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.

Introduction to eBay Auction

eBay_Mobile_Miracle.mov

eBay Group Gifts

Introducing eBayGiftsNearby

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Saturday, June 25, 2011

Blue Ocean Strategy ( Chapter 7 ) Overcome Key Organizational Hurdles – iPad

In this chapter, Professor W. Chan Kim sums up the hurdles for the company from red oceans to blue oceans. He develops the Tipping Point Leadership to overcome those hurdles. Usually, the 4 organizational hurdles to strategy execution are:

1) Cognitive: waking employees up to the need for a strategic shift.

2) Limited resources

3) Motivation: How to lead the employees to move fast and tenaciously to carry out a break from the status quo?

4) Politics: Opposition from powerful vested interests

Professor W. Chan Kim introduces Tipping Point Leadership which allows you how to triumph over those hurdles. This leadership skill can attenuate the organizational risk, moving fast at low cost, providing a break for the winning employees from the status quo.

The first iPhone was unveiled by Apple CEO Steve Jobs on 9^th Jan 2007. The iPhone can function as video camera, camera phone, can send texts and receive visual voicemail, a portable media player, an internet device and games player etc. The MacBook Air is a portable Macintosh notebook computer. The first MacBook Air was a 13.3’ model. It is promoted as the World’s thinnest Notebook. The first introduction of MacBook Air was on 15^th Jan 2008.

These 2 electronic devices are selling successfully in the world. However, Steve Jobs finds out quite a lot of people would like to read eBook in subway. There is a tremendously need of eBook reader which can allow people to read eBook with large screen, ease to carry and energy saver. Amazon released the Kindel First Generation on 19^th Nov 2007. The selling price was US$399 and was sold out in five and a half hours. The device remained out of stock for five months until late April 2008. This news bring the CEO in Apple to invent a device which can be functioned more powerful than iPhone, MacBook Air and Amazon Kindle.

Quite a lot of managers would like to introduce a new idea to change the existing selling method, product or service in the organization. However, the top level of managers won’t have enough knowledge and experience to accept those ideas. Meanwhile, the managers should implement the tipping point leadership to overcome those hurdles. First of all, they should research the data from the disgruntled customers. Sum up all the complaints from them and study the existing problems.

Then write up a report to the organization and bring out a need for a strategic shift and a break from the status quo. The report should include the strategy canvas of transit. This strategy canvas graph can indicate the disproportionate influence with the new strategic plan.

Lacking in resources can be a very big hurdle in the new idea. The resource can be manpower, capital and facilities. Professor W. Chan Kim suggests the managers should find out the hot spots and cold spots in the organization. Hot spots are activities that have low resource input but high potential performance gains. Cold spots are the activities that have high resource input but low potential performance. The management level should relocate the resource and focus on hot spots rather and eliminate the cold spots. For instance, iPod is the device which is cold spot in developing this product. Therefore, Steve Jobs relocates the resources in developing the iPad and iPhone. Another way to cut the cost in executing the new idea, horse trading is very common in use within the Tipping Point Leadership. For example, free store warehouse in an organization can be traded with other vendors for electronic components.

Several ways to motivate the employees in the organization. Professor W Chan Kim introduces the Kingpins and fishbowl management in human resources. Kingpins are the people inside the organization who are natural leaders, who are well respected and persuasive, or who have an ability to unlock or block access to key resources. In Apple, Steve Jobs is the Kingpin who deliver speech to the audience and employees. He influences the smart phone users in the world. Once he is back to his management position from hospital, he leads his creative team, product design team and product development team in Apple in effective way. Successful leaders should carry out transparency, inclusion and fair process in production. They can set clear expectation in performance from everyone. In Apple company, all the employees are placed in particular department. Each department should respond in particular production. Even in Apple store, all the members are having their clear duty role. Atomization is used to make sure everyone in the company are working under the specific department to deliver their capabilities in each section respectively.

Execute the blue oceans strategy is challenging conventional wisdom. Tipping Point Leadership brings out the disproportionate influence on performance to achieve a strategic shift fast at low cost. It can brings out the political hurdle. The managers should find out the angels, devils and consigliere. Once the managers find out the consigliere who can spot all the landmines in the office. Then cooperate with the one who align to your idea and fight against the detractors with irrefutable facts and reason.