Sunday, February 22, 2015

Exporting over the OCEAN BLUE

In the March 2015 Harvard Business Review, the authors of The Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne suggest that competitiveness and market expansion are the keys to long term success.  In the Milwaukee 7 Global Cities
Export Initiative, overcoming a shortfall in competitiveness is identified as key to economic success. The Blue Ocean authors say, “But long-term success will not be achieved through competitiveness alone.  Increasingly, it will depend on the ability to generate new demand and create and capture new markets.”1


Exporting is the capturing of new markets and is at the heart of the M7’s strategy.  Exports have been the primary source of economic growth in each of the seven counties in the region over the past decade.  Between 2009 and 2012 exports accounted for over 100% of growth.2
  
This past week Paul A. Laudicina, partner, chairman emeritus of ATKearney spoke to the M7 Regional Economic Development Advisory Council and said that nationally we can expect a “3.3% base-case average annual real growth between 2015 and 2020.”

When you apply that 3.3% growth rate to the regional economy, then at the end of 2019 the economy would have grown by seventeen billion dollars.  Doubling exports only requires the region increases exports by $15.3 billion. Given that exports are the primary source of growth in the region, the goal of doubling exports appears necessary and realistic.  To do that, many company leaders need to change direction and start to export strategically.

In the March HBR article the Blue Ocean authors also identify the one key factor that undermines efforts to change direction.  In their conversations with managers about their efforts to execute these market expanding strategies the authors noted, “we identified a common factor that seemed to consistently undermine their efforts: their mental models--ingrained assumptions and theories about the way the world works.  Though mental models lie below people’s cognitive awareness, they’re so powerful a determinant of choices and behaviors that many neuroscientists think of them almost as automated algorithms that dictate how people respond...

In the M7 strategy this is exactly the cognitive obstacles that Strategy #1 is designed to address.3  When it comes to getting companies to start exporting strategically, get the CEO/President/owner over this hump and get out of the way.

1 Kim, W. Chan, and Renee Mauborgne. "Red Ocean Traps." Harvard Business Review Mar. 2015: 68-73. 

2 Data based on Brookings ExportNation 2013

3 See the executive summary of the M7 export strategy at http://bit.ly/1DLifxa

Photo copyright 2004 by Bill Burnett, East coast of Siberia
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