Malaysia Embraces Blue Ocean Strategy

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"We have to create uncontested market space and make competition irrelevant. We can do this our way. The Asian way. Why must we follow the Westerners? Theirs (methods) may not fit in into our culture and environment. This has been done. Look at Korea. Look at Samsung." - Quotation by Professor W. Chan Kim, the Co-Author of Blue Ocean Strategy.

 

 

LUE OCEAN STRATEGY (Blue)? What is that? To answer that, it is crucial to first understand what Red Ocean Strategy (Red) is. It is a state of stiff competition where it is a dog eat dog platform. Businesses compete against each other for the same market place and the same consumers. How do they compete? They go on either value based differentiation of their offerings or they go on cost reduction leadership style to price goods low.

The Graph (below) shows the X axis for cost leadership spectrum and Y axis for differentiation spectrum forming a quarter circle graph where Red is what is within the frontier line. What is beyond the line is the open ocean, where Blue emerges. Blue is about shifting that frontier line outwads. It is about doing things out side the box making competition irrelevant.

 

In the 1980's, the Japanese used Red to out throw the Americans and the Europeans via differentiation. Amongst others, their (Japanese) stories were Toyota vs General Motors, Suzuki vs Harley Davidson, Yamaha vs European piano manufacturers; and many more. Because of this, American companies were going bankrupt in the 1980's. Then in the 1990's, the Americans, under President Clinton's leadership, reacted with a Blue, embracing innovation. They mushroomed numerous companies out of the Silicon Valley. This brought them back into the game.

Not long after that, during the turn of the millennium, Year 2000, the Chinese joined the boat using a Red again. They embarked on a cost war on almost everything especially on outsourcing centres that were widely used by many corporations across the globe. Chinese were doing everything cheaper than everyone else in the world. In 2010's, the Americans reacted yet again with another wave of a Blue by introducing the mighty pervasive social media and internet-based economy.

As you can see, the Asians are good at Reds but they lack Blues, with the exception of Korea. One really good example coming out of Korea would be a corporate example of Samsung. Samsung was not producing differentiation nor was it selling cheap products. The former was controlled by the Japanese and the latter by Chinese. Samsung was stuck in the middle and they were losing money. So, they applied Blue. After much deliberation, they decided to shift the so called "frontier" outwards into the blue areas of the graph. They became the first to use music for hand phones as well as positioning televisions as prestige furniture for homes. As a result, they came out strong from No. 27 to No. 1 ranked electronic company globally. Before you know it, Nokia and Blackberry were out of business overnight.

Malaysia is stuck in the middle income trap. Many areas are not looked at such as matters in between urban and rural areas. That is where most middle income earners belong to where most social issues such as crime are happening. Money is not the only measure. We need to look at many other important aspects such as job opportunities, crime level, education, food, ease of doing business, transportation, medical and many more. Thanks to Prime Minister Y.A.B. Dato' Sri Najib Tun Abdul Razak, over 60 Blue initiatives have been implemented in Malaysia. Some of them, but not limited to, are:

 

POLICE: Police force to stop doing administrative work. The civil service personnel have been reallocated to manage all administrative work. The police can now concentrate on going out to catch criminals and to ensure public security.

 PRISONS: Why building more prisons to accomodate the ever growing population of convicts? This costs money. Instead, they (convicts) are now accomodated in military camps and are asked to work on agriculture land or fresh water fish ponds producing products for the good of society. 

URBAN TRANSFORMATION CENTRES (UTC) now operates from 8am to 10pm daily requiring the civil service workforce to accept a 2 work shifts schedule. This is done not by additional staff but by existing staff via rescheduling work scopes. Many civil service related transactions can be done at UTC such as processing passports, immigration matters and many other transactions usually done by more than 50 agencies. There are 8 UTCs now.

 

RURAL TRANSFORMATION CENTRES (RTC) is the same as UTC but for rural area matters such as agriculture products and services facilitation. RTC will supply products to the UTCs for supply push channel for the demand that is waiting at UTCs.

 

ENTREPRENEURSHIP: Malaysian Global Innovation and Creativity Centre (MaGIC) was introduced in 2014 as a one stop centre for services facilitating entrepreneurs to build their companies. This includes funders, registrars and many other business facilities necessary for ease of business. They even have work spaces to incubate new companies. In the United States of America, Silicon Valley was pushed by the private sectors; but for Malaysia, Government will do it via MaGIC.

 

There are more examples in the book National Blue Ocean Strategy Initiatives published by the Office of the Prime Minister of Malaysia.

 

Malaysia needs Blue as well as Blue friendly leadership to make things happen. Hence, Rancangan Malaysia Ke-11 (RMK11), the 11th Malaysia Plan, will be done within the Blue mindset as guided by the National Development Strategy (MyNDS) to ensure high impact, low cost and rapid execution - a significant direction taken by the administration of Prime Minister Najib Razak. For this, we are very grateful to a Korean intellect, Professor W. Chan Kim, the co-author for Blue Ocean Strategy, who has been instrumental in the adoption of Blue within the Malaysian civil service since 2009. He is still working alongside our Government especially on RMK11. His famous quotations that inspire us all are, "We have to create uncontested market space and make competition irrelevant. We can do this our way. The Asian way. Why must we follow the Westerners? Theirs (methods) may not fit in into our culture and environment. This has been done. Look at Korea. Look at Samsung."

* kopihangtuah

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