The first two columns in this series on Managing Innovation & Growth addressed how to develop the beginnings of a plan based on:
The Current or Present State of your company and consensus with your team around
- Best and worst opportunities for growth based on the past
- Misalignments and how to create new alignments
- People, particularly who is on the bus right now and who isn’t
- Core Values
And then on the Future State or Envisioned Future for your company based on achieving profitable growth that has the following elements:
- A long-term Vision for the company, 10 or more years in the future
- A Vivid Description about what this Vision mean in concrete and easy to understand terms
- A Big Goal, that is a major stretch but ultimately achievable with hard work, sometimes called a BHAG (Big Hairy Audacious Goal)
The Current State and Future State planning model works well, particularly for Innovation and Growth planning. This process works because it forces you to be clear about the Current or Present State of your business from the beginning and then allows you and your team to think expansively about the future 10 years from now. Think of the Current and Future States as the bookends on your planning process. By concentrating on these bookends, it’s much easier to identify the gaps, priorities and actions that need to be addressed to achieve your business goals in the future.
Gaps, Priorities and Actions for Innovation and Growth
Now that you and your team have the bookends in place to confront the facts of the Current State for your company and a vision of an improved Future State, the next step is to identify the Gaps, Strategies, Priorities and Actions needed to progressively move forward. This is really the execution piece of your plan. At this point all you have in terms of a plan is a Vision for what and where you’d like to be 10 years from now and the dawning realization of the gaps that need to be addressed from the perspective of your Current situation. Jim Collins (Good to Great) calls this Confronting the Brutal Facts.
However, since we’re talking specifically about an Innovation and Profitable Growth strategy let’s think about how to find new opportunities to innovate and grow. One of the best models for thinking about growth and innovation is called Blue Ocean Strategy, after the best selling management book of the same name by W. Chan Kim and Renee Mauborgne, from INSEED in Paris, France.
Finding Blue Oceans
The comparison in this case is Red Oceans vs. Blue Oceans, the imperatives in terms of business strategy are starkly different for these two. Think of competing in a Red Ocean as fighting all the rest of sharks for the fish that are available, sometimes in dwindling supply (like a declining market). Does this sound familiar?
Red Oceans have the following strategies:
- Compete in existing market spaces
- Beat the competition
- Exploit existing demand
- Make the traditional tradeoff between Value & Cost (Value costs more)
- Align the entire system of the company’s activities with its strategic choice of Differentiation or Low Cost (Value/Cost Tradeoff)
In contrast, Blue Oceans are all about getting away from the feeding frenzy that creates bloody Red Oceans and finding new opportunities largely free from competitors, at least for a window in time. Blue Oceans have the following strategies:
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the Value/Cost Tradeoff
- Align the whole system of a company’s activities in pursuit of differentiation and low cost
Let’s explore what a Blue Ocean Strategy is really based on a bit more. Consider the following key elements of Blue Oceans:
- Strategies are typically not about technology but about delivering new value as perceived by buyers and customers. This is called Value Pioneering and focuses on finding new and innovative ways of solving problems and delivering value. Technologies are usually already in place, Value Pioneering just finds new ways to use the technology creatively.
- Blue Oceans can be created by new entrants to a market or by companies that are already incumbents in these markets.
- In many cases the industry or markets in question are unattractive currently, sometimes these are even nonexistent
- Strategies always disrupt the market and competitors
- Blue Oceans are not typically about incremental improvement but a leap-frog jump in terms of value and cost
- Blue Oceans build brands
- They are not about using the competition as a benchmark but about making the competition irrelevant by focusing on value
- Reject conventional strategic thinking that there is always a tradeoff between value and costs
- Blue Ocean strategies focus on Differentiation & Low Cost simultaneously.
Developing Strategies & Tactics
Let’s reflect on the planning process you and your team are engaged in. At this point you have a decent understanding of where you are today and where you’d like to be long-term, but there are no real strategies and tactics in place. In terms of managing an Innovation and Growth Plan, you will need to drill down and find the specific strategies, priorities, initiatives, actions and tactics to manage the process.