BLUE OCEAN
STRATEGY
CH 8: Build Execution
Into Strategy
Team 3:
Taylor Carroll, Andrew Stack,
Andrea Lapotaire, Andrew
West, Jessica Sharpless
Strategy Execution

Create a culture of trust and commitment



Must align hearts and minds
Require people to step outside of comfort
zone


Does Wal-Mart's employees trust management?
Do employees think outside of the norm
Inspire voluntary cooperation

Quick to grasp new strategy? Strategy must be
forced onto them?
Strategic Execution (cont.)
 Best

planned strategies often fail
Implementation must be programed into
the strategy to minimize risk of failure
 http://www.youtube.com/watch?v=InIS4i
cfpVw
Poor Process Can Ruin
Strategy Execution
 Failure
to explain a strategy can halt the
execution
 Trust must be built with employees to
begin to accept the new strategy
Lubber Example

Lubber: water-based liquid coolant for the
metalworking industry



Several types of coolants to choose from
Must be tested to determine right one
Machine downtime and sampling costs


Expensive for customers and Lubber
New strategy created that would eliminate
complexity and costs of trial phase

Cut down failure rate of selecting coolants from
50% to less than 10%
Lubber Example Cont:
 Excellent


strategy doomed from the start
Sales red saw it as a direct threat to their
most valuable contribution
Expressed doubts about effectiveness to
customers
 Directly
effected sales
 Management forced to pull the system
What could be learned?

Using the proper process could have prevented the
demise of the expert system





Make sure that the new strategy was properly explained to
all the employees
Train on how to use
Explain the benefits and effectiveness
Make sure employees know that their job is safe and the
new strategy is simply put in place to enhance efficiency
Work manager-employee trust

If employees would have trusted management, they would
have known that the new strategy was put in place to better
the company and would have known that their jobs were
safe
The Power of Fair Process
 What



is fair process?
Engagement
Explanation
Expectation clarity
 How
does it allow companies to build
execution into strategy?
Fairness/Justice

Social scientists John W. Thibaut and Laurens
Walker combined interest of psychology of
justice with the study of process




Created: Procedural Justice
What makes people comply with laws without
being made to do so
http://www.youtube.com/watch?v=BpRsZjBw1TI
People care as much about the justice of the
process as they do about the actual outcome

Satisfaction of outcome increases if it is believed
that procedural justice is exercised
Fairness/Justice Cont.
 When
fair process is exercised, it is
believed that a level playing field exists

Inspires employees to voluntarily cooperate
in executing the new strategy
 Involves
going beyond the call of duty
Walmart’s Treatment of
Employees

Wal-Mart has taken many hits on treatment of
employees







Unpaid overtime
Sexual discrimination
Poor health plan
Anti-union activities
Unfair process and justice
Could this be causing poor performance?
*Wal-mart has since been working to better
employee satisfaction
Google

Google is famous for treating employees well





Leisure facilities on campus
Excellent health plan
Equal employment
What is the outcome of Google’s fair
process?
Excellent performance


New innovations happen frequently
Very successful
The Three E Principles of Fair
Process

Engagement- Involving individuals in the strategic decisions that
affect them by asking for their input.




Explanation- Making sure everyone involved and affected should
understand why final strategic decisions are made.




Establish confidence in managers
Allows employees to trust managers
Powerful feedback loop
Expectation clarity- Stating clearly the new rules of the game after
a strategy is set.



Communicates management’s respect
Better strategic decisions
Greater commitment from those involved
Understood standards to be held by
Strategy can be executed rapidly
WALMART
A Tale of Two Plants
Why Does Fair Process Matter?
 Intellectually

Recognition and reflection of individual’s
ideas
 Emotionally

Individual recognition of value
 “It
all comes down to intellectual and
emotional recognition.” –Pg. 181
Intellectual and Emotional
Recognition Theory
 Individuals
share knowledge, when intellectual
worth is recognized.
 Fair
process=voluntary cooperation.
Overcoming Fair Process
Adversities
 Employees
reject opposing ideas.
 If individual ideas are not fostered, they
will refrain from sharing them.
 Lack of trust in strategy-making process=
lack of trust in implemented strategy
 Employees may resist strategies, no matter
how efficient it may be.
Wal-Mart and Fair Process
 Systematic
operation
 Micromanagement
 Adherence
to protocol
Fair Process and Blue Ocean
Strategy

Commitment, trust, and voluntary
cooperation are intangible capital



Allows companies to stand apart in the speed,
quality, and consistency of their execution and
to implement strategic shifts fast at low cost
When people have trust, they have
heightened confidence in others intentions
and actions
When people have commitment, they are
willing to override personal self-interest in the
interests of the company
Fair Process and Blue Ocean
Strategy (Continued)
 Intangible
Capital is directly related to
success or failure in executing blue ocean
strategies
 How do companies create trust,
commitment, and voluntary cooperation?


Incentives of money and power
Exercise of fair process
Fair Process and Blue Ocean
Strategy (Continued)
 By
organizing the strategy formulation
process around the principles of fair
process, you can build execution into
strategy making from the start
 Compromises and sacrifices are
necessary in building a strong company
 http://www.youtube.com/watch?v=wPO
gvzVOQig
Wal-Mart's Commitments
 Wal-Mart
is committed to purchasing food
from local growers for distribution to stores
in their areas.
 This commitment reflects their everimportant goal to provide consumers with
quality, affordable, home-grown
agricultural selections.