This is why a sustainable blue ocean strategy requires a fully developed and consistent set of three propositions. Similarly, a manufacturing department may neglect buyer needs or may treat people as a cost variable.
A marketing department, for example, may focus on the value proposition and pay insufficient heed to the other two propositions. Unlike marketing, manufacturing, human resources, and other functions, a good strategy should cover the entire activity system of an organization. As the ultimate outputs of an organization’s activities are value for the buyer and revenue for itself and its inputs are the costs to produce them and the people to deliver them, the three strategy propositions of buyer value, profit (revenue minus costs), and people capture the essence of what an organization’s activity system does. The three strategy propositions correspond to the traditional activity system of an organization. In this sense, the three strategy propositions provide an organizing framework to ensure an organization is taking a holistic approach to the formulation and execution of strategy. It also rests on aligned and fair incentives. Motivating people requires more than overcoming organizational hurdles and winning people’s trust with fair process. While good strategy content is based on a compelling value proposition for buyers with a robust profit proposition for the organization, sustainable strategy execution is based largely on a motivating-people proposition. For any strategy to be successful and sustainable, an organization must develop an offering that attracts buyers it must create a business model that enables the company to make money out of its offering and it must motivate the people working for or with the company to execute the strategy.
At the highest level, there are three propositions essential to the success of strategy: the value proposition, the profit proposition, and the people proposition.
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