Blue Ocean Strategy in the Government

As a continuation of last week’s column, let me share with you some insights from Mr. Josiah Go, Chief Strategist of Mansmith and Fielders and the 1st and only Filipino to complete the rigorous Blue Ocean Strategy qualification process. He has also been conducting the Blue Ocean Strategy Executive Bootcamp since 2006. Since I have previously referred to our country as a corporation called Philippines Inc., it is interesting to know how we can apply the concepts of the Blue Ocean Strategy to our country:

How Blue Ocean Strategy Can Help Philippine Government Promote Entrepreneurship and Investment?
By Josiah Go

Blue Ocean Strategy was conceived by two brilliant professors of Insead – Prof. Kim Chan and Prof. Renee Mauborgne. Unlike traditional marketing and strategic planning, Blue Ocean Strategy aims to help organizations become value innovators or pioneers in their industry instead of being mere me-too settlers or value imitators.

The most fundamental tool of blue ocean strategy is the strategy canvas, which has a 4-step process to help practitioners come up with their blue ocean strategy. To apply the blue ocean strategy to help government promote entrepreneurship and investment, the following steps are suggested based on the blue ocean strategy tools and frameworks:

The first step is the visual awakening, where an organization evaluates itself with competitors. In the Philippine context, we can identify and compare how entrepreneurship and investment are being promoted in the Philippines and in other countries.

The second process is known as visual exploration, where strategist of firms personally talk to customers and different non-consumer groups to find pain points to see where a firm’s strategy need to change.

If we ask existing entrepreneurs as well as potential entrepreneurs what are their pain points (biggest blocks to utility or areas of dissatisfaction)? This will include the inconvenience of filing of licenses in different offices, too much time spent in doing government reports, lack of capital, bank’s lack of willingness to lend start-up businesses, high interest rate of loans, waste of resources and time due to lack of experience in handling the business, ignorance of existing laws, including obsolete laws or having to know too many government laws.

The third process is the visual strategy fair which basically asks the following questions: Which of the factors that the industry takes for granted should be ELIMINATED? Which factors should be REDUCED below the industry’s standard? Which factors should be RAISED well above the industry’s standard? Which factors should be CREATED that the industry has never offered? These questions can be answered by using an Eliminate, Reduce, Raise and Create (EERC) grid.

Eliminate (E): Government can encourage new entrepreneurs like young students and old retirees by cutting required paper works to be submitted to the government. Simplified report means lesser paper cost for the government, lesser manpower to receive and read these reports, lesser rental to house the people and file these paper works.

Reduce (R): The numbers of laws affecting entrepreneurs are too many to mention. Yet, new laws are being introduced yearly via legislation. Reduction of bureaucracies that hamper the entrepreneurs can be done in at least two ways — by rewarding government employees who can identify obsolete laws, thus reducing potential corruption due to ignorance and/or confusion of existing laws in different government departments and bureaus. A second type is for the leadership of the legislative department to encourage proponents of new laws to identify as many obsolete laws that can be superseded with the introduction of the proposed new law. The manner of helping entrepreneurs in identifying and abolishing obsolete laws will trigger a tipping point for other obsolete laws to be identified and abolished as well.

Raise (R): Income tax exemption can be granted to first year independent distributors earning less than P240,000 a year. Also, to encourage people to invest in training, two recommendations are defined: By allowing a higher amount of training expense as part of allowable income tax deduction of independent distributors. By requiring companies to invest at least 2% of their revenue in the training and development of their employees, distributors and suppliers, thus creating a learning culture.

Create (C): A network marketing environment can be created by taking advantage of the unique characteristics of network marketing of having low entry barrier, low capital requirement, low exit barrier, and matchless free training and mentoring provided by their network marketing principals. People young and old, without the financial resources, can now be entrepreneurs by being independent distributors of network marketing companies. Eventually, the income and experience gained by these independent distributors can be used when they open their own businesses. Targeting 1 million new network entrepreneurs yearly for the next 5 years, this may be the tipping point of the Philippines to encourage more successful entrepreneurs, more successful businesses, and eventually raising more taxes and the number of taxpayer base in the future.

The last and final process is visual communication, a comparison of the old strategy canvas versus the new strategy canvas. The Philippine government can then focus on investing only on those things that will make the new strategy canvas a reality, in building a customer-centric organization where civil servants will not just be listening but be relevant to the needs of the entrepreneurs.

Before blue ocean strategy can be implemented, adoption hurdles must be recognized to ensure a smooth implementation. Such hurdles can be classified in one or more of the 4 types of hurdles – cognitive (old paradigm), resources (lack of money), motivational (uninspired employees) or political (powerful individuals with vested interest). Usually, either a crisis or a highly determined leader will make a firm much more receptive of the need to formulate and implement blue ocean strategy.

As we have always said in the Go Negosyo advocacy, the change in the structure must also coincide with the change in mindset of the people. A change in the system must also come from a change within ourselves. What if, on the mindset perspective, we eliminate procrastination, complacency, and mediocrity in all aspects of life? Eliminate “bahala-na”, “puwede na ‘yan” and other related pessimistic and counter-productive attitudes. Again on the mindset perspective, reduce complains, bickering and blaming one another for situations and events beyond everyone else’ control. Raise the level of accountability, integrity and professionalism by doing the work diligently. Raise solution-oriented attitude whenever problems overwhelm situations. Raise or increase level of encouragement, affirmation and complementation on high levels of performance, new ideas, innovative actions that made things more efficient and better for all concerned. Create avenues for constant learning, which encourage creativity and innovative thinking among Filipinos and where mistakes from the past will never be repeated again.

Then again, this is just one of the ways on how to review our country’s current situation. I guess what is more important is to have an actual timeline as to when this review will actually take place. This is why we are continuously pushing for the 2010.2016 proposal because as we gather more and more people who would like to see a change happen, new strategies and concepts will emerge which will hopefully put an end to our country’s cycle of misery.

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Yesterday, Go Negosyo in partnership with Hybridigm Consulting awarded the 10 Most Ispiring Biotechnology Entrepreneurs. The awardees include Dr. Samuel Bernal of Globetek Pro, Dr. Gisela Concepcion of Biomart Asia, Rolando dela Cruz of RCC Amazing Touch, Vicenta Mendoza-Escobar of Sol y Viento Research Center, Dr. Saturnina Halos for pioneering in the research and development of biofertilizers, Dean Lao Jr. of Chemrez Technologies, Dr. Vermen Verallo-Rowell of VMV Skin Research Center, Robert So of Ecosystems Technologies Inc., Dr. Rainier Villanueva of Rainiers Research and Dev’t. Center and the Palawan Center for Appropriate Rural Technology (PCART) as the Most Inspiring Biotechnology Community Venture. Congratulations again to the awardees and I do hope that we can further promote and commercialize these thriving biotechnology business ventures.

Biotechnology in a way is our gateway to the industries of the future. The field offers highly innovative products and services and surprisingly, the raw materials needed for these ventures can be often found locally. There is a clear value added for aspiring entrepreneurs to consider, with a clear market for these new products. This is also an avenue to consider new ideas in a new market as with the “blue ocean” principle and encourages entrepreneurs to not be a “me too” in the highly competitive low-margin and bloody red ocean.