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Company executives and business owners are ordinarily trained to formulate strategies for the beating competition. Business plans, marketing, sales and advertising campaigns, all involve a study of the competition—its strengths and weaknesses. This approach, however, exists only in markets known as Red Oceans, where there are many players and the ultimate goal is to outperform the competitors. Experts, however, point to a better option, called Blue Ocean, that is off the current marketing map, where all is calm and aggressive competition is non existent.

What is a Blue Ocean?

Understanding the concept of a Blue Ocean requires a brief description of a Red Ocean. Red Ocean refers to an existing market with many competitors. Competition is fierce and rival brands begin to resemble each other. Consumers are most likely going to base their buying decisions on price. Often, a Red Ocean will have price wars that are designed to kill competition. In a Red Ocean, supply has overtaken demand, driving prices of products even lower. This is an over saturated market where are low profit margins and limited growth potential exist.

On the other hand, a Blue Ocean is an untapped market without competition. Any business that creates this type of market will face uncontested market space. Competition is irrelevant and profit margins are huge. It is the best environment for building a strong brand and experiencing fast growth, much like Canon and Xerox in their early days.

Adopting the Blue Ocean Strategy

The key to business survival is not in beating the competition but in creating a market with little or no competition. Important elements of the Blue Ocean strategy include:

Creating unrivalled market space: Companies can create completely new industries through pioneering efforts or by altering the boundaries of an existing industry (Red Ocean). This could mean developing an entirely new product or reinventing an old business model to cater to an unserved market.

Make competition irrelevant: Blue Ocean companies don’t use the competition as benchmarks. They make the competition irrelevant by creating a leap in value both to their target markets and the companies themselves.

Create and capture new demand: Red Oceans are existing markets where supply exceeds demand. In contrast, Blue Ocean companies create new demand and develop products and services to address this new demand.

Break the cost-value tradeoff: The key to business success of your company in a Blue Ocean is to drive down costs while driving up value for the consumer.

Protect the Blue Ocean: Prevent competition from coming in by focusing your company’s system and activities on creating product differentiation and maintaining low costs.
Most Blue Ocean companies remain uncontested for 10 to 15 years. By the time potential rivals decide to imitate your Blue Ocean, you will have created a brand buzz and a loyal following, making it extremely difficult for imitators to succeed.

Studies increasingly show that a manager’s leadership style can affect the overall performance of a company and can influence financial results. Leadership style refers to the approach that a manager uses when dealing with employees in order to get things done. Six leadership styles have been identified, each of which has its place in a manager’s toolkit and are appropriate in specific situations.

Coercive style: A leader with this style gets things done by imposing his/her will on people. This is also known as the “Do what I say” approach. This style is often used in turnaround situations, a natural disaster or for dealing with a problem employee. It has short term benefits but inhibits flexibility and demotivates employees in the long term.

Authoritative style: This type of leader articulates his/her goal or direction and allows people to determine the means of achieving it. Also referred to as the “Come with me” approach, it is best used when the business is adrift but not when the leader is working with a team of experts who possess more experience.

Affiliative style: This is characterized by a “people come first” attitude where a leader strives to build harmony in the workplace. This is best used in situations when people are demoralized. However, poor performance may go uncorrected and people may lack a sense of clear direction.

Democratic style: This type of leader gives employees a voice in discussions and arrives at decisions through building a consensus. While employees may feel a sense of belongingness in this leadership style, it does not work well in times of crisis where prompt action is crucial.

Pacesetting style: This leader sets high performance standards and exemplifies them himself/herself. It is best suited for employees who are self-motivated and highly competent. Other less motivated people may feel overwhelmed with the pressure of meeting those high standards and may resent the leader’s tendency to take over situations.

Coaching style: This leader focuses on personal development and capability building to accomplish immediate and longer term tasks. This works well as it focuses on building on employees’ strengths.  This builds confidence, resilience, engagement and performance. People also become aware of their lesser strengths and want to improve themselves further.

A manager who wants to induce the best performance among people must master at least 4 of these leadership styles, particularly the authoritative, democratic, affiliative and coaching approaches. These styles go hand in hand with developing emotional intelligence competencies such as engagement, empathy, social skills, self-awareness, self-regulation, and motivation.

The best manager is one who is able to adopt a leadership style best suited for each situation and to switch styles seamlessly as the business climate changes.
 

Leaders who are responsible for devising company strategies need as much information from key personnel throughout the organisation to ensure effective implementation and the success of their plans. Often, it is the lack of honest conversations with these employees that prevent the company from achieving its goals; hence, the need for strategic conversations within the organisation.

Understanding strategic conversation

Strategic conversations are company-wide discussions designed to confront obstacles to the successful implementation of a strategy and possible adverse effects on anyone in the organisation.

Every organisation needs regular strategic conversations that are carefully designed to elicit the most honest responses from personnel at all levels in the organisation. These employees interface with clients and the market place and are aware of any of the challenges that can jeopardise the achievement of the company’s strategy.

Structure of Strategic Conversation

Clear and unambiguous strategy: A company’s business strategy should be clear and concise using words that leave no room for ambiguity, so that it is easily understood. Senior managers should be ready to answer questions on:

  • the company’s objectives and aspirations
  • the market threats and opportunities
  • the unique value the company offers to clients or customers

Task force for soliciting feedback: Top management should form a task force consisting of the company’s most trusted and highly regarded managers. The task force will then ask key employees a simple question: “What are the strengths that the company should build on and the obstacles to remove in implementing this strategy?”

Roundtable discussion: The task force should present the feedback of key personnel in a roundtable discussion without interruption or debate. Ideally, members of the task force sit in on the round table while senior managers listen to feedback.

Distilled information: After listening to feedback generated by the task force, a management committee should convene to distill strengths and weaknesses in the organisation structure, culture and capabilities. This group will then decide how to leverage strengths and correct organisation weaknesses and develop a plan of action.

Action plan review: The task force reviews the action plan and may recommend changes to the management team.

The final step in a strategic conversation is the decisive action taken by the company in connection with the honest information provided by its personnel.
Companies should maintain an active mechanism for conducting strategic conversations. Studies show that organisations promoting honest discussions experience better business performance and an increase in profits. Conducted annually, it promotes honest dialogue especially when employees are assured of the confidentiality of their feedback and absence of reprisal for candid statements.

Strategic conversations can be facilitated on a variety of topics and thought leadership relevant to the company’s market opportunities, strategic options and capability building.

Continuity in leadership is vital in any organisation. Legally, there are mechanisms for filling up vacancies in top executive positions but these are not as important as the selection of a new CEO.

The role of a CEO is undoubtedly important as this top executive’s performance determines the fate of companies and corporations. Any change in leadership can make or break a company, this is why every organisation must have a succession plan.

Quality leadership does not come by accident. It is the product of years of experience and leadership development. Changes in leadership are inevitable, and the opportunity is not in the act of replacing a CEO but in selecting the right successor.

Companies realise that searching for the best leader can be difficult unless they do three things:

* Maintain a pool of candidates consisting of potential CEO’s from internal personnel.
* Create a succession plan that includes a process for making decisions about
    these candidates.
* Taking the lead in considering outside candidates without relying entirely on the selection
    criteria of the executive headhunter.

Leadership development

Preparing for CEO succession requires active leadership development for internal candidates with CEO potential. Candidates within the company are identified and nurtured with the right education, mentoring and on-the-job experience for at least a few years before the intended succession.

Ideally, an employee is groomed for the job through a steady progression of responsibilities while rising through the rungs of the corporate ladder. The right age of a successor at the time he/she becomes CEO is somewhere between the ages of 46 and 52. This means that serious leadership development must start at age 30 or risk the elevation of an unprepared candidate.

Active board participation

The selection process and senior executive development must be regularly overseen by the board’s compensation and organisation committee. This vigilance is necessary to ensure a perfect fit between the potential CEO and the position. Directors should devote some time for getting to know the company’s rising stars by inviting them to board meetings and informal talks whenever possible. Directors should also observe CEO candidates in the natural surroundings of their business operations.

Companies without potential candidates or lack a succession plan are compelled to rely on executive search firms for outside candidates. External candidates, however, pose great risks because top management does not know them well. An outsider is generally chosen to do a job of either turning the company around or restructuring the organisation. But this type of leader may not always be prepared to lead a complex organisation for a long period and often leaves or is forced to resign as a result. Clearly, the best approach is to plan ahead and keep this plan alive through constant review and leadership development. And to consider different types of candidates, based on what candidate best fits the next strategic and operational shift the company is required to make and the new CEO is required to lead.

Quality human resources continue to be every company’s best assets which is why companies set aside budgets for recruiting and selecting employees. Contrary to popular belief, non cognitive abilities such as empathy and sociability, rather than IQ, determine future success, making emotional IQ tests imperative in the selection of workers.

For years, psychologists studied IQ scores, non cognitive skills and the outcomes of research subjects and came to similar conclusions about the role of emotional intelligence for business. Thus, the concept of intelligence which was limited to cognitive functions such as memory and problem solving was redefined to include non cognitive abilities that constitute emotional intelligence.

What is emotional intelligence?

Psychologists define emotional intelligence as a person’s ability to monitor and identify his/her own feelings and the feelings of others, and to use this information to guide his/her thoughts and actions.

A plethora of studies on emotional intelligence support the conclusion that EQ is a more reliable indicator of future work performance than IQ. In particular, psychologists found that social and emotional abilities of subjects measured at a young age were linked to varying degrees of professional success and prestige at a later age.

Workplace applications of EQ

Learned optimism: This refers to the self talk (causal explanation style) people have when dealing with failure or setbacks. Optimists tend to explain setbacks to themselves as something they learnt from and to apply that learning in the next challenge.  While pessimists tend to say to themselves that they will always have only this amount of ability and make these mistakes. 

In a study, salespeole who scored high on optimism performed better than pessimists in the same company. Another study bolsters this conclusion as it showed how optimism test scores in students can predict actual grades.

Stress management: The ability to manage feelings and handle stress is another aspect of emotional intelligence crucial for success. This involves knowing when and how to express emotion and when to control it.

Empathy: People who are able to identify others’ emotions are more successful in their work as well as in their social lives. In fact, researchers have known for years that empathy contributes to occupational success.

How EQ is assessed

Bar-On’s EQ-1: This is the oldest instrument used for measuring emotional intelligence and is essentially a self report designed to assess personal qualities that enable some people to possess better emotional well-being than others.

Multifactor Emotional Intelligence Scale (MEIS
): This is a series of tests used to assess a person’s ability to perceive, identify, understand, and work with emotion.

Emotional Competence Inventory (ECI): This is a 360 degree test where people who know the subject are asked to rate him or her on 20 competencies that are linked to emotional intelligence.

Other emotional intelligence assessments
include EQ Map and Seligman’s SASQ which is good for measuring learned optimism.

IQ and technical skills are the basic minimum required of top executives and managers. However, studies have consistently shown that emotional intelligence or EQ is a better indicator of future performance in business.  In particular, researchers have found a strong link between EQ and outstanding performance at work. 

Consequently, a company’s success is increasingly linked to the emotional intelligence of its leaders, prompting human resource specialists to include tests for measuring the key components of EQ in the hiring process.

Components of emotional intelligence

Emotional intelligence refers to the personal qualities of the leader consisting of:

•    self awareness
•    self regulation
•    motivation
•    empathy and
•    social skill.

Self awareness is the ability to identify and recognise ones strengths and lesser strengths, feelings and passions. It is manifested by self confidence, realistic self assessment and occasionally, by a self-deprecating sense of humour.

Self regulation refers to the ability to manage one’s moods and reactions. Self regulation prevents one from making hasty decisions, often choosing to postpone judgment until after some reflection. This component is indicated by trustworthiness, integrity and openness to change.

Motivation is the key to achievement of goals. Most effective leaders possess a desire to work for reasons other than money or status. They reach their goals through persistence and energetic effort.  Motivated individuals exhibit a strong drive to achieve, optimism and commitment in the face of challenges.

Empathy is the ability to understand the feelings of others.  It is essential to maintaining good relationships with individuals and groups.  It is essential for leadership and managing others. It is indicated in people who are experts at building and retaining personnel, sensitive to various cultures, and who can relate well with clients and customers.

Social Skill is the ability to manage relationships and grow networks by finding a common denominator with others and building rapport. Characteristics of a leader with social skills are persuasiveness, expertise in building and leading teams for change and growth, and being inspiring.

Development of emotional intelligence

Intelligence, analytical skills and other cognitive abilities are largely developed through education, training and experience, which leaves many to question whether emotional intelligence can be developed purposefully as well.

While some components of emotional intelligence may be genetic, psychologists maintain that it’s possible to “train” a person to develop emotional intelligence. Not all managers manifest emotional intelligence but they can become good leaders through appropriate coaching, training, time and concerted effort.

When identifying potential leaders from a pool of applicants including young people, the ones who possess highly developed emotional intelligence are more likely to lead the company to its future success.

Managers constantly face challenging situations which require determining the best course of action.  This may be a combination of a number of courses of action, even though at   times these courses of action may appear to be conflicting.

For example, on one hand, a company must compete but must remain open to collaboration. Management may set its goals in the global arena yet require its personnel to maintain and extend its footprint in the local market. These are just some of examples of conflicting situations where it is often left to the local manager to decide the best course of action in that area.

As the challenges of a manager tend to be complex, an effective manager must possess five different mindsets and learn to use these for obtaining and synthesising insights during problem-solving. The key is to focus more on how one should think in a particular situation, rather than on what needs to be done. Each of these mindsets is useful for interpreting and dealing with specific situations.

The Reflective Mindset: Management is mindless without taking time to reflect and take stock. Opportunities, problems and situations make more sense during reflection. Patterns may become more evident or a new perspective is gained during this type of thinking. This mindset also promotes innovation as experiences are viewed in a different light.  Managing the self requires this type of mindset.

The Analytical Mindset: Analysis involves breaking up a complex situation into component parts.  This process assists a manager to view problems in different ways. Analysis promotes a clearer understanding of a situation through an in-depth appreciation of quantitative and qualitative data. Thus, an analytical mindset is used to think through and manage a division issue or system functioning or business structure.

The Worldly Mindset: Managing context or the environment where a business operates requires a worldly mindset.  This entails looking at situations through the eyes of other cultures. Often this requires stepping out of the office and devoting some time in production areas and where customers are regularly served.

The Collaborative Mindset: Using this mindset, a manager will manage relationships among individuals so that cooperation becomes a theme of the team. A collaborative mindset can create processes and attitudes that promote teamwork and group effort.

The Action Mindset: This mindset is what managers need to get things done. Reflection without action is passive and accomplishes nothing for the business.  Managers are paid to produce outcomes, requiring the manager to coordinate and take action to achieve goals and objectives. This mindset is also effective for managing change.

An effective manager must be able to access all five mindsets, not in any particular order, simply by going through each as needed in a situation.  The outcome of applying these mindsets is the synthesis of insights gained from each.

More important than the individual manager’s five mindsets is the interweaving of the collective mindsets of the other managers, to overcome obstacles and achieve company goals.
New CEOs often find themselves beset with experiences they may not have expected or are prepared to deal with. Studies on the common experiences of new CEOs reveal there are seven surprises that affect new CEOs.  These surprises also apply to leaders at any level in an organisation and in all sizes of organisations. A clear grasp of the Seven Surprises is vital for the CEO to function effectively and to manage challenges that accompany any of these surprises.

Surprise One: CEOs do not run the company

A CEO may have the final say in business decisions, though running the business is only a small part of his responsibilities. To be effective, a CEO must delegate operations to a management team tasked with making appropriate decisions and running operations properly. He does this to enable him to focus on the context in which the business is run, external aspects such as investor relations and regulatory requirements.  Managing the volume of opportunities, issues and challenges inside and outside the company, earning the respect of all from day one and delivering results, the new CEO must do in his stride.

Surprise Two: There is a cost to giving orders

While the CEO has the power to approve or reject the proposals and projects of managers, he should exercise caution in rejecting strategies that have undergone thorough study and careful planning. Any rejection must be done with respect for the analysis and work that has occurred and with good reasons that fit the needs of the organisation and its future.  This approach will assist to gain the respect of executives and is part of what the new CEO is paid to do – lead with wisdom and respect.   Feedback must be done in a way that avoids demoralising senior managers and keeps them motivated.  It is important that the new CEO encourages the confidence and authority of the senior managers involved, while at the same time giving messages about appropriate
decision making.

Surprise Three: What is really going on

Finding reliable sources of information who will tell the truth without bias is critical.  Finding sources of information without undermining managers is a delicate challenge for a new CEO. The best sources of information are:

•    informal settings where barriers to communication are reduced
•    field visits and forums
•    external channels such as customers, conversations with other CEOs and affiliations with industry associations
•    independent advisers who can tell the unbiased truth and have the license to criticise the CEO’s ideas

Surprise Four: Being the CEO sends a message at all times

Every move a CEO makes is scrutinised and interpreted. His actions send signals around the entire organisation and may be misinterpreted and can elicit a variety of responses. A new CEO must always strive for consistency in his messages and demonstrate it through his actions.  Congruence between words and action are essential.  Employees will watch the behaviour of the new CEO to assess whether he is truthful or not.

Surprise Five: The new CEO may think he's the boss but he's not

CEOs are accountable to a Board consisting of directors who have the power to fire him, evaluate his performance, set his compensation, overturn his strategy and make other major decisions for the company. To gather support from the Board, a new CEO must be able to turn board meetings into participative discussions that are collaborative and build credibility with the members of the Board.

Surprise Six: Competitive advantage is more critical than shareholder expectations

Shareholder approval may not always be in the company’s best interest. A CEO must understand that long term profitability matters more than high stock prices or immediate growth expectations. Keeping focus on long term success and avoiding knee jerk reactions to small changes in the share price is important.  A high stock price can eventually dip if it is not supported by fundamental competitive advantage.

Surprise Seven: A CEO is still human

CEOs must remain humble, review their decisions and actions, continue to listen to others and find people who will be honest and forthright. CEOs should also find ways to relax, get regular exercise, go on family vacations and have fulfilling outlets for their personal interests.

Conventional approaches in human resource development and capability building focus on employee skills and competencies to enhance performance and productivity. Historically in the corporate environment, when an individual’s skills are evaluated, managers tend to work at improving weaknesses hoping to achieve a change in performance.

However, emphasis on a person’s weaknesses, does not create a change that is sustained and it can cultivate negativity in the workplace. While the intention is to improve human resources for the benefit of the organisation, the process of focusing on weaknesses actually erodes individual self esteem, confidence and enthusiasm.

A better approach, based on substantial research and practice, is to identify and develop a person’s strengths while managing weaknesses using the approaches of positive psychology.

Positive psycology is based on the concept of human potential and flourish at work. Positive psychology is an umbrella term describing the scientific study of what makes life and work most worth living. It engenders satisfied and fulfilled employees, who gain meaning from their jobs.  Focusing on strengths promotes the best interests of any business organisation. It is a formula for business success through fostering productive and mutually satisfying relationships between the organisation and its people.

Positive psychologists confirm that positive emotion can produce significant effects at work:

•    It can broaden people’s mindsets allowing them to set higher goals and find ways to achieve them.

•    It encourages people to discover new ways of thinking and alternative actions as new opportunities and a range of solutions to problems.

•    It fuels resilience essential for persevering in challenging times.

•    It can also undo the undesirable effects of negative emotions.

Character strengths: Positive psychologists have identified a range of character strengths that contribute to well being and fulfillment. They are universal in nature and relevant across many cultures and historical periods. Examples of desirable characteristics are bravery, capacity to love and be loved, integrity, honesty, and leadership. 

When choosing a candidate for a position, the question to ask is not “Can you perform this collection of tasks to an acceptable level?” but rather “What can you do really well, and how does that relate to our required outputs?” These questions will most likely draw a list of character strengths that are not only suitable for the job at hand but more importantly add value to the business.

Positive emotions: Promoting positive emotions at work significantly improves work outcomes.  Studies show that satisfied workers are more positive, see more opportunities and solutions, develop more internal resources, are cooperative, helpful, punctual, time efficient, take fewer absences and are retained longer. Positive emotions may be induced by simple exercises to enhance mood, promote humour, and encourage appreciation, or through capability coaching that enhances meaning, satisfaction and enjoyment causing more positive emotions and better performance on the job.

However, positive psychology does not eliminate negativity entirely as a means of achieving improved performance. Certain types of negativity are still essential in appropriate situations. These take the form of evaluative comments, searching analysis and challenging observations. The key is in striking a healthy balance between positivity and appropriate negativity. Where necessary, measures must be specific, time-limited and focused on obtaining qualitative and quantitative outcomes.

Outsmarting the competition requires a different approach to strategic planning which experts refer to as “strategic intent.” Managers who adopt traditional approaches to strategic planning often misjudge the moves of their more innovative and determined competitors, leading managers to relax their goals and fall behind as the competition quietly builds its strength.

Strategic intent moves the central focus of strategy from the business level to the corporate level.  It encourages a new strategic architecture that allows the building of core competencies at the corporate level so that senior managers can define the foundation of the competitive strategy for the entire company.  

What is strategic intent?

A number of case studies show how companies that have grown to global proportions once started out small, though nurtured ambitions that were clearly disproportionate to their resources. Armed with an obsession for winning at all levels of the organisation, these companies attained success by nurturing their ambitions steadily through a 10 to 20 year period. Business experts refer to this obsession as “strategic intent”.

Strategic intent is a long term vision which is maintained through the years, nurtured by focus and commitment. Companies sustain this vision in a number of ways:

•    Creating a sense of urgency: Management adopts a worst case scenario to anticipate future challenges for personnel to work on. It is proactive rather than reactive.

•    Invoking a dramatic challenge: Specifying a sizable stretch for the organisation. It envisions a desired leadership position and establishes the criteria the organisation will use to chart its progress in the marketplace.

•    Showing what the competition is up to: Keeping an eye on the competition and exhibiting their activities clearly to personnel helps to sustain the ambition and stimulates employees to focus on winning against the competition.

•    Human resource development: Developing competencies of employees helps them meet challenges through capability enhancement and training in statistical techniques, problem solving and team building.

•    Break down challenges: Deconstructing challenges into smaller goals promotes focus and prevents overwhelm and conflicting priorities.

•    Use deadlines and feedback: Establish clear milestones and review mechanisms to track progress. This instills the ambition throughout the entire organisation and at all levels.

Successful companies that once struggled with limited resources overcame the competition through innovative ways.

•    Building layers of advantages: In addition to inexpensive labor, a business must devote its efforts to building brand awareness, increasing distribution channels and customising its products for unique markets.

•    Staking out undefended territory: This approach tends to direct the competition’s attention elsewhere while a company silently builds its strength in another market.

•    Changing terms of engagement: For example offering customers the chance to own equipment through a lease-to-own arrangement in a market dominated by an equipment rental company.

•    Competing through collaboration: Companies can boost resources by entering into strategic alliances with other companies. With combined efforts and resources, collaborators are able to break into new markets.

Companies tend to lower their goals when resources are low and search for advantages they can sustain. With strategic intent, it is possible to stretch these targets and compell personnel to compete in innovative ways.

While strategic intent envisions a desired future, captures the essence of winning and redefines the marketplace.  The concept encompasses an active marketing led management process that allows the marketplace to be redefined, creating a new space that is uniquely suited to the company’s own strengths. Thereby establishing a shift from a competitive position to a position of advantage.