MBA 2004

Red Ocean and Blue Ocean Strategy - W.Chan Kim and Renee Mauborgne
derivatives of differentiation

Red Ocean
- compete in existing market space
- exploit existing demand
- make the value/cost trade-off
- align the whole system of a company's activities with its strategic choice of differentiation or low cost

Blue Ocean
- create uncontested market space => be market leader, innovator
- create and capture new market => demand generation
- break the value/cost trade-off => adopt unconventional tactics
- align the whole system of a company's activities in pursuit of differentiation and low cost

Why BPR failed?

Summary from Hammer & Champy (1993, Chap. 14):

Trying to fix a process instead of changing it
Not focusing on business processes
Ignoring everything except process redesign [e.g. reorganisation, reward system, labour relationships, redefinition of responsibility and authority]
Neglecting people's values and beliefs [need to reward behaviour that exhibits new values and behaviour]
Be willing to settle for minor results
Quitting too early
Placing prior constraints on the definition of the problem and the scope for re-engineering effort.
Allowing existing corporate cultures and management attitudes to prevent Reengineering from getting started. [e.g. consensus, short termism, bias against conflict]
Trying to make Reengineering happen from the bottom up
Assigning someone who doesn't understand Reengineering to lead the effort.
Skimping on the resources to Reengineer
Burying Reengineering in the middle of the corporate agenda.
Dissipating energy across a great many Reengineering projects.
Attempting to Reengineer when the CEO is 2 years from retirement
Failing to distinguish Reengineering from other business improvement programs [e.g. quality improvement, strategic alignment, right-sizing, customer-supplier partnerships, innovation, empowerment, etc.]
Concentrating exclusively on design [forgetting implementation]
Trying to make Reengineering happen without making anyone unhappy.
Pulling back when people resist making Reengineering changes
Dragging the effort out [1 year is long enough]