Filtering Blue Ocean Ideas: Strategic Overlays

Blue Ocean Ideas That do not Fit an Organization
Mario Castaneda, Strategy Consultant, United States
Andrew, I like your model of "Strategic Overlays."
In my case, I recently worked with a client in the defense industry where some Blue Ocean-generated ideas did not align with the core strengths and focus of the company.
In this case, I advised the CEO to have his team analyze the market potential of these and fund and create an "entrepreneur center" within the organization, where some of these ideas could be pursued and eventually be sold as a Spin-off as a start-up if successful. Fortunately, as the Founder, he does have a strategic, start-up oriented mindset.
As a result, one of these ideas has grown into a nice multi-million dollar business in a separate industry and others are being pursued.
A side effect of this action is that he has been able to retain some of his best and brightest employees.
Best Regards, Mario.

Business Matching Opportunities
Andrew Nelson, CEO, Australia
@Mario Castaneda: Mario - that's a great story! As an interesting aside, I've also had some discussions with clients about how some of their great ideas might be able to be sold to other businesses where they might be more appropriate and successful. This has created some business matching opportunities for my own business.

Overlays for Blue Ocean Strategy
C.L. Kappagomtula, Professor, Malaysia
Andrew's concern is somewhat unfounded, merely for the reason, that any BOS is subject to the condition of either entirely competition-free markets or at least ones with a relatively low percentage of competition for the product / service that the organization might be contemplating.
Overlays come into play, when there is a threat perception by the organization through competition. In such cases, it is no longer in the zone of BOS, and it comes in Red Ocean band.

Castaneda´s Participation
Gerardo Arroyo Jimenez, Consultant, Mexico
@Mario Castaneda: That's a great idea in order to retain not only employees, but also you retain ideas that other competitors could get access to by getting access to competitive advantages generated by your own company.

BOS Strategic Overlays
Darenda Downing, USA
Indeed I have to agree that using overlays, theoretically, may be counterproductive to developing BOS in the purest sense. But what good would it do an organization to identify a purely competitive-free market if they have no definitive capabilities to make a profitable impact in that market? It seems to me that overlays are useful in filtering strategies and as @Mario Castaneda: relates, in identifying new profitable business opportunities.

Competition Irrelevant to Overlays
Andrew Nelson, CEO, Australia
Just responding to Dr K and D Downing - as Darenda says, putting purely theoretical considerations aside, when working with teams we often find them generating ideas that may be great business ideas, but completely irrelevant to the business that is sponsoring the project.
Some of these ideas may spark from the areas we are considering, but others will be completely lateral and unrelated to the tasks at hand.
Someone in the Nintendo Wii team may have seen a great Blue Ocean Strategy opportunity to rethink the Yoga industry, but that doesn't mean that Nintendo is interested in pursuing that opportunity. In fact, usually the problem is that there are too many ideas to pursue, so the strategy overlays help the teams decide which of their best Blue Ocean Strategy ideas to pursue and which to postpone or abandon.

Mere Idea Generation by itself is not a Sufficient Cause to Adopt BOS
C.L. Kappagomtula, Professor, Malaysia
Allow me here to interlink the BOS with idea generation. Before any strategy is put to implementation, it is necessary, that a lot of ideas surface, even if not all are meant or desired for implementation.
BOS precedes with evaluating the ideas by SWOT, filtering out a couple of them, from scores of generated ideas, by carrying out appraisals. These appraisals can be from the angles of marketing, finance, technical, economic and ecological.
The ideas that come out favorably after these appraisals, are screened applying the organizational criteria - if any.
The final winning idea that comes out of these elaborate processes is adopted for the BOS. If the organization applies all of these processes, then it becomes very evident, that there cannot be any scope in BOS, exposing itself for unwanted, irrelevant overlays.

Strategic Filters by Any Other Name
Andrew Nelson, CEO, Australia
Dr K, I think we are in agreement on process and concept but maybe disagree on terminology.
As you say, appraising initial BOS ideas using your list of marketing, finance, technical, economic and ecological will weed out poor ideas. But, using finance as an example, the business must still make some decision on what level of ROI or capital injection it is capable of, and willing to accept.
For me, this is an example of a "Filter or Strategic Overlay" that needs to be discussed early in the process, as it will weed out inappropriate ideas early and can save considerable resources.
May I also ask, what falls into your category of "Organisational Criteria"?

Organizational Criteria for BOS Strategy
C.L. Kappagomtula, Professor, Malaysia
Andrew, thanks for initiating an interesting discussion on BOS. Pragmatic evaluation of ideas by SWOT, and in-depth evaluation of the filtered ones by various factors performance appraisals will filter out the viable ones for the BOS ambit.
Despite this, organizations might have overriding constraints in terms of Risk, NPV, IRR etc., (which are linked mainly to the financial part of appraisals), and they have to be aligned with the overall organizational objective(s).
That is why, I feel, that the concern for overlays becomes redundant and un-confounded in BOS.

Confused About Terminology
Andrew Nelson, CEO, Australia
Dr K, I am a little confused. All these evaluations you mention must have criteria set by the organisation, and as you say they have to be aligned to the organisational objectives. These are in my language the strategic overlays. Yet you say these overlays are redundant? Again I feel we are in agreement with process but you have an aversion to my use of the phrase "strategic overlay". Let us maybe agree to disagree.

Blue Ocean Strategy Assumes no Boundaries
TAUQEER AHMED MUGHAL, Manager, Pakistan
Blue Ocean Strategy, on the other hand is based on the views that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players.

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Editor: haha that is true, but of course Andrew is talking about other boundaries :-).

Strategic Overlays in BOS
C.L. Kappagomtula, Professor, Malaysia
The very definition of overlays in management jargon means, managing or trying to avoid the inefficiencies by harmonization process in the system. This can happen in BOS context, when there is no balanced evaluation of criteria under various appraisal parameters, thus resulting in overlooking the organization's objective(s). In the domain of BOS, the process of evaluation ought to be balanced to qualify any business to be in Blue Ocean's ambit.
Yes, may be we are both stating the same things in different wordings.

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Editor: OK, let's stop the discussion as far as the precise wording of Andrew's idea is concerned and focus on the idea itself: what are the pros and cons of using "strategic overlays" for the BOS-team to be able to assess (in early stages) if an idea could fit where the organisation is prepared to go?

There is a Case for Filtering Blue Ocean Strategy
Mohd Norfaizin Bin Hj. Md Salleh AFA (UK), Director, Malaysia
Whilst applying Blue Ocean Strategy, more often than not organisations tend to get over excited for applying the so called "NEW" strategy and spend valuable resources in large quantities.
At the end of the day, instead of fishing in the Blue Ocean they find out that actually they are not ready for the actual change to the organisation that is actually required, so they resist it and plummet in the red ocean even deeper.
It shows that filetering and calculating these risks is highly necessary in applying BOS strategy.

Blue Oceans are Hard to Find
Uditha Liyanage, Senior Lecturer, Sri Lanka
It must be noted that what is commonplace and typical are red ocean strategies. BO strategies call for sensing uncontested market space. And that is hard to find or sometimes not big and attractive enough.