Public services: blue ocean thinking

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From Malaysia to the UK, governments are having to look at providing public services differently. A ‘Blue Ocean’ strategy is proving an increasingly popular way to turn routine thinking on its head

While ‘blue sky thinking’ might be a tired management cliché, experience from Malaysia suggests that a ‘Blue Ocean’ approach offers practical tools for innovation in public services.

The so-called Blue Ocean Strategy has been adopted by the Malaysian government and applied to a range of its services. Results, so far, indicate that it could prove useful in public sector contexts elsewhere.

Blue Ocean theory was created by professors W. Chan Kim and Renée Mauborgne of INSEAD, one of the world’s largest business schools with campuses in France, Singapore and Abu Dhabi. Their book, Blue ocean strategy: how to create uncontested market space and make the competition irrelevant, was published in 2006 and the Blue Ocean Strategy Institute at INSEAD applies the theory to businesses worldwide.

Blue Ocean theorists describe existing markets as ‘red oceans’ – red with blood as firms are dragged under by circling sharks with which they try to compete. They propose an alternative to standard differentiation strategies of either lower cost or higher quality, arguing that it is better to focus on being different rather than trying to compete in an already bloody red ocean – hence the blue ocean analogy.

According to this theory, high performing companies achieve growth and long term stability by creating new markets and avoiding cut throat competition. McDonalds, Cirque du Soleil and Yellow Tail wine are among the many case studies cited as demonstrating the application of this strategy to businesses.

In industry, the impetus to innovate comes from the threat of competition, whereas in public services it is from having to do more with limited budgets. Much current thinking about how to manage public services comes from a conventional understanding of how businesses survive when the going gets tough, but the Blue Ocean approach turns such thinking on its head. While the commercial sector aims to expand demand for services, public organisations are often trying to do the opposite.

Blue Ocean Strategy can help boost creativity in public as well as private sector organisations. The dramatic transformation of the New York Police Department in the 1990s, later applied in Boston, is one such example cited by Kim and Mauborgne. Blue Ocean Strategy is popular among businesses in Asia in particular, with, for example Malaysian Airlines discovering that driving customers to the airport could distinguish their offer from that of competitors.

There is a close relation between business and the state in Malaysia, leading the Malaysian Government to adopt a National Blue Ocean Strategy in 2011. Prime minister, Datuk Seri Najib Razak, has said: ‘Blue Ocean Strategy is a management tool which can be applied in the government’s administrative context as it enables us to think out of the box with good results.’ He wants every civil servant to adopt four elements enshrined in the Blue Ocean Strategy when carrying out their daily duties: ‘reduce’, ‘eliminate’, ‘create’ and ‘increase opportunities’.

The Blue Ocean Strategy has been applied to prisons, housing, water supply and a number of other services in Malaysia and has encouraged collaboration between the police and army. Blue Ocean thinking has meant developing holistic solutions through seeing things from service users’ perspectives and eliminating steps in bureaucratic processes.

This has led to the creation of one-stop-shops at urban Transformation Centres in principal locations, which house government services, private agencies, businesses, NGOs, and youth facilities in one place and are open every day including Sundays. Results include reducing the time taken to issue a passport from three days to half on hour.

The Blue Ocean approach complements lean thinking and is a way of potentially taking it further. In this context, the Association for Public Service Excellence was recently asked to run workshops for civil servants in Malaysia to show how UK councils have been responding to austerity. Delegates in Kuala Lumpur gained insights into ways in which APSE has used ‘lean thinking’ management tools to help local authorities reduce costs and improve efficiency.

Most public service improvement plans tend to look at how to do what the organisation is already doing more effectively. But efficiency has been optimised in many instances in the UK by taking a different approach, and APSE is now helping councils innovate, generate income and reduce demands on services.

Applying Blue Ocean Strategy to ‘reduce’, ‘eliminate’, ‘create’ and ‘increase opportunities’ refocuses thinking – and questions underlying assumptions; for example, by changing public behaviour in order to reduce demand and by involving users in service design. However, with all strategic management frameworks such as ‘Blue Ocean’ it is important to remember that public service delivery is not a ‘perfect’ market.

Some desirable social objectives or outcomes cannot be delivered through normal market mechanisms and the normal rules of demand and supply don’t always apply in a public sector context. However rather than stripping away services as a response to austerity, in these tough times for public services everywhere, Blue Ocean thinking can help strategise and prioritise innovation and income generation – and lead to entirely new ways of doing things.

Andy Mudd is principal consultant at the Association for Public Service Excellence, based in Manchester, UK. For further details visit: www.apse.org.uk

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