HOW TO IMPLEMENT BLUE OCEAN STRATEGY (BOS) IN B2B SECTOR Andrejs Čirjevskis1, Genadijs Homenko2, Valērija Lačinova3 Riga International School of Economics and Business Administration, Meža 3, LV-1048 Riga, Latvia E-mails: 1andrejs.cirjevskis@riseba.lv (corresponding author); 2mkatedra@riseba.lv; 3mkatedra@riseba.lv Received 18 November 2010; accepted 15 January 2011 Abstract. The aim of research is to confirm the hypothesis that BOS is viable in the B2B sectors. The objects of research are two business entities: world’s lead- ing suppliers of construction chemicals and manufacturer of purification equip- ment. Authors posed first research question is BOS a suitable within construction chemicals and purification equipment manufacturers’ industries? Second research question was about how to evaluate acceptability of new strategic choice on BOS? Third research question was how to diagnosis organisational hurdles on BOS im- plementation? Research has confirmed the hypothesis and suggested application of innovation value chain to diagnosing company’s ability to implement value in- novation. Keywords: B2B sector, Strategic Canvas, Blue Ocean Strategy Idea Index, Value Innovation Chain. Reference to this paper should be made as follows: Čirjevskis, A.; Homenko, G.; Lačinova, V. 2011. How to implement Blue Ocean Strategy (BOS) in B2B sector, Business, Management and Education 9(2): 201–215. http://dx.doi.org/10.3846/bme.2011.14 JEL classification: L17, M13, O31, O32, O33. 1. Introduction The challenge of implementation exists for any strategy. Many successful examples about Blue Ocean Strategies implementation focus much more on B2C (Dell, Yellow Tail, Ford T; CNN) than B2B sectors, although most sales and marketing personnel is in the B2B sector. To implement the new strategy an organization would have to overcome key or- ganizational challenges, including the cognitive, resource, motivational and political hur- dles (Kim, Mauborgne 2005a, 2005b). However there are no or very few examples how to diagnosis of a type or hurdle would be the most potentially serious for organisation. The aim of this research is confirm the hypothesis that Blue Ocean Strategy can be viable and successfully implemented in the organisation of B2B sectors as well as to B U S I N E S S, MA N AG E M E N T A N D E D U C AT I O N ISSN 2029-7491 print / ISSN 2029-6169 online 2011, 9(2): 201–215 doi:10.3846/bme.2011.14 Copyright © 2011 Vilniaus Gediminas Technical University (VGTU) Press Technika www.bme.vgtu.lt 202 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector explore how to diagnosis a type of organisation hurdles which would resist the imple- mentation of Blue Ocean Strategy in practice. The objects of this research are two real business entities from two different coun- tries operating in two different fields in terms of technologies, industry life cycles and the natures of innovations, those companies working in production and distribution of construction chemicals (Switzerland) and in production and distribution of industrial purification equipments (Russia). As concerns the basic unit of analysis, the current research mainly concentrates on Strategic Move. Strategic move is the set of manage- rial action and decision involved in making a major market-creating business offering (Kim, Mauborgne 2004a, 2004b). The type of research is classified as descriptive (provides a description of organi- zational capabilities that need to be developed for successful implementation of blue ocean strategy within B2B sector), co-relational (identify multiple factors that influence value innovation creation in B2B sector), with minimal interference of researchers, non- contrived (conducted in the natural environment where organization’s work proceeds normally). The time horizon of study is cross-sectional – data collections are done just once over short period of time (up to several months). Data collection methods: interviews, questionnaire and observation. 2. Description of research The objects of this research were two real business entities from two different countries operating in two different fields. First company SIKA AG (Switzerland) is one of the world’s leading suppliers of construction chemicals presented globally in more than 70 countries. Second company ALEXANDRA PLUS LLC (Russia) is the B2B provider of new innovative purification technologies in industrial sec- tor. The companies have been chosen taking in consideration different industries development stages: SIKA AG runs the business many years in mature construction chemicals industry and ALEXANDRA PLUS LLC represents business in emer- gent industry of innovative industrial purification technologies. Accordingly, three research questions have been elaborated. Having provided the hypothesis authors posed first research question is Blue Ocean Strategy is suitable within B2B sectors like construction chemicals and industrial purification equipment sectors? Suitability is concerned with whether a strategy addresses the key issues that have been iden- tified in understanding the strategic position of the organisation. Broad literature review helped authors to analyze a range of classical models and techniques to test a suitability of strategic choices, however many of them are based on the concepts of Red Ocean Strategy. Authors have decided to apply the Competitive Profile Matrix, Four Actions Framework, the Strategy Canvas and Three Tiers of Non-customers to visualize a suitability of Value Innovation creation for two very different industries. Accordingly, second research question was appeared: what about the most helpful 203 Business, Management and Education, 2011, 9(2): 201–215 analytical technique to evaluate an acceptability and feasibility of Blue Ocean Strategy? Acceptability is concerned with the expected performance outcomes of a strategy. Feasibility is concerned with whether an organisation has the resources and competences to deliver a strategy (Boguslauskas, Kvedaraviciene 2009). Authors adopted a Blue Ocean Strategy Idea Index to test acceptability and feasibility of new strategic canvas for two business entities. Third research question was formulated as follows: how to diagnosis organisational hurdles on value innovation implementa- tion? Authors adopted Innovation Value Chain to identify major barrier on the way of value innovation implementation. Investigation stage has included: firstly, the literature reviewed on commercial vi- ability of strategic choices in Red and Blue Ocean Strategy; secondly, the interviews and questionnaires are used in order to obtain information from the companies man- agement, companies customers and non-customers; thirdly, the direct observations of the work environment and industry specifics are made; fourthly, the secondary data, such as statistics, publications and internal company reports are examined and finally, the data is analyzed and interpreted, on the basis of which the research question are answered. 3. Data analysis and interpretation There are number of tools that can be used to assess the suitability of strategic choice. These include: ranking as method of identifying strategic options, decision trees where options are “eliminated” and preferred options emerge and also scenarios. However many of above mentioned concept are based on the concepts of Red Ocean Strategy (Kim, Mauborgne 2005a, 2009), they will not be able to test suitability of creation Blue Ocean Strategy and cannot be applied in current research. For answering first research question the object of research has been taken Switzerland Company “SIKA” operating in construction chemical industry (Table 1). Table 1. Profile of the company “SIKA AG” Company name “SIKA AG”, world’s leading suppliers of construction chemicals Status of the company: Joint Stock Company Date of registration: 1910 Target markets: Presented globally in more than 70 countries Target industries: Construction industry Annual turnover: 4624.5 million CHR (2008) Number of employees: 12900 Industry development stage: Maturity stage Company Profile: Construction chemicals 204 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector Construction chemicals are broad array of chemicals used in construction industry to reduce costs and / or to achieve necessary quality characteristics of final product (water resistant concrete, for instance). In current research the main focus is on the chemicals used for concrete and cement production. Having answered on first research question the study aim was to obtain information relevant to the group of people working with- in construction chemicals business and located in Scandinavian and Baltic countries. Judgments sampling involves the choice of individuals who are in the best position to provide the information required and represent a rich data source (Sekaran 2009). In order to identify critical success factors three top managers having decade’s long expe- rience within construction chemicals were asked during the phone interview from. The interviewees were offered to list factors they think are most important to be successful within construction chemicals industry in the form of unstructured brainstorming when the ideas are given as they come to mind (Brassard et al. 2002). What do you think the most critical success factors within construction chemicals industry are? Please name 10–15 factors that come to your mind. 1. What additional offerings can be created for the customers that are still missing in construction chemicals industry? 2. Are there any alternatives available in other industries that company may start of- fering instead and thus make customers trade across alternatives? 3. Are there other strategic groups within construction chemicals industry that can be attracted by existing offerings? 4. Are there any overlooked groups of potential customers in the chain of buyers (user, influencer, and purchaser)? 5. Is there a need for complementary products and services that is still not satisfied? 6. Is there a possibility to change functional appeal of construction chemicals industry into emotional one? 7. Are there stable and irreversible trend that can significantly change the business? 8. What non-customers can be attracted by construction chemicals industry offerings? All the given ideas were grouped by identity as sometimes they meant the same with different wording. The final list generated served as the basic list of critical success factors for designing of questionnaire. Then, altogether twelve individuals were chosen as respondents who are directly involved with construction chemicals business and technologies, are highly experienced within the field of study (in some cases decades long), and represent the countries under investigation. In addition, these experts were readily available by phone and e-mail as are personally known by one of researcher which minimized access concerns that usually accompany judgment sampling approach. To determine the importance weight of each critical success factor, first, all twelve re- spondents were offered, in questionnaire to simply choose value from 1 to 5 (1 – low importance in the industry and 5 – high importance) in dropdown list in appropriate cell of excel spreadsheet. Only nine of twelve respondents (75%) exercised it and sent the results back to the researchers. Afterwards, the absolute value chosen for each factor has 205 Business, Management and Education, 2011, 9(2): 201–215 been divided by total sum of absolute values of all factors in the list, giving the weight of certain factor from one respondent. The average weight of certain factor was then calculated from all responses. In addition, the results obtained from questionnaire have been used in practicing Four Actions Framework for SIKA AG and contribute to the suitability assessment of Blue Ocean Strategy within construction chemicals business. Further, identification of competition offering level in the market (i.e. critical success factors competitors are investing in) was made by means of questionnaire, where the respondent were able to choose the offering level of critical success factors in construc- tion chemicals industry for SIKA and two main competitors in the comparative scale from 1 to 5 (1 means low, 5 means high offering level). The questionnaire served in assessing SIKA’s and competitors’ offering level of the most important CSFs which have been identified on previous stage. Each respondent was asked to estimate each factor for SIKA AG and for BASF AG as main competitors. Only ten out of twelve respondents (83%) filled in the questionnaire and delivered the answers to the research- ers. All ten mentioned BASF as competitor number one. During the assessment of CSFs’ importance within construction chemicals market the following factors have been weighted as the least important: complementary products, commodity products, back- integration and training of customers. Advanced technology, quality, technical support, complete solutions, price and ease of use of product are among highly rated factors. The rest (skilled sales force, tailor made solutions, fast delivery and geographic presence) are somewhere in the middle. To reconstruct buyer value elements in crafting a new value curve, researchers have developed the four actions framework. Complementary products provided by respondent are more imitations of competitors’ moves and thus can be reduced to the minimum to lower the costs. Commodity products are still cash generators and cannot be eliminated until new innovative products pioneers become profitable. Anyway sooner or later SIKA should give up on commodities completely. Tailor made solutions have middle importance weight and also stand comparatively high in the value curve. This factor is more about differentiation and focus strategies that are mainly pursued in competitive red oceans. Blue Ocean Strategy on contrary looks for commonalities. Therefore, it makes sense to significantly reduce it in order to cut costs. Price is of high importance within construction chemicals industry, and has reversed influence (the higher the price the less attractive is the offering). It can be slightly re- duced due to the cost reduction moves discussed above to make the offering even more attractive. Training of the customers should be even raised in spite of low importance weight as it’s been concluded that some of customers in the chain of buyers have been overlooked. Advanced technology is the most important CSF according to the rating and is directly related with the capabilities of the company to innovate. The new value curve for SIKA has been built based on that information and is presented in Fig. 1 along with the main competitor value curve. Effective Blue Ocean Strategy has to have three complementary qualities: focus, divergence, and a compel- ling tagline. Now a clear divergence from competition and focus on certain factors can be observed on the new Strategy Canvas of SIKA AG. The compelling tagline of new 206 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector strategy can be pronounced as follows: “More innovation to our customers with friendly and honest attitude!”. Based on these three attributes in can be concluded that initial litmus test of commercial viability in terms of suitability of presented blue ocean ideas is passed. Thus, it can be concluded that blue ocean ideas are suitable within construc- tion chemicals industry, but of course more detailed investigation of each criteria is still necessary. The difference between the current and the desired industry performance level in terms of its Critical Success Factors was representing the direction of the Buyer Value Innovation creation in search of the Blue Ocean Strategy and makes the strategic choice as a suitable one in B2B sectors. Second research objective was Russian Company LLC (Table 2). Table 2. Profile of the company “Alexandra Plus” Company name “ALEXANDRA PLUS” Status of the company: LLC Date of registration: 2000 Target markets: Russia Ukraine, Kazakhstan, Byelorussia, Latvia, Lithuania, Macedonia, Mongolia Joint Project: China, South Africa Target industries: Real ways, Metallurgy, Public Utilities Number of employees: 36 Number of clients: 300 Industry development stage: Growing Company Profile: Industrial purification equipments Fig. 1. New Strategic Canvas of SIKA AG versus BASF Group (10 respondents) C om m od ity pr od uc ts C om pl em en ta ry Pr od uc ts Ta ilo r m ad e so lu tio n Pr ic e B ac ki nt eg ra tio n Ea sy to u se pr od uc ts C om pl et e so lu tio ns G eo gr ap hi c pr es en ce Q ua lit y Tr ai ni ng o f cu st om er s Fa st d el iv er y Te ch ni ca l S up po rt Sk ill ed s al es fo rc e Ad va nc e Te ch no lo gy Fr en dl y re la tio ns Tr us t N et w or k of fe llo w su ct om er s SIKA BASF 207 Business, Management and Education, 2011, 9(2): 201–215 The direct observations of the work environment of manufacturers of industrial pu- rification equipments specifics are made by researchers; the secondary data, such as statistics, publications, videos and internal company reports of ALEXANDRA PLUS LCC are examined. Having manufactured and supplied purification equipment for rail- way industries, company has started to produce purification equipment for metallurgy, medicine, and even for water industrial purification equipment based on ultrasonic waves technologies. Company maximized the scale of his blue ocean strategy beyond existing demand to non-customers and de-segmentation opportunities for future strategies. These newer technologies based on ultrasonic ways were opening up new market opportunities for ALEXANDRA PLUS, also raised fresh challenges in further strategic choices. Blue Ocean has been created in 2004, when after careful market research; ALEXANDRA PLUS launched a new daughter company producer of water purification equipment, LLC NOVOTECH EKO. There are traditionally three kinds of impurities in water: physical, chemical and bacterial, each presenting a different challenge in terms of consequences for human health as well as technologies and feasibility of removal. Although numerous technologies existed, the water purification market was dominated by ultraviolet (UV). A UV purifier irradiated water using UV rays, eliminating bacterial micro-organism. UV equipment needed reliable running water and power and seeks out after-sales service when exhausted consumables like UV lamps needed replacement. Regarding ultrasonic purification equipments produced by NOVOTECH EKO, the efficiency of ultrasonic clearance (US) is based on high-frequency oscillations which are the cause of strong cavitations in liquids. Microscopic cavitations bubble explodes in liquid removing grease and other kinds of impurities quickly and efficiently. NOVOTECH EKO LLC Company has created unique water purification technology in the world combining ultrasonic waves with UV rays for eliminating bacterial micro-organism till 100%! The benefits of ultrasonic waves plus UV rays technology were quite obvious e.g. minimal maintenance costs, long class life of equipments, high level of ecology and energy efficiencies and short payback period. It gave sound viable example of successful im- plementation of Blue Ocean Strategy in B2B sector. Strategy canvases for producers of industrial purification equipment, particularly, new Strategy Canvas for LLC Alexandra Plus have been built in comparisons with Russian purification equipment producers ITRANS LLC and Italian competitor MADIGO Group S.r.l as presented in Fig. 2. Thus, authors applied strategy canvas to visualize value innovation creation for two very different industries. New Strategy Canvas has been elaborated for both industries and answer on the first research question was given in confirmation manner, namely, Blue Ocean Strategy is suitable within B2B sectors. The concepts and frameworks already applied in current research can be especially helpful in understanding suitability of Blue Ocean Strategy in B2B sector. Accordingly, second research question was appeared: what about the most helpful analytical technique to evaluate an acceptability and feasibility of Blue Ocean Strategy? It is very important to get strategic sequence right to insure acceptability of blue ocean 208 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector idea. The assessment of viability in terms of acceptability and feasibility of blue ocean strategy within construction chemicals industry and in industrial purification equip- ment has been conducted based on the answers to first research questions. By address- ing the problems related to the spread of new ideas throughout the company adoption hurdles raised by employees can be easily tackled. The water purification equipment that promoted NOVOTECH EKO help economizes a sufficient resource that is not in interest of state-owned organizations. Sustainable management of water resources is complex process often requires responsibilities of concerning institutions (Dzemydiene, Maskeliunas et al. 2008). At present NOVOTECH EKO delivers water purification ultrasonic based technolo- gies equipment for small cottages, sanatoriums, and private water-canal as well as for sewage tanks. BOS Idea index (Table 3) visualizes whether each criterion throughout strategic sequence towards commercially viable blue ocean idea has been met. It can be concluded that blue ocean ideas are commercially viable within B2B sector at least in construction chemicals industry and water purification sector, but of course more detailed investigation of each criteria is still necessary. Small issues, however, can be observed inside the company. The research revealed the spread activity as one of the weakest in the company SIKA. Third research question was formulated as follows: how to diagnosis organisational hurdles on value innovation implementation? Value innovation isn’t an easy task as many innovative ideas failed to become real products due to many reasons (Moore 2004; Bruce, Birchall 2009; Kanter et al. 1997; Temme 1998; Banyte, Salickaite 2008). Several authors postulate that it is not enough just to hire creative people and make organization innovative (Bharadwaj, Menon 2000). B ra nd D es in g Pr ic e M at er ia l Ec on om y C on vi ni en t Q ua lit y M as s C us to m is at io n M ai nt en an ce En eg rg y Ef fic ie nc y Ec ol og y Ef fic ie nc y U ltr aS ou nd Te ch no lo gy ALEXANDRA PLUS MADIGO GROUP ITRANS Fig. 2. Strategic Canvas of manufacturers of industrial purification equipment (20 respondents: 10 customers and 10 non-customers) 209 Business, Management and Education, 2011, 9(2): 201–215 Table 3. Index of blue ocean ideas in construction chemical industries for SIKA AG and in in- dustrial purification technologies for “Alexandra Plus” LLC Criteria Questions SIKA AG Criteria met? ALEXANDRA PLUS LLC Criteria met? Utility Is there exceptional utility? Are there compelling reasons to buy the offerings? + + Price Is the price easily accessible to the mass of buyers? + + Cost Does the cost structure meet the target cost? + + Adoption Have the adoption hurdles been addressed upfront? +/– + A strong and focused organizational culture or environment, which helps to recog- nize the paramount importance of innovation and removes all the obstacles in its de- velopment, should be established and maintained. Different organizations face different hurdles in development of new products, services or businesses (Hansen, Birkinshaw 2007; Kazlauskaite, Buciuniene 2008), thus proving that there is no universal solution for innovative process. However, by taking an end-to-end (or holistic) view on innova- tive efforts organizations are able to pinpoint their weaknesses and adjust their inno- vation practices to address existing deficiencies (Hansen, Birkinshaw 2007). Hansen, Birkinshaw (2007) have offered a comprehensive framework on end-to-end view, called the Innovation Value Chain (IVC), which is the result of decade long research project where innovation effectiveness in 120 new product development projects was analyzed, more than 130 executives from over 30 multinational companies in North America and Europe were interviewed and 4000 non-executive employees in 15 multinationals were surveyed. The idea behind the IVC is similar to Porter’s value chain for transforming raw materials onto finished products. It provides a systemic approach to assessing com- pany’s innovation performance and identifying which of the many available practices are best to apply. The IVC breaks innovation process down into three phases (Hansen, Birkinshaw 2007): idea generation, idea conversion (or development) and idea diffu- sion. There are also six critical tasks that managers should perform throughout all three phases: internal sourcing, cross-unit sourcing, external sourcing, selection, development and companywide spread of the idea. Each is a link in the chain (see in Table 4 “Phase of IVC”). The strongest links are those in which company’s activities are excellent. The weakest ones are activities company struggles with. A company’s ability to innovate is as strong as the weakest link in the IVC. Therefore it is important to focus on the weakest links to make them equivalently strong throughout the whole IVC. Typically there are three broad ‘weakest link’ scenarios: idea-poor company (difficulties in idea generation phase), conversion-poor company (problems in idea development phase) and diffusion-poor company (problems with bringing good idea to market). Initially raw ideas are created within a unit and often are not distributed outside it (Hansen, 210 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector Birkinshaw 2007). These raw ideas are usually incomplete as they are lacking another point of view (by people with different experience and background). McKeown (2008) argues that there is no perfect idea and it can always be improved. Therefore, compa- nies need to build internal cross-unit networks, as well as external networks to improve generation of good new ideas (Hansen, Birkinshaw 2007). As supported by the study (Morrison 2008) cross-functional teams (or cross-unit networks) represented by differ- ent organization departments proved to be the key element in efficient innovative prob- lem solving. Responsibility of team members for the results they promised to deliver is another crucial point. External networks are needed as a source of enough good ideas from outside the company, and even outside the industry (Hansen, Birkinshaw 2007). That gives the opportunity to understand real needs of customers and end users, gain knowledge from scientists, entrepreneurs, investors, suppliers and even competitors. In order to avoid conversion-poor company scenario it is suggested (Hansen, Birkinshaw 2007) to practice multichannel funding (to insure funding of idea devel- opment in case, for instance, boss doesn’t like a particular new idea) and safe havens (sometimes separate company’s entities that run new businesses and have high level of operating autonomy). Another key element of conversion phase, except funding, is screening of new projects (Hansen, Birkinshaw 2007). In other sources (Nieto et al. 1998) it is called portfolio management. There is always a huge amount of projects to implement in any developing organization, and resources are usually limited. Therefore it’s of vital importance to choose and do the right project. Companies tend to choose “natural” approach – focus on incremental innovation as its less risky (Johnson et al. 2005). Portfolio management can help to overcome this barrier. It works like a funneling process that removes weak projects and allows making decisions on the right num- ber of projects for resources available (Andersen, Strandskov 2008; Hansen, Birkshaw 2007). Finally, to fix diffusion problems, it is not enough for executives just order a companywide rollout of developed ideas (Hansen, Birkinshaw 2007). Employees feel themselves safe and comfortable by dealing with known product or process, and some- thing unknown with unclear and hardly measurable benefits like new product or service, of course creates fear and resistance (Loewe, Dominiquini 2006). The necessary pre- requisite to overcome these barriers is committed leadership (Bruce, Birchall 2009). The leaders, who preach good words about emerging product or business through- out the company, can insure successful implementation of innovation diffusion phase (Hansen, Birkinshaw 2007). In order to succeed in innovation projects company should strengthen all the weak links in Innovation Value Chain (IVC is as strong as the weakest link in it). Valuable suggestion can be elaborated for SIKA and ALEXANDRA PLUS managers on what links of IVC to focus by finding the answers to third research ques- tion. Having answered third research question researchers had chosen SIKA Corporation as object of research because Blue Ocean Ideas had not been implemented so far and in comparison with ALEXANDRA PLUS who had successfully implemented BOS re- cently. For the purpose of finding the weakest link in the IVC of SIKA the questionnaire has been designed. Ten of twelve respondents (83%) expressed their agreement level 211 Business, Management and Education, 2011, 9(2): 201–215 with the statements in the questionnaire. The rating of IVC of SIKA is summarized in Table 4. According to the measurement principle the higher the score of certain link (or activity) the weaker it is. As seen in Table 2 the weakest links of SIKA’s IVC are cross-pollination, development of ideas and their spread across the organization. Cross- pollination weakness is related with low involvement of people from different units and subsidiaries in innovation projects, and with reluctance of different units and businesses to collaborate on projects. As mentioned above, cross-unit networks proved to be the key element in efficient innovative problem solving and on time project implementa- tion. Therefore, the management of SIKA should try to find the ways of motivating col- laboration between different units. The development of innovative ideas suffers mainly from slow development of new products. This can be explained with too high amount of projects, which is mainly idea screening problem, with lack of human resources to deal with all projects or with lack of project management capabilities. The further step of SIKA management is to find out which is the root cause of idea development prob- lem to address. Finally, spread activity is the weakest one due to slow roll out of new products to the market and unwillingness to penetrate all possible channels, customer groups and regions with new products. According to Kim, Mauborgne this is happening because of fear and resistance that new products create. Table 4. Innovation Value Chain rating of SIKA AG (10 respondents) Statement Do not agree (1) Partially agree (2) Agree (3) Total score Total score of ac- tivity Activity (link) Phase of IVC Our culture makes it hard for people to put forward novel ideas. 80% 20% 1.20 3.00 In-house idea ge- neration I d e a g e n e r a t i n g People in our unit come up with very few good ideas on their own. 40% 40% 20% 1.80 Few of our innovation projects in- volve team members from different units or subsidiaries. 10% 70% 20% 2.10 4.30 Cross- pollina- tion Our people typically don’t collaborate on projects across units, businesses, or subsidiaries. 10% 60% 30% 2.20 Few good ideas for new products and businesses come from outside the company. 20% 70% 10% 1.90 3.40 External sourcing of ideas Our people often exhibit a “not in- vented here” attitude – ideas from outside aren’t considered as valuable as those invented within. 50% 50% 1.50 212 A. Čirjevskis et al. How to implement Blue Ocean Strategy (BOS) in B2B sector Statement Do not agree (1) Partially agree (2) Agree (3) Total score Total score of ac- tivity Activity (link) Phase of IVC We have tough rules for investment in new projects – it’s often too hard to get ideas funded. 30% 50% 20% 1.90 3.60 Selection C o n v e r s i o n We have a risk-averse attitude toward investing in novel ideas. 30% 70% 1.70 New-product-development projects often don’t finish on time. 10% 60% 30% 2.20 4.10 Develop- ment Managers have a hard time getting traction developing new businesses. 10% 90% 1.90 We’re slow to roll out new products and businesses. 10% 60% 30% 2.20 6.30 Spread D i f f u s i o n Competitors quickly copy our prod- uct introductions and often make pre- emptive launches in other countries. 40% 40% 20% 1.80 We don’t penetrate all possible chan- nels, customer groups, and regions with new products and services. 70% 30% 2.30 Employees feel themselves safe and comfortable by dealing with known product and create certain adoption hurdles. Therefore SIKA has to find the ways of overcom- ing this hurdle either by finding true leaders, who preach good words about emerging product or business throughout the company but may not be readily available, or by other means. In overall the IVC of SIKA is not that weak (the maximum total score for each statement is 3 and none of them was higher than 2.3), but in any case by addressing the issues related to mentioned weaknesses the company can improve its capabilities in value innovation activities and significantly contribute to value in- novation creation and eliminate adoption barriers (cognitive and motivation hurdles) raised by employees. Regarding resource and political hurdles these are not the case of SIKA AG. Because for 100 years SIKA has positioned itself as innovative company always striving for introducing something new into the market. For instance, invention rate (percentage of sales with products invented within the previous five years) is 34 % (SIKA… 2009a). Thus answering on third research question the VIC (value innova- tion chain) has been adopted to diagnosis organization hurdles and the weakest links of SIKA’s innovation value chain were identified and certain suggestions to address them provided. End of Table 4 213 Business, Management and Education, 2011, 9(2): 201–215 4. Conclusions Research has confirmed the hypothesis that Blue Ocean Strategy can be viable and successfully implemented in B2B sectors. The answer to the questions on the viability (suitability, acceptability and feasibility) of Blue Ocean within construction chemicals industry for SIKA AG and within industrial purification technologies for ALEXANDRA PLUS LLC, which was the main aim of the research, was found. Furthermore, the ele- ments of blue ocean strategy in currently undertaken strategic steps of SIKA AG and ALEXANDRA PLUS LLC have been revealed. When it comes to limitation of the research paper the time constraints imposed the most limiting influence on the research. Additional analytical tools and strategic models would certainly provide more detailed picture on strategy formulation approaches and allow ana- lyzing provided ideas from other points of view. The scope of research is also restricted geographically as the information was mainly collected from managers in Scandinavian and Baltic countries for SIKA AG and in Russia and Latvia for ALEXANDRA PLUS LLC. Next researches in this area will be connected with investigation how to re-di- rect limited organizational resources from cold spots to hot spots to execute Blue Ocean Strategy to overcome diagnosed key organizational hurdles on practice? References Alexandra Plus corporate webpage. 2010 [online], [accessed 04 September 2010]. Available from Internet: . Andersen, P. H.; Strandskov, J. 2008. 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Innovation and Competitive Advantage [online], [accessed 26 November 2009]. Available from Internet: . http://dx.doi.org/10.1108/10878570610637858 http://dx.doi.org/10.3846/2029-0187.2008.14.64-75 215 Business, Management and Education, 2011, 9(2): 201–215 KAIP ĮGYVENDINTI ŽYDRŲJŲ VANDENYNŲ STRATEGIJĄ (ŽVS) SEKTORIUJE „VERSLAS – VERSLUI“ A. Čirjevskis, G. Homenko, V. Lačinova Santrauka Tyrimo tikslas patvirtina hipotezę, kad ŽVS yra gyvybinga B2B sektoriuose. Tyrimo objektai yra du verslo subjektai: pasaulyje pirmaujantys statybos chemikalų tiekėjai ir valymo įrenginių gamintojai. Autorių keliamas pirmasis mokslinių tyrimų klausimas – ar ŽVS yra tinkama statybos chemikalų ir valymo įrenginių gamintojų pramonei? Antrasis mokslinių tyrimų klausimas – apie tai, kaip įvertinti naujo strateginio pasirinkimo priimtinumą ŽVS? Trečiasis tyrimo klausimas – kaip diagnozuoti or- ganizacines kliūtis, įgyvendinant ŽVS? Tyrimai patvirtino hipotezę, ir buvo pasiūlyta taikyti inovacijų vertės grandinę, siekiant diagnozuoti įmonės gebėjimą įgyvendinti inovacijų vertę. Reikšminiai žodžiai: B2B sektorius, žydrųjų vandenynų strategijos idėjos indeksas, inovacijų vertės grandinė. Andrejs ČIRJEVSKIS is a Professor of RISEBA (Latvia) as well as a business consultant, working in both the public and private sectors. He was a leader in executive finance functions within Latvian and international companies for 10 years. His expertise lies in corporate strategy development and implementation, corporate financial management and project management. His international teaching experience spans lecturing in ESCE of Paris; in Normandy Business School, France; University of Applied Science in Mainz, Germany; INHOLLAND University, Rotterdam; Estonian Business School and Safford Business School of Safford University (UK). He has spoken numerous times at interna- tional scientific conferences and forums. Genadijs HOMENKO is currently Business Unit Concrete manager within SIKA Baltic company (a branch of SIKA corporation in Baltic countries). He has chemical engineering background and experience, and possesses MSc degree in chemistry. Recently was granted MBA degree from the University of Safford (UK). Before SIKA he was working for CEMEX (one of the world’s leading cement and concrete manufacturers) as project manager and concrete quality manager. He’s interna- tional experience is related to Velsicol Chemical Corporation in Estonia. By operating as Technical manager he was leading the team of chemical engineers and dealing with all technical projects re- lated to the chemical’s factory. Valērija LAČINOVA is a board member of OU “Sunprima” (Estonia) and a sales manager of SIA “Dalks” (Latvia). Her work is connected with mechanical engineering and metalworking sector, supplying spare parts and technological equipment to railway companies of CIS and EU countries. She has graduated form professional Bachelor’s study programme “Business Administration” from Banking Institution of Higher Education (Latvia). Recently was granted Master degree in “Business Management” from Riga International School of Economics and Business Administration (Latvia).