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Leadership & Organisations

From Blue Ocean Strategy to Blue Ocean Leadership

W. Chan Kim and Renée Mauborgne, INSEAD Professors of Strategy and Co-Directors of the INSEAD Blue Ocean Strategy Institute |

The same way that blue ocean strategy can create uncontested market space, blue ocean leadership can unleash oceans of untapped talent and employee potential in organisations.

Reflect for a moment on how effective leadership is in your organisation. Is there a gulf between the potential and the realised talent and energy of your people at work? If yes, how big do you imagine the gulf is -- 10 percent, 20 percent, 40 percent or more of talent and energy that’s left unrealised? How much better would your organisation likely perform in terms of productivity, creativity, customer service, and employee happiness if you could close the gap? The numbers are larger than most executives surmise.

Take Gallup’s 2013 State of the Global Workplace report. It found that only 30 percent of American employees, 15 percent of German employees, 9 percent of French employees, 6 percent of Chinese employees, 11 percent of Korean employees, and 9 percent of India’s employees were engaged at work actively sharing their best ideas and giving their all for high performance. The remaining far larger percent of employees were either disengaged, that is merely doing what it takes to get by, or actively disengaged, acting out their discontent in counterproductive ways. Exhibit 1 shows just how large The Ocean of Untapped Talent and Energy is across the globe. Gallup estimates that in the United States alone, the cost of actively disengaged employees is around half a trillion dollars per year in lost productivity.

Of course, no leader intentionally leaves untapped talent and energy on the table. And employees are also partly responsible for their disengagement. We all know of people who are passionate and give their all pretty much irrespective of the circumstances they confront. That said, if the role of leaders is to drive high performance, then understanding how to turn this situation around is key.

We believe that this ocean of unrealised talent and energy can be effectively released through an approach to leadership that we have come to call ‘blue ocean leadership.’ Unlike most research in the field of leadership that has largely drawn on psychology and cognitive science, blue ocean leadership looks to the field of strategy to inform the practice of leadership. Specifically, it draws on our over twenty-five year research journey on blue ocean strategy and applies the concept and analytic frameworks to the challenge of leadership only not to unlock new market space and an ocean of new demand but to unlock new leadership space and the ocean of unrealised talent and energy that is hidden in most organisations. The metaphor of a blue ocean here reflects the wider, deeper, and untapped potential of employees that organisations can set free with the right leadership.

The Link Between Blue Ocean Strategy and Blue Ocean Leadership

It goes without saying that strategy and leadership are inextricably linked. No organisation can formulate strategy nor execute it without leadership and people. And yet despite the central importance of leadership and people to strategy as well as to organisations’ health and high performance, over the course of our twenty-five year research journey on blue ocean strategy, we observed time and again organisations struggling in this regard. We witnessed organisations expending large sums on leadership development programmes that scarcely moved the needle on leadership strength. And consistent with the Gallup study, we also saw disengaged employees up and down the ranks; employees who showed up for work and did what it takes to get by, but who were neither energised nor went the extra mile to apply their ingenuity and creativity. And yet ingenuity, creativity, and energy are among the most essential ingredients to organisations’ health, wellbeing, and high performance today and in the future. 

As our research on blue ocean strategy deepened and executives came to us to apply the idea in practice, executives often voiced these concerns to us. Many noted that while their organisations were stuck in red oceans and needed to break out, without a step change in leadership strength their organisations would not be able to execute a blue ocean strategic move even if they created it. The issue was they couldn’t tap into the energy and creativity of their employees that would be needed to move fast and adapt to a strategic shift. At the same time, leaders had a shortage of time to up their game.

As we started to think about their challenge, we started to see many analogies between blue ocean strategy and the leadership challenge that organisations confront. 

•       Isn’t leadership, after all, a service that people in an organisation either ‘buy’ or ‘don’t buy’?

•       Doesn’t every leader in that sense have customers – those above and those below them?

•       As in blue ocean strategy, which pursues high value at low cost to create and capture new customers and markets, isn’t the challenge of leadership to create high impact at low cost to unlock employees’ talent and energy?

•       And if employees were disengaged, weren’t they in effect non-customers of leaders? These non-customers of leaders represent an ocean of untapped talent and energy that companies can unlock much as blue ocean strategy allows companies to unlock an ocean of new demand in the market universe.  

Once we began thinking through this challenge, we started to see with increasing clarity how the concept and tools of blue ocean strategy could be laterally applied to the challenge of leadership.  Over the last ten years we and our Blue Ocean Strategy Network expert Gavin Fraser have interviewed hundreds of people in organisations to understand where leadership was falling short and how it could be transformed to not only convert non-customers of leadership into customers, but achieve this while conserving leaders’ most precious resource, time.  In this sense, blue ocean leadership is the product of the constructive interaction between the theory of blue ocean strategy and the leadership reality that organisations confront. With this understanding of the link between blue ocean strategy and blue ocean leadership, we define blue ocean leadership as creating a leap in leadership strength fast and at low cost to release organisations’ ocean of unrealised talent and energy. By low cost here we refer to time, as time is the most expensive and limited resource of leaders.

In this five-part series, we will first explore how blue ocean leadership differs from conventional leadership approaches. We will then explore each of the four steps to put blue ocean leadership into practice and the leap in performance and motivation that comes with it. Our extensive experiments in the field show that this approach to leadership allows organisations to achieve high-impact results fast and at low cost. 

Download a PDF of this article and view the other articles in this series here.

W. Chan Kim and Renée Mauborgne are Professors of Strategy at INSEAD and Co-Directors of the INSEAD Blue Ocean Strategy Institute. They are the authors of Blue Ocean Strategy, which has sold over 3.5 million copies, is being published in a record-breaking 43 languages, and is a bestseller across five continents. They are ranked No. 2 in The Thinkers50 listing of the World’s Top Management Gurus and are the recipients of numerous academic and management awards including the Nobels Colloquia Prize for Leadership on Business and Economic Thinking, the Carl S. Sloane Award by the Association of Management Consulting Firms, the Leadership Hall of Fame by Fast Company, and the Eldridge Haynes Prize by the Academy of International Business among others. Kim is an advisor to several national governments and Mauborgne is a member of President Barack Obama’s Board of Advisors on education. 

INSEAD is the home of the Blue Ocean Strategy programme, which is designed to help executives successfully implement the Blue Ocean Strategy in their organisations.

You can follow blue ocean strategy and leadership on Twitter and Facebook and visit the website here.

This article is an outgrowth of Kim and Mauborgne’s study on Blue Ocean Leadership originally published in Harvard Business Review, May 2014.

Comments
Erika Martinez,

Just like blue ocean strategy turned conventional perspective on corporate strategy and creativity on its head, blue ocean leadership is doing the same in the field of leadership. While management scientists were still wondering whether creativity was a talent or a skill, blue ocean strategy showed how easily creativity could be learned and systematically applied in practice to achieve profitable growth. And while corporate managers heavily focused on striving to beat the competition to survive and grow in the market, blue ocean strategy showed how competition could be made irrelevant by creating a new market space. Similarly, while current approaches to leadership all focus on developing qualities, skills and attitude to inspire and influence your team for driving performance, blue ocean leadership shows how a strategic lens could be applied to tap into and release unrealized talent in an organization for driving results. Amazing.

Meggie,

Based on my experience in the financial services sector I can totally agree that poor leadership is the cause of widespread employee disengagement. Here the authors provide a very interesting framework to tackle this issue, which I think could prove to be very effective. The insight that leadership is a service that people ‘buy’ or ‘don’t buy’ is brilliant. What a refreshing idea.

Jillian Lee,

I really enjoyed reading this blog post. Leadership is not only applicable to top management but should be visible at all levels of an organization. The framework of Blue Ocean Leadership will definitely help companies to improve their employee engagement and as a consequence, their bottom-line. Will definitely check out the next blog posts.

Jane B,

Unlocking unrealized talent and energy through Blue Ocean Leadership – wow. An innovative idea that may actually work to elevate employee engagement. Motivating your staff is a significant challenge that requires a change in how we perceive leadership. I think Blue Ocean Leadership might just be the solution we were looking for.

Jerome Peters,

Indeed a refreshing idea in the leadership field. We should inculcate the ideas behind blue ocean leadership among our team members to harness results that can be incredibly compelling to realize our projects in the long run. I can't wait to read other updates on this blog.

Didier Baudois,

The idea is interesting but I don't understand why the prof. Kim and Mauborgne seem to oppose social and cognitive sciences to their own work.
My opinion, as I express here in my blog http://www.slideshare.net/DidierBaudois/documents , posts 21 to 24 available both in French and English, is that the best opportunities emerge from synergies between the strategic approach of the Blue Ocean Model and the social and cognitive field.
Because if you ignore how your employees will react to your leadership, your change is doomed to fail.
This why I am a great fan of both the Blue Ocean Model and the social and cognitive sciences.

VENUGOPAL TIMMARAJU,

It is well said in the article and ignited further thoughts on "whether leadership is a service to buy or not to buy ?".
earlier thoughts are leaders are born, but many have proved leaders are made , and they grew where all others have grown and lived, but still they ( leaders ) emerge as acceptable lead personalities.
The dearth of leaders and dearth of time for leaders is again a topic for research. can we think of a situation, If these emerged leaders allow others to emerge as leaders and also create an atmosphere that the new aspirants grow organically.
In reality we get very few like this. They do allow and create an atmosphere , but with boundaries to grow with their believed values without assessing whether the same values will be applicable for every future situation ?
let us open this discussion and see how the consensus emerge ?

jang,

Blue Ocean Leaders must have two important qualities to motivate people and obtain their unrealised/hidden talent and energy to achieve Blue Ocean Goals:-
1. Decision Making-Quickly and correctly.
2. Delegation -Trusting Team-mates after due training

Richy Dato',

Worldwide "Not engaged" must be 63%, but not 3%- i guess

John Zinkin,

The ideas are indeed very interesting, as is the concept of selling leadership as a service to those above and below. What seems to me to be entirely missing, however, is the impact of ethics on leadership. I believe effective leadership is a morally neutral activity. Followers all over the world have to live with the "dark side" of the force as well as the "bright side". That is why I am not sure that the ways of achieving engagement as envisaged in this set of blogs is the key criterion. What about fear and force? The ancients and Macchiavelli thought long and hard about the paradox of "great bad" leadership, which has been assumed away since the work of James McGregor Burns and Warren Bennis. The Mafia, al Qaeda and ISIS, to name just three organisations achieve highly engaged followers and they only really follow the idea of distributed leadership. what the article seems to me to have left out entirely is the psychopathology of followers and how "great bad" leaders tap into the neuroses and fears of followers, who are often willing collaborators in being exploited.

Professors Kim and Mauborgne, this is not to say that your idea is bad. It isn't, but to suggest it could be made even better by adding in the ethical dimension.

Sunil Tripathi,

Nice post. Thank you for sharing.

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