exists Voluntary Cooperation Going beyond the call of duty to
execute strategies
Slide 8
The Three E Principles of Fair Process 1. Engagement 2.
Explanation 3. Clarity of Expectation Whether in the corporate
office or on the sales floor, they all look at these elements.
Slide 9
Engagement Means involving all individuals in decision making
that affect them, by asking for their input. Encouraging
individuals to share their ideas builds better collective wisdom.
It results in better decisions by management and greater commitment
by those executing the decision. To engage Nikes more than 30,000
employees worldwide, Nike created an internal online network - the
WE Portal - to house its employee engagement programs.
Slide 10
Explanation Means informing everyone involved of why the
decisions are made as they are. It allows employees to trust the
managers decision. Serves as a feedback loop that enhances
learning.
Slide 11
Expectation Clarity Clearly states new strategy and all it
entails. To achieve fair process; goals, expectations and
responsibilities must be clearly understood. Once understood people
can then focus on executing the strategy rapidly.
Slide 12
A Tale of Two Plants Elco- an elevator systems manufacturer in
the late 1980s Sales in the elevator industry declined and domestic
demand fell Co. decided to turn things around and create a blue
ocean strategy by replacing its batch-manufacturing system with a
cellular approach that would allow self-directed teams to achieve
superior performance Management team was in agreement of beginning
to execute its new blue ocean strategy and started implementing
changes at its two plants
Slide 13
A Tale of Two Plants Would 1 st install new system at Elcos
Chester plant then roll it out to its 2 nd plant, High Park. -At
the Chester plant, there were exemplary employee relations and
management was certain it could count on employee cooperation to
execute the strategic shift in manufacturing. They were said to be
the ideal work force -At the High Park plant, there was a strong
union expected to form in resistance to the shift in the
manufacturing process, but they thought the positivity from the
Chester plant would spillover to the High Park plant In theory this
was all good to go, but there was an unpredicted turn that took
place.
Slide 14
A Tale of Two Plants What actually happened once the new
manufacturing system was implemented at both plants: -At the
Chester plant, disorder and rebellion plagued the introduction of
the new system -At the High Park plant, the new system was accepted
and followed without resistance Why did the exact opposite happen
than what the managers expected?
Slide 15
A Tale of Two Plants At the Chester plant, Elco managers
violated all 3 of the basic principles of fair process. -1 st, they
failed to engage employees in the strategic decisions that directly
affected them. Elco brought in a consulting firm to design the
master plan for the conversion. -None of the workers knew who these
men and women in black suits were that would stand behind them,
whisper, and observe. -Also, the plant manager was increasingly
absent due to meetings with the consultants. -the rumor mill
started and everyone was convinced the company was downsizing.
-trust & commitment soon deteriorated
Slide 16
A Tale of Two Plants 2 nd of all, Managers at Chester didnt
explain what strategic decisions were being made the way they were
and what those decisions meant to employees careers & work
methods. -Management unveiled the master plan for change in a 30
minute session with the employees and that was it. 3rd of all,
Managers neglected to make clear what would be expected of
employees under the new manufacturing process.
Slide 17
A Tale of Two Plants Violations of the principles of fair
process undermined employees trust in the strategic shift & in
management. -The employees began taking their fear out on one
another & refused to do as they were asked, turning down
assignments even if you fire me. In the absence of fair process,
the Chester plants employees rejected the transformation &
refused to play a role in executing the new strategy.
Slide 18
A Tale of Two Plants On the other hand at the High Park plant,
management abided by all 3 principles of fair process when
introducing the strategic shift. -Management engaged employees in
plant wide meetings routinely, discussing the declining business
trends, and explained the strategic course of action thoroughly.
-Goals & expectations were made clear to employees By
practicing the 3 principles of fair process in tandem, management
won the understanding & support of High Park employees. When
fair process is practiced correctly, the worst employees can be
turned into the best.
Slide 19
Why does Fair Process Matter? Intellectual and Emotional
recognition Respect, dignity, individual worth Universal Value Nike
and the FLA
Slide 20
Intellectual and Emotional Recognition Theory Recognition leads
to employees giving: Active Ideas Knowledge sharing Intrinsic
motivations Leads to success Violation of fair process leads to
employees: holding back their best/most creative ideas Reject other
intellectual worth Drag their feet Sabotage Push for rolling back
strategies imposed unfairly
Slide 21
Intellectual and Emotional Recognition Theory The execution
consequences of the presence and absence of fair process in
strategy making : Fair Process Intellectual/emotional
Trust/commitment Voluntary cooperation recognition in strategy
execution Violation of Intellectual/emotional Distrust/Resentment
Refusal to execute Fair Process indignation strategy
Slide 22
Fair Process and Blue Ocean Strategy Trust Heightened
confidence in one anothers intentions and actions Commitment
Willing to override personal self-interest in the interest of the
company Voluntary cooperation
Slide 23
Dilemma How to create trust, commitment and voluntary
cooperation within a company? Many companies separate strategy
formulation from execution Slow and questionable implementation
Traditional incentives Power and money
Slide 24
Fair Process Wrapped Up People tend to be committed to support
the resulting strategy even when it is viewed as not favorable or
at odds with their perception of what is strategically correct for
their unit. People realize that compromises and sacrifices are
necessary in building a strong company. They accept the need for
short-term personal sacrifices in order to advance the long-term
interest of the corporation