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Guest Bloggers

Michael Olenick: Blue Ocean Strategy® and Honesty

Michael Olenick: Blue Ocean Strategy® and Honesty

Michael Olenick: Blue Ocean Strategy® and Honesty

Tired of competing against all those "others" for the same customers in the same way? Ready to carve out uncluttered market space and make the competition irrelevant? That's the premise of Blue Ocean Strategy, the phenomenally successful methodology that helps you see, feel and think in new ways about your business. Michael Olenick, the newest addition to our SAMC team of experts, is someone who really "gets" Blue Ocean Strategy, and we'll regularly be sharing his wisdom and his viewpoints as a guest blogger. There's so much to learn here and also so much you can hopefully apply to your business and your life. Enjoy.

From Guest Blogger Michael Olenick

Blue Ocean Strategy doesn't directly address the issue of honesty but it comes close enough that a blog post seems appropriate.

In the world of strategy consulting, new business and new product development, "iffy" people and practices run rampant. We’ve all seen some amount of egregious behavior. Often, the direct victims of the bad behavior are embarrassed or painfully affected enough not to do anything, or to settle their dispute quietly.

One example: A friend asked me to help on a project where a business broker sold a Fortune 500 company a useless piece of software for $16 million. Not only was the software poorly constructed, but one vital component directly relied on and infringed upon the license of another company who wouldn't budge with a cross-license, rendering the purchase entirely useless. This was a literal Potemkin Village (false façade) that did not and could not work as sold.

The managers who’d completed the purchase wanted to know how to “manage the problem.” My friend asked me to help.

Instead of honesty, a cover-up

My solution? Come clean, admit to corporate they’d been had, and cooperate with company attorneys as they tried to clean up the mess. I’ll grant that my approach lacked originality but it aligned correctly on the ethics, law and strategic foundation for building strong businesses. Fraud—whether on a micro scale of claiming the work of another or bloating a résumé, or on a macro scale like the example above—will never lead to a blue ocean.

In the end, the managers rejected my advice. I wished them well, leaving the project but staying in touch.

Their eventual solution? Another small startup had a working version of the software they had been seeking, and asked $1 million for it. A quick background check showed that the startup was essentially a struggling one-person company. There was nothing slick about the software or the sales presentation, but it did fulfill the objectives of the software which the Fortune 500 company had been swindled on. Rather than make a fair offer, which might have aroused suspicion, they offered $50,000 and a job for the developer. The deal was accepted, with the $50,000 marked as a defensive IP acquisition.

With the help of graphic artists, the less expensive software went on to do exactly what the company wanted. They then messaged senior management that the $16 million acquisition was a success, never mentioning that the software they had purchased was thrown away. A director or two were quietly shown the door but most people were untouched and the funds were never recovered.

This kind of story is incredibly common

True to their nature, charlatans sell something useless, misrepresent sales, cloud IP, fail to disclose conflicts of interest, and/or misrepresent their qualifications or experience. Even after being exposed, they don't admit fault. Par for the course.

This brings me to a study I came across about a radical new business process that eliminates two-thirds of the cost and 80% of the time spent on malpractice claims. It’s a Blue Ocean approach that lowers costs for physicians, hospitals and insurance companies, while increasing value for injured patients.

The honest approach? Owning up to mistakes and apologizing.

The approach is honesty. Doctors who make mistakes are asked to admit it, apologize, honestly explain what happened, then work fair compensation. On average, payouts are about 30% less than a traditional malpractice claim and patients feel better after-the-fact. 

Honesty pays. Empathy begets empathy. 

When physicians act like human beings, their human patients reciprocate and do the same. People understand that good-faith mistakes happen. This case shows that they are more likely to come to an amicable settlement early on, leaving everybody except plaintiff lawyers in better shape.

Blue Ocean is all about honest value

At the core of Blue Ocean Strategy is value innovation and, as the name implies, at the core of that is buyer value. Cool tech that doesnt work, slick marketers selling snake oil, and vapid salespeople may bring short-term revenue at long-term cost. In contrast, focusing on buyer value to create sustainable, repeatable real value is a path to blue oceans. As a bonus, these solutions often cost less. 

Selling value is honest, and also tends to be more fun. 

Competing by trying to destroy existing competitors, new entrants, substitutes, buyers and suppliers is a recipe for thin margins, unhappy customers and high blood pressure. 

Honesty is a theme I notice consistently running through the best businesses. Steve Jobs made it clear that Apple is always focused on giving consumers products which he and his staff believe add genuine utility to people's lives. Nintendo offers fun to the masses. Marvels movies add value to buyers who love them and wish for more. People love Teslas cars. Real value doesnt take a whole lot of selling; influencers come along naturally. Conversely, nobody had anything nice to say about Sears for the past few years before its bankruptcy.

Blue Ocean Strategy focuses on genuine buyer utility woven through virtually every element of an offering

There are substantive cost savings by eliminating or reducing factors that do not offer utility, including and especially aggressive marketing. The core part of value innovation—eliminating and reducing these factors—is clearly explained to buyers. If all works well, the final lower-cost offering costs less and offers higher value; think lower-cost malpractice payouts with happier patients. 

Honesty is a blue ocean secret sauce for higher earnings, better margins and a solid nights sleep.

About Michael Olenick

Michael OlenickHaving worked extensively with SAMC’s European and Middle East clients on Blue Ocean Strategy, Dr. Michael Olenick now leads our Europe and Middle East division, helping our clients in those regions rethink their business strategies to sustain growth in fast-changing times. Even before the launch of the groundbreaking book, “Blue Ocean Strategy” (which has sold 4 million copies to date), Michael was a Blue Ocean Strategist, working with Blue Ocean Strategy co-founders W. Chan Kim and Renée Mauborgne since 2001. 

As an Executive Fellow at the INSEAD Blue Ocean Strategy Institute in Fontainebleau, France, Michael advises, consults, researches and teaches Blue Ocean Strategy throughout the world, helping companies from startups to Fortune 100s implement its highly successful business strategy. His research has been cited in leading business publications, including The New York Times, The Wall Street Journal, The Washington Post and Bloomberg, and it is also being taught by leading business schools.

News flash! W. Chan Kim and Renée Mauborgne ranked #1 Thinkers
by thinkers50.

Want to learn more about Blue Ocean Strategy? Check out these blogs and podcasts

Blue Ocean Strategy is all about identifying your customers' (and potential customers') problems, pain points and unmet needs, then offering them your one-of-a-kind solution. For a more in-depth explanation and tips on how to find your own blue ocean, read and listen:

SAMC Guest Bloggers  

We have a select number of guest bloggers whom we have invited to share their insights with our readers. They bring different perspectives to the challenges of change, innovation and opening new market space...recurring themes here at SAMC. Please enjoy their viewpoints and share them with others.

Additional resources:

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Andi Simon, Ph.D.
Corporate Anthropologist | President
Simon Associates Management Consultants

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