What It Takes to Shift From Competing to Creating
Why nondisruptive
creation is as important as disruption in seizing new growth.
In their just
released book, BLUE OCEAN SHIFT, Chan Kim and Renée
Mauborgne, creators of Blue Ocean Strategy, deliver the definitive
guide to shifting yourself, your team and your organisation to new heights of
confidence, market creation and growth. They show why nondisruptive creation is
as important as disruption in seizing new growth, what leads to one over the
other and why you’d be unwise not to understand this.
Kim and Mauborgne: BLUE OCEAN SHIFT addresses a key challenge facing
virtually every organisation today. How to move yourself, your team and your
organisation from competing to creating. Or, from cutthroat markets to wide
open new markets in a way your people own and drive the process.
Think about it. What
industry today doesn’t face intense competition? Take retail. It’s getting
decimated. The competition is fierce. It’s tough. It’s rough. It’s what we
refer to as a bloody red ocean.
But the successful
companies, they’re not in those red oceans. They’re moving into and creating
new markets. What we think of as blue oceans.
The question is: How
can all of us do that too?
This book lays out the
path anyone can follow to get there, using proven steps.
IK: What does it take to make a successful shift?
Kim and Mauborgne: You need two things to shift. Without them you are going to
struggle.
First, you need a
roadmap. Because we all want to shift from compete to create, but we don’t know
how. So you need a roadmap with tools and guidance that anyone can apply.
Second, you need
people. And by that, we mean you need people’s confidence to act. If people
don’t have the confidence to act, your roadmap means nothing.
And that’s what the
book does. It gives you that roadmap and it shows you how to build people’s
confidence at every step so that they own and drive the process for success.
IK: Has any company actually applied the roadmap and proven steps laid
out in the book to shift from competing to creating?
Kim and Mauborgne: Absolutely. Blue Ocean Shift shows
real-world examples of organisations facing the same constraints we all face –
be they politics, bureaucracy, limited resources – and applied the very tools
and process outlined in the book to shift from competing to creating. You’ll
learn, for example, how a musical conductor applied the blue ocean shift process
to create the “bravest orchestra in the world". He redefined what a youth
orchestra means, from music excellence to ambassadors for peace, even inspiring
Shiite, Sunni and Kurdish musicians to play together, all the while dealing
with resource constraints, historical ethnic divides and poorly trained
musicians.
There’s the example
of a hotel chain that applied the proven steps outlined in the book to break
out of the highly competitive hotel industry – which is ‘redder than red’– to
create the new market of affordable luxury hotels offering five-star comfort at
three-star prices. Today it has 90 percent occupancy rates, guest ratings
called ‘superb’ and ‘fabulous’ on booking sites, as well as the lowest costs in
the most chic locations. It’s fast rolling out to major cities across the
world.
The book also
explains how a global, small-appliance company with more than 100 years of
history turned an industry whose value was declining by 10 percent a year into
a high-growth one. It did that by redefining its offering to such an extent it
allows all of us today to make mouthwatering French fries with no frying and
almost no oil. The upshot of its shift: Not only did demand grow by 40 percent,
its stock price lifted by 5 percent. Oprah fell in love with the new offering
and started tweeting that the product had “changed her life.”
From prisons to
toilet paper, healthcare to convenience stores, national governments to small
nonprofits, new companies to established ones, Blue Ocean Shift shows you how
they applied the process outlined in the book to shift from competing to
creating in a way that brought their people along.
IK: You talk about creating new markets. How does that differ from
disruption?
Kim and Mauborgne: Disruption matters. But as we discuss in the book, that’s
only half the picture of how new markets are created.
The other half, and
we would argue the more important half, is what we call nondisruptive
creation. What we mean by that is creating new markets where there once wasn’t
any.
Take the example of
life coaching. Today it’s a $2 billion industry. The second fastest growing
profession in the United States after IT. But twenty years ago it didn’t exist.
That market didn’t exist until someone had the idea to create a brand-new
opportunity for people to improve the quality of their lives in a way they
couldn’t get from anywhere else. Life coaching didn’t disrupt anyone. No one
lost a job because of it. No company went out of business. Microfinance,
Viagra, online dating, Sesame Street – those are just a few of the many
market-creating moves created by nondisruptive creation.
As we lay out in the
book, the opportunities for nondisruptive creation are huge. No executive or
entrepreneur can afford to not understand this important, missing half of how
new markets are created. That would be like shutting yourself from half of your
opportunities to seize new growth, which no one should do. From a macroeconomic
perspective, understanding nondisruptive creation is equally vital since it
generates new growth and jobs without destroying existing jobs or companies,
which is key.
IK: Last question. Big companies are increasingly buying their
innovations, like the Dr. Pepper Snapple Group, which recently purchased Bai
Brands, makers of natural flavoured waters, instead of creating and opening up
new markets themselves. What are your thoughts on that?
Kim and Mauborgne: It’s great that a top company like Dr. Pepper Snapple
recognises that it needs to go beyond competing to seize new growth and stay
relevant. But instead of empowering its own 19,000 employees to do what it
takes to move the company forward, which is to create, it empowers them to do
what increasingly doesn’t move the needle, which is to compete. That’s why the
company had to shell out close to $2 billion to purchase Bai Brands and stay
relevant. This mismatch between what employees are empowered to do, and where
profit and growth increasingly come from, is something that we believe many
large companies need to address.
While the world has changed, employees
in many companies remain aligned with the path to success in the past, which is
competing. What firms would need to do now is shift and get their people
attuned to the new market reality where creating new markets is the ticket to
seize new growth. Just think of the message you are sending your employees
about their value in the company if every opportunity to grow comes from people
outside the company. How will they feel they are a vital part of their
company’s future? Blue Ocean Shift lays out the
path to turn this around and shift.
W. Chan Kim and Renée Mauborgne, INSEAD Professors of Strategy and Co-Directors of the INSEAD Blue Ocean Strategy Institute | September 26, 2017
Read more at https://knowledge.insead.edu/strategy/what-it-takes-to-shift-from-competing-to-creating-7246?utm_source=INSEAD+Knowledge&utm_campaign=c9f74b011f-EMAIL_CAMPAIGN_2017_09_28&utm_medium=email&utm_term=0_e079141ebb-c9f74b011f-249840429#pRb35ZkfPFFiGSEe.99
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