Creating Blue Oceans

SAS takes first place

We’d like to take a moment to congratulate our friends at SAS for being awarded the  prestigious title of the ‘Best Company To Work For’ by Fortune Magazine. Given our association with SAS, via Gabor’s address at the company’s Global Forum in 2007, and his contribution to the recently-published Radical Action for Radical Times by Jonathan Hornby, SAS’ Director of Worldwide Marketing, we applaud the recognition.  And given CEO Jim Goodnight’s focus to make sure his “chief assets” come to work cheerfully every day, it seems very well-deserved. 

What is SAS doing to receive such accolades?  Via Yahoo! Finance:

Though companies in Silicon Valley get lots of press about perk-friendly workplaces, it's here in the less go-go South that employees reign supreme. SAS is not only the world's largest privately held software business -- with revenues of $2.3 billion, it's about the size of publicly traded Intuit -- but also the paragon of perks.

In fact when Google, a SAS customer, was putting together its own campus freebies some years ago, it used SAS as a model. SAS (pronounced sass) has been on Fortune's list of Best Companies to Work For every one of the 13 years we've been keeping score. But this is the first time SAS is in the No. 1 slot.

While its pampering of employees might give corporate scrooges a coronary, CEO Jim Goodnight says the policies make estimable business sense. "My chief assets drive out the gate every day," Goodnight likes to say. "My job is to make sure they come back."

His motives aren't charitable but entirely utilitarian, even a bit Machiavellian. The average tenure at SAS is 10 years; 300 employees have worked 25 or more. Annual turnover was 2% in 2009, compared with the average in the software industry of about 22%. Women make up 45% of its U.S. workforce, which has an average age of 45…

[Image via CNN Money.]

Will Chile become the next Innovation powerhouse?

In our recent series covering Gabor’s high-profile visit to Chile, we wrote briefly about the pivotal elections taking place in Chile. During the campaign by Sebastian Pinera, Innovation became a focal issue in one of the only global economies to weather the recent global financial crisis. As a natural follow-on story, we share with our readers today an article from the Wall Street Journal highlighting Mr. Pinera’s victory—following the recent run-off against the incumbent president—as well as some of his ambitions as he takes office and some of the challenges he will likely face.

From the Wall Street Journal online:  

The president-elect says he will create a National Office of Innovation and Entrepreneurship to slash red tape. Mr. Piñera cites a World Bank study noting that opening a business in Chile takes 27 days and costs $1,100, while in New Zealand it takes one day and costs a fraction of what it does in Chile.

Finally, Mr. Piñera has pledged to bring greater efficiency to public administration. Mr. Piñera maintains that due to mismanagement of state entities involved in transportation, energy and copper mining, Chile has wasted $4 billion—enough money to build 160,000 homes.

[Image via TIME.]

The Perfect Calm Series: U.S. texting raises $11 million for Haiti

One of the most exciting spheres of application for Blue Ocean Strategy is the realm of Social Capitalism. This explosive market space is at the intersection of successful business and lasting social impact. Traditionally these two spheres were considered separate, but the two can be pursued simultaneously via Blue Ocean Strategy. Periodically, we feature stories which illustrate stimulating ventures, ideas and concepts targeting this very market space.

This week we select the story:  U.S. texting raises $11 million for Haiti .  

While this is not a quintessential example of social capitalism, it is an inspirational illustration of using new technology for quick, large-scale public donations to disaster victims.

Do you know of companies, organizations or business visionaries sailing along the intersection of good business and social good? Share your ideas with the Creating Blue Oceans Community.

[Image via Google.]

Blue Ocean healthcare: High quality at a low price

With the debate about health care in the United States far from over, we were intrigued by a recent article showing how one particular hospital is taking matters into its own hands.  By taking a step back and looking at the industry in new ways,  Providence Regional Medical Center is shattering the conventional wisdom of the healthcare industry, and, in the process creating its very own blue ocean marketspace: high quality healthcare at a low price.  

From BusinessWeek: 

Walk into Providence Regional Medical Center, in Everett, Wash., and you will see a hospital trying something different: It brings the equipment to the patient. In 2003, Providence opened one of the few "single stay" wards in the nation. After heart surgery, cardiac patients remain in one room throughout their recovery; only the gear and staff are in motion. As the patient's condition stabilizes, the beeping machines of intensive care are removed and physical therapy equipment is added. Testing gear is wheeled to the patient, not the other way around. Patient satisfaction with the "single stay" ward has soared, and the average length of a hospital stay has dropped by a day or more.

This is just one of many changes—some radical, many quite small—that have enabled Providence Regional to join a special subset of American hospitals: those that do not lose money on Medicare patients.

Almost 60% of U.S. hospitals report losing 20 cents on the dollar for every elderly patient that comes through their doors. They make up the difference by charging the under-65s a far higher fee. But Providence breaks even on the elderly, even though Medicare pays about $1,000 less per enrollee in the hospital's region than the national average. The hospital accomplishes this feat while winning a doctor's satchel full of national awards for top-notch care, placing it among the elite 5% of all U.S. hospitals.

High quality at a low price. Every other industry strives for that combination, but a hospital that does both is all too rare. Providence and its cost-efficient brethren demonstrate that quality care can be delivered at an affordable price, provided hospitals can be persuaded to rethink decades-old practices.

[Image via BusinessWeek.]

Defying Conventional Wisdom: Fair weather man

Blue Ocean Strategy is all about defying conventional wisdom — questioning taken-for-granted assumptions, and overstepping industry boundaries. It's a frame of mind of continuously questioning and searching for a different angle and fresh perspective. You can draw inspiration from everyday life, and train your mind by having a discerning view of the world around you. To help stimulate this sort of thinking, here is a quick, comic observation that challenges conventional wisdom.

Fair weather man

All meteorologists should be required to display their weather prediction statistics on the TV screen during a weather report. The stats would consist of the following:

• Total Number of Weather Predictions Made to Date - indicating career experience

• Overall Percentage of Correct Predictions - displaying lifetime performance

• Current Streak - showing the meteorologist’s present form of predictions

• Average Margin of Error During Career - exposing the severity of inaccurate predictions

[Video via YouTube.]

Swimming against the tide of recession

We’ve been monitoring HCL’s adoption of Blue Ocean Strategy, being especially curious how they would tackle the current global recession.   Our latest update on HCL comes from an article written by its CEO, Vineet Nayar, who echoes Gabor’s sentiments that difficult economic times are in fact ripe with opportunity, and are not an excuse for declining performance. 

From the Financial Express:

The past 12 months however have been quite literally a bloodbath for world economies. As businesses across the globe witnessed degrowth in every direction, most companies put on hold any investment in expansion plans preferring to wait and watch the global recessionary trends play themselves out.

A safe approach, you might say. Yet, not necessarily the best. As pointed out in a study titled Learning to Love Recessions in a special edition of the McKinsey Quarterly on Risk and Resilience, which studied business behaviour in previous recessions: “When other companies simply battened down the hatches, seeing only risk during the recession, the more successful competitors found opportunity and pressed their advantages.” The companies emerged leaders when the winds turned.

The leaders at HCL Technologies for example decided to swim against the tide. We believed, as McKinsey had inferred, that “managing risk does not mean avoiding it altogether.” We refused to see the recession as an excuse for declining performance. On the contrary, we saw it as an opportunity. We pressed on the accelerator while others applied the brakes. We increased our sales and marketing spend and focused on targeting uncontested market spaces in line with our Blue Ocean strategy.

[Image via Serendipity Artists.]

Swimming against the tide of recession

 We’ve been monitoring HCL’s adoption of Blue Ocean Strategy over in India, being especially curious how they would tackle the current global recession.   Our latest update on HCL comes from an article written by its CEO, Vineet Nayar, who echoes Gabor’s sentiments that difficult economic times are in fact ripe with opportunity, and are not an excuse for declining performance. 

From the Financial Express:

The past 12 months however have been quite literally a bloodbath for world economies. As businesses across the globe witnessed degrowth in every direction, most companies put on hold any investment in expansion plans preferring to wait and watch the global recessionary trends play themselves out.

A safe approach, you might say. Yet, not necessarily the best. As pointed out in a study titled Learning to Love Recessions in a special edition of the McKinsey Quarterly on Risk and Resilience, which studied business behaviour in previous recessions: “When other companies simply battened down the hatches, seeing only risk during the recession, the more successful competitors found opportunity and pressed their advantages.” The companies emerged leaders when the winds turned.

The leaders at HCL Technologies for example decided to swim against the tide. We believed, as McKinsey had inferred, that “managing risk does not mean avoiding it altogether.” We refused to see the recession as an excuse for declining performance. On the contrary, we saw it as an opportunity. We pressed on the accelerator while others applied the brakes. We increased our sales and marketing spend and focused on targeting uncontested market spaces in line with our Blue Ocean strategy.

[Image via Serendipity Artists.]

Is your business in danger of becoming obsolete?

All companies face difficult or life-threatening challenges at one point or another, and it is their adaptability and ability to make smart strategic moves which allow them to prosper even in the face of adversity. 

But those companies that fail entirely to innovate risk becoming a Lava Casualty.  All one has to do is to look at a recent photo montage from The Huffington Post highlighting 12 things which became obsolete in the last decade. 

Could your business or industry be on this decade’s list?

Via The Huffington Post, time has caught up with these industries in the first decade of the millennium:

• Calling

• Classifieds in newspapers

• Dial up Internet

• Encyclopedias

• CDs

• Landline phones

• Film (And Film Cameras)

• Yellow Pages and Address Books

• Catalogs

• Fax Machines

• Wires

• Hand-Written Letters

[Image via The Huffington Post.]

Higher education drowning in red oceans

In our two-part series entitled ‘Let’s Get Academic: Blue Ocean Strategy for higher education’ we shared with you Gabor’s unconventional solution addressing the exorbitant cost of higher education.  His solution came in direct response to Fast Company Editor Robert Safian, who posed challenging questions about the state of higher education, and the best model for the future.

Gabor’s provocative remedy — subsequently published in Fast Company — seems rather timely, especially now in light of a recent Wall Street Journal report highlighting another related problem:  The alarmingly high number of default rates on student loans by graduates of for-profit colleges in the USA. 

From the Wall Street Journal:

Students who took out government loans to pay for their education at for-profit colleges had a 21% default rate in the first three years they were required to make payments, about three times the level of four-year public and nonprofit institutions, according to a Wall Street Journal analysis of government data….

Twenty-two campuses of the Everest College chain, a unit of publicly-traded for-profit Corinthian Colleges, Inc., had three-year default rates of 30% or higher. One of its schools, Everest Institute in San Antonio, Tex., had a default rate of more than 40%. The Everest schools offer programs in areas including medical assisting, massage therapy and criminal justice.

The Kaplan unit of Washington Post Co. had seven campuses at or above the 30% mark and ITT Technical Institute, owned by the publicly-traded ITT Educational Services Inc., had one campus that exceeded the 30% threshold. Of the 5,600 schools whose data are being released Monday, 316 had default rates of 30% or more, and three-quarters were for-profits, the Journal analysis found.

[Image via Fraggle Red.]