|
When a Strategy Is Not Properly Aligned
While a properly aligned blue ocean strategy like Comic Relief’s has an inherent
sustainability because it is hard to imitate, when not properly aligned, even a
compelling blue ocean idea with an impressive market entry may not sustain its
appeal and struggle to get back its initial momentum or end up failing in some
cases. This is why so many innovations to create new markets generate initial
market excitement but fizzle out. Take the case of the Tata Nano. At its launch,
the Tata Nano was hailed as the people’s car. It garnered more media attention
than any other car launch in the world at the time. It also achieved the biggest
sales uptake in the history of the global automobile industry. After it was
officially introduced in March 2009, more than two hundred thousand orders
poured in within two weeks. There is reason.
Its value proposition had the hallmarks of a blue ocean. Tata Motors
reconstructed key buyer value factors across the passenger car market and the
two-wheeler market to offer the Tata Nano. Like the passenger car, the Tata
Nano offered a safe, comfortable, reliable, and respectable all-weather means of
transportation for Indian families. At the same time, however, the Nano was
priced against the far-lower-cost, two-wheeled vehicle market that most Indian
families relied on for their daily transportation needs. In this way, Tata Nano’s
value proposition offered buyers both differentiation and low cost, putting an
automobile within reach of most Indians for the first time.
Tata Motors matched its compelling value proposition with a compelling
profit proposition. Under the guidance of Ratan Tata, chairman of the Tata
Group, the Nano team introduced a series of cost innovations in design,
manufacturing, marketing, and maintenance that resulted in a profit proposition
that was both differentiated and low cost. The Nano, for example, used a two-
cylinder rear engine combined with rear-wheel drive to not only lower costs but
also provide better fuel efficiency and more interior space without an increase in
the size of the car. The Nano’s two-cylinder engine was also made of aluminium
instead of the steel of conventional engines, which was lighter, cost less to build,
and also provided better fuel efficiency. And the component parts were
dramatically simplified; for example, its door handles were designed with 70
percent fewer parts.
While the Nano team eliminated nonessential luxury features in its profit
proposition, it did not reduce costs across the board. For example, making the
Nano a two-door car could have achieved substantial cost savings, but it would
have greatly inconvenienced the typical multigenerational Indian family and
have greatly inconvenienced the typical multigenerational Indian family and
therefore was not adopted. It would be hard, for example, for a grandmother in a
sari to get in the backseat. In this way, Tata Nano’s cost-reduction efforts
reinforced rather than compromised its value proposition, resulting in a well-
aligned, differentiated, and low-cost profit proposition.
Yet, despite its compelling value proposition and a viable profit proposition,
the Tata Nano’s initial success was not sustained and ended up failing to meet
sales targets and public expectations. What went wrong? A closer look reveals
that this setback arose largely from a major weakness in the people proposition
for a critical external stakeholder group whose cooperation Tata depended on.
Despite its good will and intentions, Tata was unable to secure the cooperation
of the Singur community in West Bengal where Tata set out to establish its
manufacturing facilities. The focal dispute was mainly about the leasing of
arable land for industrial use and the negotiation process and level of
compensation for the local owners in the community. This misalignment caused
Tata Nano’s massive facility relocation and dampened the Nano’s initial success.
While Tata has since put a new team together to get the Nano back on track, it is
a good example of how a misaligned proposition can bring about negative
performance consequences.
To produce a high-performing and sustainable blue ocean strategy, you need
to ask the following questions. Are your three strategy propositions aligned in
pursuit of differentiation and low cost? Have you identified all the key
stakeholders, including external ones on which the effective execution of your
blue ocean strategy will depend? Have you developed compelling people
propositions for each of these to ensure they are motivated and behind the
execution of your new idea?
Do'stlaringiz bilan baham: |
