“I THINK THE BOX WITH the wide pink stripe looks best. It really pops. And the bright color gives it a nice edge.”
“I couldn’t agree more. It will definitely catch women’s eyes.”
The trouble is the packaging the marketing team decided on wasn’t for a women’s product. It was for an iron that didn’t require ironing, and it was designed principally for men and young adults of both sexes. You simply hang your wrinkled shirt or pants on a clothes hanger or the back of chair, run the small handheld device up and down the garment, and voilà, with the help of a strong burst of steam, the wrinkles fall away—in less than half the time ironing takes. No skill necessary. No ironing board, either.
The trouble had started eight months earlier, when the head of domestic appliances, whom we’ll call “Brad,” spoke with his counterpart in marketing (let’s call him “Joe”) about including one of his staff on the team Brad was assembling for a blue ocean initiative. Quickly outlining how busy marketing was with “major” new product launches and campaigns, Joe’s attitude was clear: “Just create the new product and don’t worry. We’ll take it from there. We know the market. That’s our forte.”
Truth be told, Brad wasn’t exactly keen on bringing someone from marketing onboard the team, either. Within the division, the commonly held belief was that “When it comes to the consumer and the market, marketing never listens to anyone. They don’t think anyone else has anything to add or knows better than they do.”
To motivate his team, Brad decided not to push it and to forgo getting marketing involved. It just seemed easier and made everyone—both his division and the marketing team—happier. So the business division rolled up its sleeves and set about applying the blue ocean shift process to the humble iron.
The market in Europe for irons couldn’t have been bloodier. The process revealed a range of similar irons at every price point, with the number of special features climbing with each jump in price. Convinced there was most likely no new path to go down, the team was surprised as, step-by-step, that belief was overturned when new insights began to emerge. Like how, despite all the cool features added to irons over the years, no iron addressed the greatest issue of all: People hated ironing. They didn’t want ironing made better. They wanted no ironing at all.
What’s more, to iron you had to have an ironing board—and a good one, for the iron to work well. This was an unwelcome added cost. Ironing boards were also big, clumsy, hard to store, and a hassle to set up and put away. Those issues had never been addressed, either, since ironing boards were in another industry and, technically, not the iron makers’ responsibility.
The team saw a huge opportunity in these unaddressed problems, as well as a growing ocean of noncustomers: men, who, as they married later in life and lived on their own longer, were doing more and more of their own household chores. Men didn’t like going out looking sloppy, but they hated the tedious task of ironing even more. And most couldn’t afford to have their clothes professionally pressed. Young adults of both sexes were also a largely untapped ocean of noncustomers. Yet the industry generally acted as if it were still the 1950s, and that when it came to domestic chores like ironing, women should be the focus of their efforts. And women, it was also believed, wanted to do a meticulous job.
The ironless iron would change all that.
As agreed, the blue ocean team shared the prototype and the results of the process and rapid market tests with marketing. And, as agreed, the marketing team took the baton. But not having been part of the process, marketing was full of doubts.
“It can’t create a crease. Creases are important,” said some of the marketers.
“They don’t get it. Women buy irons, not men, and rarely young adults,” added others.
So the marketers decided to do damage control. They knew you had to target customers, not noncustomers. That was just plain common sense. So they put the new “device” in a box with a striking pink stripe to attract existing customers, and they pitched it as a supplemental iron made for those times when creases weren’t necessary. Packaged and sold that way, women saw the ironless iron as just one more add-on, another thing to store in their already crowded cupboards. They never thought it could replace ironing. It was never sold as if it could. And men and young adults—the ocean of noncustomers who were the prime targets—never gave the pink-striped box a second glance.
What the marketing team did went against what the blue ocean team found mattered. But what the blue ocean team found mattered went against the accepted wisdom the marketing team had mastered. The lesson: If people are not part of the process and there to discover firsthand the power of the ideas that open up new value-cost frontiers, it’s too easy for them to dismiss those ideas as irrelevant, deny their validity, and push to bend them right back to the industry’s so-called “best practices,” even when those best practices may be outdated or just plain awful.
That’s why putting together the right team to carry out a blue ocean initiative is incredibly important. When you are shifting—changing what you are doing and the factors on which your industry has long competed—all the key players who will make that shift need to be involved.
We’re going to talk here about how to construct the right team in an established organization or division (be it for-profit, nonprofit, or public) with typical line and staff positions, where executing a new strategy will likely depend on the cooperation of people across various functions, and the usual politics and naysayers will need to be overcome. If you own a small, family-run business or a single store on Main Street, or you’re an entrepreneur just starting out, you may well have only a handful of professionals at most in your organization. But while you may not have the depth of talent to draw on that a larger organization can bring to bear, don’t worry. Founders and owners almost always have much more control in aligning people around their blue ocean vision. By understanding the dynamics of what makes a team successful, you’ll be in the best position to know how to leverage your employees or the people you have access to as you set out on your blue ocean shift journey.
Who, then, should be on this team? As our cautionary example about the iron suggests, you want representatives from all the functions and organizational levels that will play a key role in bringing a new offering to market. In a typical corporate setting, that would usually include someone from HR, IT, marketing, finance, manufacturing, R&D, and sales, as well as someone on the front lines, like a call center staff member or someone who works on the store floor. While organizations routinely separate functions and hierarchical levels to achieve efficiencies, these divides create silos, often break trust, and motivate people to suboptimize when what you need is all the parts working together so that ideas get built for execution from the start and everyone owns them.
All in all, you should look to create a team with 10 to 15 people. The lower limit is to make sure all the major functions and areas are represented, have a chance to contribute, and discover firsthand the need for change. The upper limit is to keep the process manageable and the team flexible and fast. More than that tends to become unwieldy and frustrating for those involved, unnecessarily sapping the team’s energy and breaking down the integrity of the process.
When setting up the team, we’ve found that executives can be hesitant to include people from a particular function who might be perceived as more trouble than they’re worth, or who could slow the process down as they struggle to get into the blue ocean mindset. Like Brad, they may shy away from marketers or want to leave out HR people, whom they see as benefits administrators with little strategic vision. However, we caution against this. Have you also heard the refrain “Finance trumps strategy”? We certainly have. Over the years, many people have told us how their efforts to innovate were thwarted by finance staffers inclined to support what they knew and could measure, not what could be. Not surprisingly, they worry that the same result will befall their blue ocean shift initiative.
We’ve found otherwise, however, in our research over the last 10 years.
When finance people are included on the team, and go through the process, just like the other members, they develop firsthand insight into the need for a strategic shift and the power of the blue ocean strategic move they’ve helped create. Finance staff members become bean counters when they are asked to sign off on strategic imperatives they don’t deeply understand. Like all of us, they simply don’t feel comfortable putting money behind ideas that are foreign to them. To turn finance into your ally, put a finance representative on the team from the start. The team will gain the power and robustness of this functional discipline, and finance will become your true strategic partner in the investment decision-making process. All sides learn and grow from the process.
While you want a cross section of people on the team, be sure that everyone selected is directly involved in the division or product/service offering you’re aiming to shift from red to blue and therefore has skin in the game. This cross section is critical, because it ensures that there’s someone from every function who can personally and authentically affirm the credibility of the shift the team is developing. These people will be the conduits to their functions and to the hierarchy at each step of the process, relaying firsthand updates on the team’s findings. This is what makes those findings believable and testifies to the robustness of the process.
Contrast the experience of the iron manufacturer with this one from a corporate foreign exchange provider. Before starting the blue ocean shift process, the company was convinced that account executives were one of their key competitive advantages vis-à-vis large banks. Not surprisingly, the account executives agreed, as their swagger and status in the company showed. But as the team went through the process, one truly unexpected finding that emerged was that buyers disdained the account executives’ role and hated wasting their time talking with them. They saw the account executives as the people who focused on coming up with creative excuses and smoothing over the problems and frustrations clients had with the company’s services. What good was attention from an account executive when wire transfers were frequently executed late, or customers failed to get confirmation that transactions had been executed, or they received scant market knowledge to properly hedge their currency payments. Had the account executives not been on the team and heard this feedback for themselves, rest assured they would have vehemently insisted that the process had not been done correctly, that the team members didn’t know what they are talking about, and that—to the contrary—account execs were what set the company apart. But because they were included and heard customers say the same thing time and time again, they couldn’t deny it.
More telling, this finding led account executives to a realization about themselves. Yes, they had long been perceived as the company’s superstars. But now they could see that all too often they were heroes not because they added real value for clients but because they stopped clients from leaving by being smart in excusing, apologizing, and calming them down. And so, the team made the decision—with the support of the account executives themselves—to phase out the position. Account executives became sales reps for large, high-value accounts, effectively tripling the company’s sales force and increasing the company’s revenue generation capability significantly with no increase in cost.
In organizations with geographically scattered operations, a common refrain is “Our area is different.” In one company that had a poor track record of rolling out virtually any initiative globally, subsidiary managers summed up their take on the head office’s view of the world as “Nuts in the field, brains in the center.” Not surprisingly the “nuts” took great pride in quietly derailing and slowing down head office initiatives. Having someone from each key geographic region included on the team goes a long way toward remedying this situation. People feel their area is valued and that they are not viewed as brainless doers to command.
What typically happens first on such international teams is that the regional members grouse about how their area is different, and how no new “global” strategy can possibly work there. To which the response we recommend is, “If that’s true, the process will reveal it. And if it does, we’ll say sayonara to the aim of creating and rolling out a blue ocean shift globally.” The clarity of that single statement goes a long way toward creating openness and engagement in the process. Then, as the teams get started, what they typically discover is that, if the organization could shoot the lights out on a few key common concerns voiced by customers and targeted noncustomers around the world, people would gladly forgo the majority of their idiosyncratic regional wish lists. This reinforces real buy-in and excitement in the process. While more than one team is needed for multinationals with geographically diversified operations, for the purpose of clarity and simplicity, we will focus on the one-team situation.
So far we’ve been talking about where your team members should come from. In fact, we’ve equated the individuals with their functions, referring to “marketing” and “finance” as if the people were their jobs. Now we’ll shift gears and talk about the individuals themselves.
Human dynamics is something many leaders gloss over. And, true, setting the right human dynamics does take time and thought up front. But the rewards are priceless. That’s why, when it comes to whom to select for the team, job title is not the most important factor. Character is. What you are looking for are people who are well respected and already have credibility with others in the organization. That may or may not overlap with their status in the organization. You want to select people who are good listeners, are known to be thoughtful, and are willing to raise questions when others don’t. People who not only can dream big but also are noted for their commitment to getting things done. These are the people others will naturally tend to admire and listen to. Such people elevate the credibility of the team within the organization and the respect team members have for one another.
At the same time, you will also want to put one (or potentially two) known naysayers on the team. Though to ensure that they can’t dominate the team’s dynamics or undermine its positive energy, they must be the clear minority. Why have them there at all, then? For one thing, putting a devil’s advocate on the team boosts the credibility of the process and the team’s findings. It signals your confidence that the process can withstand their doubts and misgivings. It shows that you intend to scrupulously examine any idea that challenges the status quo to ensure that potential downsides are fully considered and not simply glossed over, only to come back and bite you later. In addition, when skeptics go through the process and see, feel, and experience for themselves the ways your current strategy fails to excite the market, they tend to stop complaining. And when they are convinced, the momentum for change is reinforced further.
Back in the day, when Bernie Marcus was still running Home Depot with a viselike grip, the leader of one of its second-tier suppliers of electric lighting felt his company needed to make a blue ocean shift to get a bigger slice of Home Depot’s and other major retailers’ business. But neither argument nor numbers could convince the naysayers in his company that their products weren’t good enough. They claimed it was the sales force that needed upgrading. Full stop.
Then the leader took a different tack. He put the two key naysayers on the initiative team to meet the market. The team started with customer #1, Bernie Marcus himself. And Bernie let it rip: The product was a me-too. It was too expensive. It was not reliable. It was a waste of valuable shelf space. After that naked feedback from Bernie, the naysayers were visibly ashen. No more urging for a new strategy was needed.
Be prepared for people to be, on the one hand, glad they are chosen for the team and, on the other, apprehensive about the extra work that will require. On average, team members will spend 10 percent of their weekly work time on the initiative, with peak points, when they will need to set aside around 20–25 percent, scattered over the course of the project. This work almost always comes on top of their day jobs. But as they say, “No pain, no gain.” Fortunately, we can also say the gain will outweigh the pain.
In the process, team members step up to leadership, gain experience working with people from different functions and hierarchical levels, learn firsthand and up close about the market, and acquire a big picture of the organization and the environment (often for the first time)—all highly valuable exercises for every person involved. Working on a blue ocean initiative team changes the scope of the members’ day jobs, shifting their focus away from the routine to more strategic concerns.
People learn to ask future-focused questions about how to create innovative value, what adds cost but no value (like account executives at the corporate foreign exchange provider), what could add a little cost but deliver a leap in value, and who the industry’s noncustomers are and how to convert them to customers. This transforms everyone on the team, making them more valuable to the organization and to themselves. You will want to discuss these benefits with team members up front. People appreciate knowing that the extra work they’ll take on will be more than repaid by the new skills, team connections, and ideas about future opportunities they will gain by participating.
Job title isn’t everything, but the head of the team, whether it is you or someone you appoint, does need to outrank the other members. That simply makes it easier for them to accept and follow the leader. The disproportionate influence of a strong kingpin, both on the team dynamics and across the company, will help mobilize large swaths of the organization to support the initiative.
The team leader is expected to act as the team’s first contact point, maintaining direction and excitement, keeping everyone informed, and helping the team navigate through the organization. The leader also needs to anticipate problems that could hinder the team’s ability to complete its tasks and address these issues proactively. Organizations are often tempted to delegate a lot of this work to assistants. However, we strongly advise against this for a number of reasons. When a team leader directly undertakes these tasks, it signals that the initiative is important and not to be taken lightly. It shows respect for team members. And it keeps the fire burning, closing loopholes for procrastination and halfhearted efforts. It’s far too easy for people to play games with assistants, telling them, “We’ll get back to you soon,” only to respond three weeks later, compromising the process and draining energy from the initiative.
Is your organization dysfunctional? Ridiculously bureaucratic? Or highly political so that getting things done feels akin to walking through a minefield? Large, older organizations may feel this way. So can government entities. In these situations, in addition to putting the team together and selecting the right team leader, you also want to think about enlisting a consigliere. This is particularly important for organizations that have operated in the same way for a long time or have a strong institutional culture.
A blue ocean shift initiative can overturn many established industry and organizational conventions. This may have ramifications for how work is currently done, which, in turn, may inspire anxiety in the hearts of the people doing that work now. Where human emotions and behavior are involved, an ounce of prevention is truly worth its weight in gold. So you need to be mindful throughout the process of any potential resistance that may be brewing or poised to arise when it comes time for implementation.
A consigliere can help you anticipate these issues before they become intractable. A consigliere is someone in the organization with an ear to the ground, a master of organizational politics, who knows who the big players and blockers are, and who’s hungriest for change and likely to be one of your strongest supporters. As a respected insider, he or she can advise the team and provide air cover from potential detractors, as well as garner support from individuals who might otherwise want to thwart the initiative actively or through passive aggression. The best candidate is someone who is highly influential, can be a quiet advocate, and also has the will to get involved, if necessary, to remove obstacles the team might face.
With the scope of your initiative set and the right team in place, you’re ready to move on to the second step of the process. Here we’ll discuss how to get a clear understanding of the current state of play in the industry, align everyone on the team, and inspire a natural wake-up call among the team members and the wider organization about the need to make a blue ocean shift.