In our previous chapter, we began our discussion on Tipping Point leadership in the Blue Ocean, and how a company can spur motivation by placing key players into extreme situations. Tonight, we’ll continue this discussion, as we move through the four hurdles that impede a Blue Ocean strategy.
We’ll continue our discussion with the Resource hurdle. Most of the time, when the word “resource” arises, the first thing the mind goes to is money. This isn’t an unrealistic expectation, as most often, a Blue Ocean strategy will require funds to implement, though costs are expected to go down (and they realistically should once the strategy is in place). This will often leads to fights in management, as political battles lead to reluctance in the granting of funds. Gaining funds through traditional means is time consuming, and will hinder implementation of the various procedures that must be enacted. Likewise, politics in the office can easily turn a “yes” into a “no”, depending on who is spoken to and the various variables within the company. Rather than wait and waste valuable time, it would be most prudent to find other ways to manage the current resources on hand.
In order to effectively manage an implementation on limited resources, one must find other means of extracting the most value from the assets one has on hand. To do so, one must know how to exploit hot spots, minimize cold spots, and understand the basics of horse trading within the company.
A hot spot within a company is a sector that can see large gains in productivity and output at a low overall cost. A Cold Spot is the exact opposite of a hot spot: a sector that requires large investments for a relatively small output. For example, let’s look at a hypothetical example:
Anime company BEW is preparing to retool their core operations into a Blue Ocean strategy. Rather than focus on DVDs and streaming, they’d like to jump in on a social video platform. However, the top brass want to make the changes as quick and cheap as possible. Within the company, the web development division is understaffed. Adding two members would increase productivity five-fold. However, the graphics design wing is seeing healthy numbers: to get a 100% increase in productivity, one would have to add nine new members.
In this example, the hot spot is the web division: These folks will be building the platform, and have the largest gain from adding new help. At the same time, graphic design is a cold spot. Adding help to this wing is pointless at the moment, as it would cost more to gain similar productivity boosts. In this case, the web development folks would benefit from a larger staffing budget. To make up for the costs, divert funds from graphics design – losing the one or two designers would prove far more beneficial to the project in the long run, as the gains would pay for themselves in short order.
Another potential cold spot would be negotiations of licenses. This is often an expensive and time consuming process that involves having a company representative meet with the licensor to hammer out a price and a term in which a show’s rights are purchased. It provides a bottleneck among all players in the industry and remains a massive cold spot. If our hypothetical BEW were to devise a way to remove the travel requirements from the licensing process, say by engaging all long-distance clients via a secure online service, with digitally signed agreements (again, hypothetically speaking), this cold spot would be eliminated. This would allow for more engaged, more convenient negotiations that would cost less and allow for more expedient negotiations processes.
If a company’s still short on resources despite maxing out their hot spots and draining their cold spots, those coordinating affairs may need to engage in a bit of horse trading to get what they desire. Horse trading involves going to other departments in the company to trade excess resources for needed resources. In this example, we’ll return to our hypothetical BEW corp. Say our new web platform division, after working out the various hot and cold spots, is still in need of equipment. They have about six extra offices to work with. Meanwhile, accounting has more equipment than they need, though they need more office space. By coordinating a compromise between departments, one could easily broker an agreement in which accounting gets the offices, in exchange for their excess equipment. In this arrangement, both departments are happy, and output can rise to maximum capacity in both cases.
With a little ingenuity, the resource hurdle becomes but a trivial speed bump in the greater picture of implementation. However, if it is not addressed early in the process, there could easily be headaches that arise as changes begin to roll in and the coffers begin to run dry. In our next installment, we will look at the Motivational hurdle, and how one can use key personnel to create a ripple effect through the company as a whole.
I am sorry about the hypothetical companies. I don’t have the perspective that is needed to tell such stories with the players in the current market.