In 2005, W. Chan Kim and Renée Mauborgne published the book "Blue Ocean Strategy," where they demonstrated that creating new categories without competitors, so-called "blue oceans," yields significantly better results compared to competitive "red oceans." The book quickly became a bestseller—over 3.5 million copies sold.
Around the same time, Chris Zook and James Allen, consultants at Bain, released the book "Profit from the Core," arguing that companies focused on their core business outperform those that deviate from it. They even warned that Amazon was taking a risk by expanding beyond the book market.
Clearly, both theories cannot be correct simultaneously. The point is that there is no single right formula—success depends on context. What works in one situation may lead to failure in another. Therefore, a leader must be able to adapt and change approaches depending on the circumstances. There are no universal solutions—it's crucial to tailor the strategy to the specific problem.
Hierarchies and Networks
For years, we've been told about the need to dismantle hierarchies and barriers. However, there are few successful examples of such transformations. For instance, a Harvard Business Review reader survey conducted by management guru Gary Hamel showed that organizational layers have only increased despite efforts to reduce them. At the same time, many high-profile attempts, such as Holacracy, have failed.
The truth is simple: flat structures do help foster creativity, but complex processes require clear hierarchies and role distribution. Everyone must understand what they need to do and how it connects to others' work.
Research by Stanford professors Bob Sutton and Huggy Rao reveals that good leaders know how to switch between hierarchical and flat leadership styles. For example, Navy SEALs strictly follow the chain of command during missions, but after completion, during debriefing, everyone can voice their opinion.
Similarly, at Pixar, collective feedback is actively used during script development. However, once a film moves into production, everything becomes strictly hierarchical—everyone knows their role, and discussions cease. A film can have only one vision, and it belongs to the director.
Leaders must be able to both give orders and listen to diverse opinions when crafting strategy. Effective leadership lies in knowing when to switch between these approaches.
Incremental and Breakthrough Innovations
One of the best innovation stories I've heard involves a major tech company. Once, the firm secured a million-dollar contract to develop a sensor for detecting water contaminants at extremely low concentrations. It was a challenging task, and the chip development team began actively searching for a solution.
After 45 minutes, a biologist walked into the room with a bag of mollusks. The developers were puzzled. The biologist explained that mollusks can detect contaminants at just a few parts per million and open their shells upon detection.
It turned out that instead of a complex chip, the company needed a simple sensor to signal when the mollusks opened their shells. "We saved $999,000 and had mollusks for dinner," the manager noted.
This example highlights the importance of shifting approaches. Chip development is typically incremental: performance improves each year, as predicted by Moore's Law. But when the problem changes, fresh perspectives and new ideas are needed.
As I wrote in "Mapping Innovation," if the task had been merely to improve the chip by 30%, the biologist with mollusks would have been a distraction. But when the business model is at risk, high-tech solutions may prove useless. There is no single path to innovation—the strategy must fit the specific challenge.
Change-Maker and Manager Mindsets
Most of the time, we operate in manager mode—seeking consensus, executing tasks with predictable outcomes. Clients know what to expect, and we meet their expectations. Quality and stability are the foundations of success.
However, when it's time for change, this mindset must be discarded in favor of a change-maker approach. Don’t expect everyone to immediately support the changes—seeking consensus is a waste of time. Identify those who believe in the transformation and move forward. Over time, some will join, while others will stay behind.
When driving change, predictability is elusive. You’re doing something you’ve never done before and must embrace uncertainty. Mistakes and dead ends are inevitable. This isn’t just execution—it’s exploration and learning from failures.
Effective leaders must be able to switch between manager and change-maker mindsets. Change is necessary, but day-to-day operations cannot be neglected. Attempting to drive change while stuck in manager mode almost guarantees failure.
How to Become an Effective Leader
For creative tasks, it’s important to hear everyone out, but in complex operations, each person must clearly fulfill their role without questioning authority. Innovation requires first identifying the problem, then selecting the right strategy to solve it. Change is impossible with the same mindset used for routine tasks.
As Ludwig Wittgenstein said, "No action can be fully determined by a rule, because any action can be made to fit a rule." Leaders must have the courage to make decisions, and often, this requires switching from one approach to another.