Saturday, July 30, 2011

Blue Ocean Strategy ( Chapter 8 ) Build Execution into Strategy - eBay

In the last chapter, we introduce how to overcome the hurdles in the Blue Ocean Strategy in its organization. Usually, those hurdles are in the top level management level. In this chapter, we will discuss the fundamental base of action. This is the attitudes and behavior of its people deep in the organization. The CEO should create a culture of trust and commitment which can motivate people to follow the strategy. In this chapter, I introduce eBay, it is an online auction and shopping web site. Its payment gateway is Paypal. eBay encourages eBay sellers in worldwide to upload their items on its web site. The eBay buyers can choose auction bid or buy it now to purchase the items. eBay set up several rules and regulations in between buyers. The buyers need to follow the rules in eBay and Paypal platform in order to sell their items. 

For instance, the buyer protection is set up to protect the buyers not receiving the items or items are not as described case. The eBay buyers can open dispute via eBay or Paypal to sue the eBay sellers. The buyers can give positive, neutral and negative feedback to the buyers. The number of positive feedback rates, power seller level can be display on the listing. The top rated seller indicates that the eBay buyers receive less than 0.5% in Dashboard Seller Rating category in the past 3 months. The top rated seller can receive 20% discount of final value fee and improve the search of standing in fixed price listing in best match search results. Thus the buyers can select the same items among the locations, price, shipping time, sellers’ rating etc. On the other hand, Paypal is monitored under Veri Sign identity protection. Thus the buyers and the sellers can purchase in a safe and secure condition in every online transaction.
Professor W.Chan Kim indicates that fair process it the managerial expression of procedural justice theory. When fair process is exercised in the strategy making process, people trust that a level playing field exists. This inspires the employees cooperate voluntarily in executing the resulting strategic decisions. He introduces 3 E principles of fair process. They are engagement, explanation and clarity of expectation. Engagement means the top level managers allow refutation to build better collective wisdom. Explanation means the managers explain to the employees how they think about their options. It is a powerful feedback for the employees in learning process. Expectation clarity requires that a strategy is set. Clear list of new rules is shown for the employees. The performance can be judged clearly within those rules. They can understand clear in failure and set up new target goal. 

Using fair process in strategy making is strongly linked to both intellectual and emotional recognition. The eBay sellers gain confidence in the selling platform. They will be treated with emotional recognition. Increase the motivation and causing people to go beyond the call of duty and engage in voluntary cooperation. The sellers will apply their knowledge and expertise, as well as their voluntary effects to cooperate for the organization’s success in executing new strategy. Now eBay introduces a new purchase method, Group Gifts. The buyer can invite friends to chip in order to sum up an amount of money to purchase a large gift to a special friend. The receiver can receive gift card at the same time. All the new strategy in e Commerce is based on fair process. 


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