A Proposal for “Value Innovation” Framework Based on the Blue Ocean Strategy: The Case of Kedah State Zakat Board and Malaysia Hajj Pilgrims Fund Board

Abstract

The Kedah State Zakat Board or Lembaga Zakat Negeri Kedah (LZNK) is an Islamic institution responsible for the collection and distribution of zakat in Kedah. Since majority of the population in the state of Kedah comprise of those from the middle- and small-income category, and highly dependent on agricultural sector, the role of LZNK is significant in helping them improve their standard of living. Currently, the biggest contributor to Kedah zakat payments is the Malaysia Hajj Pilgrims Fund Board or Lembaga Tabung Haji (LTH). This article dwells on the question of how can the zakat administration under the LZNK be maximized through the cooperation of these two institutions. A proposed cooperative framework based on the Blue Ocean Strategy (BOS) is hereby proposed which describes the method by which these two iconic institutions might benefit from each other’s organizational strengths and weaknesses. In particular, the framework is focused on the idea of “value innovation” as conceived by the BOS framework. The proposed framework was derived from a qualitative case study of the two institutions. The data collection process using structured data collection methods using interviews among policy makers and implementers as well as experts in both institutions. The results of the study discussed in this paper suggested a framework of Islamic management module based on BOS that can be a conceptual model for the improvement of the LZNK governance system.