Book Review: Blue Ocean Strategy

Management Gurus W. Chan Kim and Renee Mauborgne have presented a critical strategic management approach for today’s global competitive environment in their international bestseller, Blue Ocean Strategy: How to Create Uncontested Marketspace and Make the Competition Irrelevant. The book, which debuted in 2005, is a must read for any corporation today. Resting upon four “formulation principles” and two “execution principles,” Blue Ocean Strategy teaches the reader to create uncontested market space and break away from bloody competition by strategically moving into the area the authors call the “Blue Ocean.”

An example of its application to put the book/ strategy in context is the Nintendo’s newest game console Wii which unlocked a ‘blue ocean’ of new market space of whole new mass buyers – Adults including senior citizens that never before played video games. This enabled it to bypass the bitter competitive rivalry with the Sony Playstation and Microsoft Xbox. As many of the world’s leading growth companies showcase their success in exploring Blue Oceans (eg. Apple, Google etc), such examples are far and few in between in Muslim world economies. However, an example to note would be, Bangladesh based Grameen Bank which has created a blue ocean in finance industry by focusing on once non-customers of banking and finance – the poor. Another one would be Malaysia based AirAsia who has successfully implemented a business model to capture an untapped budget travel market in the travel industry.

Challenging the focus on Market Share wars

Management strategies, corporate strategies and marketing strategies: any strategy crafted by a corporation traditionally focuses on profit-maximization. Increasing the wealth of a firm is strongly related to capturing revenue through market share. The golden rule of business denotes that the higher the market share, the larger the revenue stream – consequently, the greater the wealth of the firm (provided there is constancy of market prices). Blue Ocean Strategy challenges this notion by forcing firms to create new a market space and in many cases, work parallel to the competition.

Obviously, this overhaul of ideas would entice strong resistance to change by corporations who have become accustomed to their practices (as they comfortably match their competitors’ ideals) and continue to contest for market share. Such a strategy would only serve to increase costs, cause conflict amongst staff and diverge from the corporation’s vision.

In the introduction to Blue Ocean Strategy, readers will find that this is hardly the case, and though there would be hurdles to overcome when executing the “Blue Ocean Strategy” (as hurdles would be inherent in any strategy), appropriate sub-strategies would have to be implemented for the successful creation of demands for new products or services.

Most importantly, the book highlights that the “Blue Ocean Strategy” is not a new concept. The growth of unique industries and the ever-changing lifestyles that are enjoyed by various communities around the world is proof that many corporations have successfully adopted and implemented “Blue Ocean Strategies” in the past and that the potential of creating uncontested market space in the future is most certain, provided corporations follow the intricate formulation and execution principles. The book talks about the business world 30 years prior to its publication and forecasts the growth of the “Blue Ocean Strategy” as an integral part of corporate reform for the next 3 decades.

Four Actions Framework

Source: www.blueoceanstrategy.com

How to Create Uncontested Market Space and Make the Competition Irrelevant

The book is intricately designed to walk through the process of its six principles and teaches the reader how each principle is able to reduce risks inherent in any new strategy. Blue Ocean Strategy is not only a book to read but a strategy to adopt and implement for corporations that are determined to succeed in the long-run.

The six principles that fall under the formulation and execution building blocks are designed to reduce various risks in adopting a new approach to business. Even for the most risk-averse business owner, a well-formulated “Blue Ocean Strategy” cannot be ignored.

To fortify this understanding, the authors wove in various case studies and true success stories to reinforce several points. First, they these cases create a familiarity within the reader who, as a consumer, is able to relate to certain cases such as of Cirque du Soleil®, Starbucks® and Curves®, and observe how consumers are affected by the “Blue Ocean Strategy.” Second, the reader is able to visualize the strategy as it is crafted in “opposition” of competition, by using its suggested managerial tools such as “The Strategy Canvas” and “The Four Actions Framework.” Lastly, the Book substantiates proof that Blue Ocean Strategy has existed since the 30s and that it is an ongoing process for the firm rather than a one-time strategy that will outlast competition.

The Waves of Blue Ocean Strategy

Kim and Mauborgne present Blue Ocean Strategy as part of strategic management, being a long-term focus rather than an intermediate route at a problematic juncture. The strategy is comprehensive and takes a macro approach towards how the strategy should be formulated, implemented and nurtured to its success. At the same time however, the authors present cases endorsing that corporations who ride the Blue Ocean wave will succeed in a shorter time-frame compared to those who continue to battle with competition in the shark-infested red waters. They do not discount the macro approach to Blue Ocean and assert that a misinterpretation of the formula or a miscalculation during its implementation will inevitably lead to failure.

The strategy concentrates on value innovation, which reduces costs for corporations. Instead of focusing on outdoing competition, the book advises corporations to use managerial tools such as “The Strategy Canvas” to identify voids in customer values. The book presents multiple cases validating how companies easily overlook opportunities to cater for valuable services concerning their existing and potential clients. This usually happens because decision makers in a company are absorbed with battling head-on with competitors rather than shifting their focus on clientele-oriented values. To be better acquainted with existing and potential clients and their values, the authors strongly advocate that top management descend to the grass-roots of their industries to blend in with their consumers and understand their trends. Furthermore, many corporations tend to outsource their marketing research to specialist marketing intelligence. This, according to Blue Ocean Strategy, is a detrimental approach to understanding the market and creating uncontested market space.

The Strategy Canva

Source: www.blueoceanstrategy.co

Besides challenging the norm of competing with rivals, Blue Ocean Strategy also challenges several other perceptions of new business strategies. Increase in product value and services do not necessarily require technological advancements. A successful “Blue Ocean Strategy” is seen to rely on existing resources and in many cases, allow companies to cut down on further resources.

Finally, Blue Ocean Strategy emphasizes the importance of interpersonal office skills in executing a successful new strategy. Employees are often sidelined during decision making and are generally not treated with the appropriate respect and humanity deserving of employers.. The authors caution the reader that employees and office politics are not only strong determinants of the strategy’s success but can also lead to failure even before the strategy takes off.

Although written in simplified English, the book retains a text-book feel because of its technical terminology. The authors provide numerous examples and case studies to ensure the understanding of readers who are not necessarily familiar with managerial terms. Additionally, their multiple illustrations and steps under each principle allow readers to observe and learn the different phases of crafting a strategy.

A Must have Tool for the Next Generation of Business Leaders

Blue Ocean Strategy has already benefited numerous companies and has received stellar reviews. Its authors have already been listed amongst the top 10 most influential thinkers of 2007 (The Thinkers 50 biennial poll of business thinkers.) The Strategy has emerged as one of the most important business strategy in the new globally competitive markets. An evidence of that is the acknowledgement of this business strategy by senior executives in China as a ‘Top 10 China Management Practices’ (source: Chief Executive China, the largest-circulation management magazine in mainland China’s ‘Fourth Annual Top 10 China Management Practices.’)

Business leaders in the Muslim world economies seeking global/ regional competitiveness cannot afford to ignore the ‘Blue Ocean Strategy.’ There are some encouraging signs certainly. Deputy Prime Minister of Malaysia Datuk Seri Najib Tun Razak is known to be a big supporter of the Blue Ocean Strategy. In an interview in Malaysia Star newspaper it was noted that he liked the book so much that he ordered 30 copies for members of his staff. We hope this and other such support will lead to many Blue Ocean Strategy successes from the Muslim World.

Imam Ghazali on Leadership Ethics

Al-Ghazali, a renowned Muslim scholar of the 11th century from Persia, identified qualities required in kings, ministers and deputies, whose relevance to modern business management is worth exploring. 
Ethics in leadership and management is a topic every contemporary business person has to think about. It doesn’t matter whether you work at a major corporation or head up a mid-market consulting practice. Ethics in leadership matters.

In this article we look at the perspectives of the great scholar Abu Hamid al-Ghazali who lived 450-505 AH/1058-1111 AD and served under the reputed Nizam al-Mulk.

We highlight some of the advice he gave to rulers and leaders in his own time on issues like good conduct, trustworthiness, and the qualities to look for in a good team.

Like Ibn Khaldun, al-Ghazali’s thought brings forth wisdom that is highly relevant to our current contexts.

Imam Ghazali’s early career

Abu Hamid al-Ghazali (1058-1111 AD)

Imam Abu Hamid al-Ghazali’s formal education began at the early age of 7 with a curriculum including the basic sources (usul) of Islam, law, theology, logic, and Sufism. After studying with the great Imam al-Haramain, al-Juwaini, for five years al-Ghazali joined the court of the Seljuq minister Nizam ul-Mulk where he remained for six years. During that time he actively participated in political and learned discussions until he was appointed as a professor to the famous Nizamiyyah school at Baghdad. He remained there for four years and wrote works on fiqh, or Islamic law, which he also taught, together with logic and theology.

Al-Ghazali’s position at the Nizamiyyah brought him influence and rank in political and intellectual circles. His proximity to these circles led al-Ghazali to be linked to the service of the Seljuq Sultans who ruled over the central Islamic lands of Iraq, Iran and Central Asia under the minimal authority of the Sunni Caliph in Baghdad.

The Nasihat

Al-Ghazali’s work titled “at-Tibr al-Masbuk fi Nasihat al-Muluk” or Ingots of Gold for the Advice of Kings. According to Carole Hillenbrand, the Nasihat, or Advice, is part of a larger genre of political writings which dealt with issues of political authority at the time. The Nasihat was addressed to the Seljuq government and its administration. Al-Ghazali dealt with a variety of subjects in the Nasihat such as the qualities required in kings, the character of ministers and deputies, and intelligence.

Al-Ghazali’s Advice to Kings

On good conduct

Al-Ghazali places the burden of establishing the right model of conduct squarely on the shoulders of the king. In other words, management’s example will either create an exceptional organization or a corrupt one. In the Nasihat he tells us, “If a king is upright… his officials will be upright, but if he is dishonest, negligent, and comfort-seeking… officers implementing his policies will soon become slothful and corrupt.”

On accessibility

Al-Ghazali begins this section by citing a saying known to Arabs: Nothing is more damaging… and more prejudicial and sinister for the king than royal inaccessibility and seclusion. In other words, leaders who are not open and accessible to their subjects put a strangle hold on open communication throughout an organization. Whether a company adopts a flat or tiered corporate structure the line of communication to leadership should be known and continually tested to make sure that leadership is engaged with the organization as a whole and that there are no bottlenecks along the line.

In addition to being important for understanding the strengths and weaknesses of an organization a good leader will also realize that it’s important to keep abreast of any information which would affect his/her leadership/management of the company.

On Trustworthiness and self-denial

As a result of corporate scandals at companies such as Enron, WorldCom, Adelphia, and others corporate greed, misappropriation of funds, and other such vices have unfortunately become too well known. Executives betrayed the trust of their companies’ employees by enriching themselves and contributing to the downfall of their organizations through bogus accounting and diversion of company funds to their own accounts.

Al-Ghazali relates an account from the life of the Caliph Umar bin Abdul Aziz. He says that the Caliph sat up one night to study the daily report of the government under a lamp light. At that time one of his household employees entered the room to discuss some domestic issues. Umar ordered,

“Put out the lamp! and then speak for this oil belongs to the public funds and the people’s property ought not to be used except for their business.”

Contrast this with the way executives at companies like Tyco and Adelphia did with their corporate funds and Umar ibn Abdul Aziz’s words speak for themselves.

On appointing deputies

We all know that a good management team is a fundamental element to a businesses success. Good leaders surround themselves with experts and leaders who can be delegated responsibilities and come back with results. Likewise, al-Ghazali wrote of deputies in the context of ministerial posts at the Sultan’s court. He likened the minister of a ruler to the companions of the Prophet (s). To support his case for securing good ministers he wrote that even the Prophet (s) was commanded to consult the learned and wise among his companions.

“And consult them in affairs. Then when you have taken a decision put your trust in God.” (Qur’an 3:159)

Prophets of old even asked God to appoint a deputy for them as in the case of Moses (see Qur’an 20:29-32).

Drawing lessons from the Nasihat

The wisdom shared by Imam al-Ghazali is useful in a variety of leadership and management applications. But when taking lessons from Imam al-Ghazali’s work it’s important to keep in mind that he wrote the Nasihat for the kings and sultans of his day. Many of these rulers were given the Nasihat (sincere advice) because they had or were transgressing the bounds of sound leadership.

Imam al-Ghazali wrote the Nasihat based on the guidance of the Prophet Muhammad (s) who taught that “the religion is sincere advice”. So al-Ghazali linked his advice to a duty taught to all Muslims by the Prophet (s) himself.

In addition, the fact that al-Ghazali linked his theories of political leadership to theology should be considered. In other words, good rulership and leadership were sacred duties for al-Ghazali – performing them well brought God’s pleasure while doing otherwise brought His ire.

Extending this into a business paradigm requires managers and business professionals to first hold themselves accountable for their conduct. In fact, managers are to hold themselves accountable to themselves and their teams. Whether it’s how one conducts him/herself, how accessible they are, or how they build their teams.

Imam al-Ghazali’s advice is useful for anyone in a leadership position.