TELDAP(Taiwan e-learning and digital archives program) has already invested a huge amount of efforts to create a better digital environment for digital heritage, e-learning, e-culture and cultural industry. How do the TELDAP improve herself and promote Taiwan’s national image? TELDAP e-newsletter is very proud to talk with Mr. Luciano Pezzotta, the Regional Consulting Lead of Blue Ocean Strategy Regional Centre, to discuss the issue with everyone.

TELDAP e-newsletter: Luciano, would you like to explain to us what the Blue Ocean Strategy is?
 
Mr.Pezzotta: Yes, the Blue Ocean Strategy is a new approach to strategic thinking, which is actually a breakthrough in the traditional mindset as we try to simultaneously achieve differentiation and low cost [at the same time]. And this is actually something completely new because we had traditionally thought that you either go for differentiation, or for low cost. In reality, the Blue Ocean Strategy provides a systematic approach composed of principles, frameworks and analytical tools to create new businesses that we call “blue oceans,” and this is mainly achieved through looking to alternatives and know customers, which are the two basic principles of the Blue Ocean Strategy.
 
TELDAP e-newsletter: I see. So, Luciano, this is your first time in Taiwan, and this is your first time to be approached by the Taiwan e-Learning and Digital Archives Program. Right now Taiwan e-Learning and Digital Archives Program (Teldap) is constructing the digital environment and developing the energy of the digital culture in Taiwan. As Taiwan is a very small country in the world, is it a suitable way to improve Taiwan’s soft power and national image with a resource like Teldap (such as Japan and its manga/anime pop culture)? Or could you provide your viewpoints on applying the Blue Ocean Strategy to Teldap?
 
Mr.Pezzotta: What I can see is that, according to the Blue Ocean Strategy, what is very important is to mitigate “pain points” of existing users of South Pacific services or contents, and then unlock exceptional value for new groups of non-customers that eventually can appreciate the new offering and enter the market. So, about the potential of these digital platforms, to answer your questions, I would go through an exercise, which is designing the existing strategy canvas. The existing strategy canvas is the starting point for understanding how these digital platforms can unlock exceptional value for existing and new users. In particular, I would also combine this framework, which is the key to the Blue Ocean Strategy, together with the buyer experience cycle, which is looking at products from the standpoint of the buyer, because as suppliers, we tend—as I said in my speech—we tend to share implicit assumptions and beliefs with our competitors about who we are, who our competitors are, who our customers are, what our product is, but in reality we do not really focus on the buyer or user experience cycle. Specifically, in IT industries, there is a real danger that we fall in love with the technology, with the delivery platform, and we do not really look at the experience of the customers—we focus on delivering exceptional value on a specific stage of the buyer’s or user’s experience. So in reality, my point is to make sure these digital platforms are delivering exceptional value, and this must be seen from the buyer’s or user’s perspective. Then, if, overall this is a good path for Taiwan, I would say [my personal comment] is that in the future the value is going to be more and more into knowledge. We’ve seen already in the economy, that in the last hundred years we’ve shifted from agriculture to manufacturing, and now the focus is on services and adding value through a culture economy. So my personal feeling is that when it comes to recommendations of the Blue Ocean Strategy, I would look at these digital platforms from the buyer’s perspective, to see if they are really delivering exceptional value, and how can they potentially deliver exceptional value in the future, and what the user base is of these services. Are there ways to bring into the market new users that never used these kinds of services, or do they find them in some way creating pain points? Because, for example, what customers mind is that traditionally these kind of innovative services tend to target people who are very familiar with technology, tend to be kind of young, so we tend to forget the elderly or people who do not love technology so much for the sake of technology. People who want to get real value from products might be not in this majority of the people out there in the market. So I would go for these exercises.
 
TELDAP e-newsletter: I think this is a very interesting point, because frankly speaking, the Teldap program is still in the stage where we are still looking and asking ourselves: Who are the users? We don’t know that because our directors mostly come from the humanities field, so I think it is very…
 
Mr.Pezzotta: I think this is a very good point to have in every case of Blue Ocean Strategy thinking. It’s very important to have a good mix of expertise, of backgrounds, because we look for ways to do things we know already in new ways. The Blue Ocean Strategy is about thinking what everybody has—about seeing what everybody has seen before, but thinking what everybody has never thought before. So, this is a very important point, I think for your program, as it is very important to understand what kind of needs you want to meet and satisfy with this program. For example, there is in the IT industry a very successful and interesting case of NTT Docomo in Japan, where they provide a new version of the mobile phone on which you can access the Internet by simply pressing a button. Because with the Blue Ocean Strategy, you do not necessarily need to create new products; you need to find ways to unlock exceptional value, and sometimes exceptional value is easy to deliver, but we need to use the buyer’s or customer’s perspective. Because, for example, in the case of NTT Docomo, exceptional value has been delivered simply by realizing—and it’s something I personally totally share—the point that accessing the Internet via mobile phones is painful. You have to do all the configuration, and then there are several steps, and then you have access to a lot of functionalities, while in reality when you use the Internet on your phone, you just need two or three specific features. All the rest are typically features and services you use when you access the Internet from your computer, because obviously the mobile phone is a very small device. So by simply providing a button with access to two or three major services, NTT Docomo has been able to unlock exceptional value. So in many cases all it seems is that in IT industries, the supplier tends to focus on developing the next technology wave, the next step, while in reality, the real value for customers is by unlocking exceptional value in the experience cycle of used and existing technology. So how easy is it to use this technology? How easily can the device be maintained? How easy is it to purchase it and get it delivered? [How easy is it to use?] How pleasant? Is it really productive? Is it really making my life simpler or easier? Is it really adding value to my life in any way? Or is it just providing me with a new instruction manual to read, a new device to configure, new troubleshooting issues?
 
TELDAP e-newsletter: So it is very important to find out the unsatisfied needs and new customers, and I think we need to do a lot of things, a lot of research in order to achieve that. Now, let’s go to another level of questions. Because Teldap right now is expected to establish its own [market in certain industries], such as the culture industry and e-learning industry, now it is a government-supported program, but we will expect it to support itself in the future. As we look at it on an Asian or global scale, you do observe any “blue ocean” or chance to sell [our Teldap product] in these two industries? We need to achieve some goals in a very simple way. The government is investing in this program and its ultimate goal is to make money. Up until the current stage we have been just focusing on the culture industry and the e-learning industry, so do you observe any interesting case on an Asian or global scale that could be the new “blue ocean”?
 
Mr.Pezzotta: Yeah… I think there are a lot of such examples. The examples I’d like to make here are examples about industries and situations where you didn’t see any opportunities for value innovation before. These, in my opinion, are the most interesting cases, and actually, the Blue Ocean Strategy is a methodology that can be applied to any industry, because with the Blue Ocean Strategy what we’re doing is that we’re providing a systematic process with principle frameworks and analytical tools to actually take apart any business and reconstruct it in order to reduce the [amount of] investment [needed]. We’ve been dealing with factors that don’t really matter to our users and customers because companies traditionally tend to benchmark their competitors, [thinking that] if they focus on their competitors they will know what their competitors are doing and they will feel comfortable. [And] they feel very comfortable and risk-free in trying to do what their competitors are doing, but trying to do it better. In reality, there is in any industry the opportunity to create profitable businesses simply by taking apart the business, looking to alternatives instead of looking to what competitors are doing, and looking to what other industries are doing or looking to what is happening to different strategic groups, and see why customers trade up or down. Looking to the chain of buyers, many industries tend to better serve the existing target of the industry, [but] in reality there are several actors that are involved in the process—that may be the purchaser, who may be different from the user, who may be different from the influencer. In many cases, you can change the focus and completely redesign the logic of your industry, or you can add additional and complimentary services or products to change the experience. Or, another opportunity is about changing the emotional or functional orientation of the industry—it’s typically [the case that] any industry is driven by either the emotional or the functional orientation. It is functional when you buy a product or service for the immediate functional benefits. It is emotional when there is much more, when emotional feelings are involved. And then, it is about trends. Instead of passively taking and following trends, you can participate in the finishing of trends and you can shape them [by] being an active player from the beginning. But what is really perceived [also] by hearing some questions I received from the people [whom I’ve talked to] is that obviously, in a relatively small island close to such a big country like China, you feel kind of in a weak position. In reality, my conception—which is not completely related to the Blue Ocean Strategy—my examples are that there are a lot of small countries like Holland and Switzerland…these countries actually have been able to create some of the most efficient and effective co-operations in Europe and worldwide. This is because they do not have such a big market in their home countries, and they are required to go abroad. And because this is something they need to do, from the very beginning, they actually became very strong companies that are able to effectively compete in international markets. So I wouldn’t see [small country size] as a limit, because you are also already in a good position in terms of several industries. You have a good regulatory framework, you have good basic infrastructure, and so I see your country in a very good position to start this kind of strategic thinking in several different industries, including e-learning and digital platforms. The key driver here, to defend yourself from China, is look to eventual barriers, and as I said in my speech, barriers can be legal barriers [that prevent others from] patenting your innovative ideas, which would be a lucky case [for you], but there are also cognitive, economic and organizational barriers that can prevent any player from any country. I wouldn’t say China nowadays is your main competitor…definitely it is, but being in a world that is more and more globalized, I would be prepared to compete with any competitors from anywhere in the world.
 
TELDAP e-newsletter: I see. That’s a good point [to keep in mind] when trying to find the new “blue ocean”. Let me go to Question 5: As a successful manager and decision maker, how do we keep an eye on the discovery of blue oceans and find new opportunities? In your opinion, what kind of characteristics should a manager or decision maker have and develop?
 
Mr.Pezzotta: This decision maker should be able to have both typical management skills developed at the same time, which are the analytical and rational, and the creative and the emotional, because, obviously, you need to run an efficient company, you need to be a rational and very analytical person who works with numbers and is very familiar with data analysis, but at the same time, you must be able to focus on the big picture, which is one of the major principles of the Blue Ocean Strategy. Because actually, there is a statement I like to quote from an advertisement that says, “Not everything that can be counted matters and not everything that matters can be counted.” This means that we love to use numbers to describe the reality of the world, and I love it too, I love numbers. But, if we just simply focus on numbers, we’re going to miss a big portion of the picture, because actually not all phenomena can be described by numbers. So this is also the approach with a command for strategic planning, and this is also the big value of the Blue Ocean Strategy, because the Blue Ocean Strategy comes with a set of tools, analytical tools, which are based on visual communication. They do not require a big bunch of papers to describe a strategic profile. With the Blue Ocean Strategy you can use the strategic canvas, which is a simple diagram where you can define a strategic profile simply by drawing a line, and this is also a revolutionary point about the Blue Ocean Strategy. So the basic skills of such a leader should be being analytical and creative at the same time, being able to shift his or her mindset from the numbers to the big picture, being able to capture soft elements and trends that can be injected into a creative solution. And, obviously, you need to be daring and challenge the conventional wisdom of your industry. You have to be very open-minded, you don’t have to be somebody who likes to jump out of the window, we’re not saying that, but somebody who has a flexible mind in order to challenge the conventional wisdom and capture venture opportunities of exceptional value. That within a developer may not make sense.
 
TELDAP e-newsletter: To try to find new value and to stay emotional seems to be very important. You cannot be just a computer, but you also have to feel how the world changes.
 
Mr.Pezzotta: Yes, exactly. And because—as I said in the speech—customers are not going to tell you how to create a blue ocean, they are just going to tell you “We want more of the same for less,” you must be able to change your perspective from the perspective of the market and once more challenge the conventional wisdom to create new options that obviously need further development and assessment before they can be marketed. But you need the ability to capture high-level ideas that might create completely new offerings.
 
TELDAP e-newsletter: I see. So because I believe that everyone is hungry right now, let’s go to the last question: Would you like to say a few words or share any [final] comments with our readers in Taiwan?
 
Mr.Pezzotta: Yes, I have two major recommendations. The first one is about reading the Blue Ocean Strategy book because I truly believe it is an exceptional book, it is a one-time book where all the concepts and principles and tools of the Blue Ocean Strategy have already been described. So, [reading] this single book, which is also not so long, can be a pretty quick exercise, but an exceptional exercise with a very stimulating lecture, and this is really going to give [the reader] a better and deeper knowledge of the Blue Ocean Strategy. And, the second [recommendation] is to be very, I’d say, very strict in applying the methodology, because this methodology is not being developed overnight, and also includes some great insights not supported by empirical evidence. This book and this methodology has been developed [based on] over twenty years of academic research, so you may find that the book has been based on academic research, has been tested by our international network of practitioners, and so it’s already been tested, and has proven to be very effective. And in reality, what I do perceive is that people like the concept of creating innovative businesses, and then don’t really use systematically the methodology, and stop at a certain point, but I’ve seen several countries…these brings to capture…not fully capture the opportunities you have, because the methodology’s been designed around a strategy formulation process, which is called the four steps for visualizing strategy, which pushes companies to create new options and gather the highest return from these opportunities. In many cases I see both academics trying to develop their own version… I think some call it a new color instead of blue… Or, some companies use just portions of the methodology. So what I would like the Taiwanese academics and managers to do is to fully understand the methodology and all its tools in order to fully exploit the potential return of the application of the methodology.
 
TELDAP e-newsletter: Thank you very much for your time.

Links:
Blue Ocean Strategy
http://www.blueoceanstrategy.net.cn/china/index.php?page=luciano-pezzotta
An Introduction of Mr. Luciano Pezzotta
http://www.blueoceanstrategy.net.cn/china/index.php?page=luciano-pezzotta