INSEAD Knowledge interviews Professors W. Chan Kim and Renée Mauborgne.
INSEAD Knowledge: The book Blue Ocean Strategy has caused a big stir around the world. With the book out in 43 languages, a bestseller on five continents, and over 3.5 million copies sold, you are recognised as the masters of strategy. The emergence of Blue Ocean Leadership (BOL) is a surprising evolution. What made you think of leadership from this brand new perspective?
Kim & Mauborgne: The connection between strategy and leadership is obvious as strategies are driven by leaders. But leadership is seldom studied in the field of strategy. It is usually a topic of study in Organisational Behaviour (OB). Studies from the OB perspective normally look at the supply side and focus on who leaders need to be. They examine factors such as values, qualities and personality traits without establishing a direct link between effective leadership and organisational performance, the latter being the concern of strategy studies. On the other hand, if we think about leadership as a service that people in an organisation “buy” or “don’t buy”, the focus of study is moved to the demand side and on what acts and activities leaders need to undertake in order to boost their teams’ motivation and business results. In this sense every leader has customers and noncustomers, the latter being those disengaged employees who don’t ‘buy’ your leadership. The challenge is how to convert noncustomers into customers of leadership. Seen in this light, the concepts and frameworks of blue ocean strategy (BOS) can be adapted to creating leadership that effectively unlocks the ocean of unrealised talent and energy in most organisations. Here strategy and leadership go hand in hand and share the same fundamental logic. Building effective leadership is directly linked to achieving an organisation’s strategic goal.
INSEAD Knowledge: How much energy and talent do you believe organisations are leaving on the table?
Kim & Mauborgne: A lot. Indeed, realities in the workplace today call for a rapid step change in leadership strength. Gallup reports show that widespread employee disengagement is a global phenomenon and that poor leadership is a key cause. In the United States, for example, only 30% of employees are actively committed to doing a good job. In France only 9% are actively engaged and when it comes to China only 6% are actively engaged. In fact, according to Gallup’s macro statistics, only an average of 13% of employees worldwide are actively engaged. That’s a lot of disengaged employees that organisations have on their payroll and are paying for every day. The consequence is profound: when employees are disengaged and non-committed, they are not likely to harness their intelligence and energy to produce the performance results desired by their leaders. There is therefore huge room for improvement for these companies, even for those that are relatively successful. Blue ocean leadership can help organisations tap the huge potential in the leadership area by converting the large number of noncustomers of leaders into customers. And with its focus on changing acts and activities, blue ocean leadership can help them achieve what is hard to achieve with a traditional approach, i.e., 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. That’s what makes blue ocean leadership more important than ever.
INSEAD Knowledge: Have you tested blue ocean leadership in any organisation? Is there any failure case (if yes, what causes led to the failures in your opinion)? Are they mostly from developed countries or emerging markets, or is there no obvious bias?
Kim & Mauborgne: Over the past 10 years we experimented with blue ocean leadership in a number of companies in a variety of industries and in different regions of the world. Like the British Retail Group discussed in our article, these organisations have applied blue ocean leadership. As they were highly committed and closely guided by us and Gavin Fraser, our Blue Ocean Strategy Network expert to ensure the integrity of the approach adopted, results of these ex-ante experimentations have been positive and inspiring. As our approach now becomes known to the public, we expect more and more companies, both in developed countries and emerging markets, to apply blue ocean leadership to their organisations. Naturally, some may stumble along the way, alongside successes in the expanded sample. We will be ready to analyse more cases and answer relevant questions when that time comes. However, we have found that the act of drawing the leadership canvases and thinking in terms of what acts and activities leaders need to eliminate, reduce, raise and create to connect their activities to the market realities of employees, are in their own right very powerful and eye-opening exercises that provide a real wake-up call to most organisations.
INSEAD Knowledge: Blue ocean leadership focuses on the actions of a leader instead of their traits/personality. Does this mean that traits/personality do not matter?
Kim & Mauborgne: Of course having the right values, qualities and behavioural traits matters. However, as part of a human being’s inborn nature these factors are hard to change within a short time frame. On the other hand, activities are something that an individual can change in time frames that make sense in corporate terms, given the right feedback and guidance. Blue ocean leadership, which focuses on what acts and activities leaders need to undertake to boost their teams’ motivation and business results, allows companies to achieve high-impact results rapidly, with less effort and at low cost. It provides a practical and effective solution for companies that are in dire need to improve their leadership practice and achieve better performance results. What blue ocean leadership focuses on and what conventional leadership theories emphasise, therefore, are complementary rather than mutually exclusive to each other. Personality and traits alone do not make a competent leader. When a leader’s energy is spent on wrong acts and activities, there is no competent leadership to talk about. Blue ocean leadership tackles exactly this area where positive changes are most possible given time and resource constraints.
INSEAD Knowledge: A key input in the blue ocean leadership process is the customers of leaders, that is, both those above and below the leader. How do organisations make sure that employees provide sound judgment when they are asked to have a say in leadership?
Kim & Mauborgne: First let us clarify that the four-step process of blue ocean leadership is not one of bottom-up democracy. Instead, it is a carefully orchestrated and closely guided analytical process. Typically, the team in charge of conducting interviews at the three management levels of senior, middle and frontline is composed of 12-15 senior managers who are chosen across functions and recognised as good leaders in the company. Divided into sub-teams, these senior managers interview relevant leadership customers –both bosses and subordinates at respective levels. It is these sub-teams of senior managers that create the as-is leadership profiles by pooling their findings and determining based on frequency of citation, the dominant leadership acts and activities at each level. Hence it is only those employee comments that are consistently voiced by employees at a given level that get recognised as dominant leadership acts and activities. Again it is these sub-teams of senior managers that conduct further interviews and process the findings to draft the “to-be” canvases for each leadership level. And at the “leadership fair”, it is again these senior managers who present the as-is and to-be canvases based on their findings and analyses, which are to be voted upon by attendees composed of board members and senior, middle and frontline managers. The final decision on which to-be leadership profiles to move forward on is made by corporate top management based on the information obtained at the fair.
Evidently the process is inclusive of opinions and insights of employees at all different levels. However, under blue ocean leadership employees are not asked to identify the values, qualities or traits of leaders, which indeed demands a high level of sensitivity and sound judgment for employees to accurately assess. Instead employees are asked to identify the specific acts and activities their direct leaders do that get in the way of their ability to deliver performance results as well as those that would be beneficial that leaders currently do not do. This focus on acts and activities that employees directly observe combined with the senior managers’ pooling and focus on those that are consistently cited leads to sound judgments that typically ring true in organisations.