BLUE OCEAN STRATEGY

TOPICS COVERED
1. Blue Ocean Vs. Red Ocean Strategy 2. Blue Ocean Strategy Tools a. Strategy Canvas b. Four Action Framework c. PMS Map 3. Six Principles of Blue Ocean Strategy 4. Formulating Blue Ocean Strategy 5. Executing Blue Ocean Strategy

BLUE OCEAN VS. RED OCEAN STRATEGY

Blue Ocean Strategy Red Ocean Strategy

Create uncontested market space Compete in existing market space

Make the competition irrelevant

Create and capture new demand Break the value-cost trade off

Beat the competition

Exploit existing demand Make the value cost tradeoff

Align the whole system of a firms activities with its strategic choice of differentiation and low cost

Align the whole system of a firms activities with its strategic choice of differentiation or low cost

BLUE OCEAN STRATEGY TOOLS

STRATEGY CANVAS
A diagnostic tool for building a compelling blue ocean strategy It captures the current state of play in the known market space Allows to understand : where the competition is currently investing the factors the industry currently competes on in product, service and delivery what customers receive from existing competitive offerings on the market

FOUR ACTION FRAMEWORK

ELIMINATE

RAISE

REDUCE

CREATE

FOUR ACTION FRAMEWORK

Eliminate Reduce

Which of the factors that the industry takes for granted should be eliminated?

Which factors should be reduced well below the industrys standard?

Raise
Create

Which factors should be raised well above the industrys standard?

Which factors should be created that the industry has never offered?

FOUR ACTION FRAMEWORK

The case of cirque du soleil (A circus company) ELIMINATE REDUCE
Star performers Animal shows Aisle concession sales Multiple show arenas Fun and humour Thrill and danger

CREATE
Theme Refined environment Multiple productions Artistic music and dance

RAISE
Unique venue

PIONEER-MIGRATOR-SETTLER MAP
PIONEER Value Innovation

MIGRATOR Value Improvement

SETTLER Value Imitation

TODAY

TOMORROW

SIX PRINCIPLES OF BLUE OCEAN STRATEGY

FORMULATION PRINCIPLES
Reconstruct market boundaries

EXECUTION PRINCIPLES
Overcome key organizational hurdles

Focus on the big picture, not the numbers

Reach beyond existing demand

Build execution into strategy

Get the strategic sequence right

FORMULATING BLUE OCEAN STRATEGY

1. RECONSTRUCT MARKET BOUNDARIES

Head-to-Head Strategy
Focus on rivals within industry

Blue Ocean Strategy

Looks across alternative industries

Focuses on competitive position within strategic group Focuses on better serving the buyer group

Looks across strategic group within industry Redefines the industry buyer group

1. RECONSTRUCT MARKET BOUNDARIES Cont.

Head-to-Head Strategy
Focuses on maximizing the value of product or service offerings within the bounds of its industry Focuses on adapting to external trends as they occur

Blue Ocean Strategy

Looks across to complementary product and service offerings

Participates in shaping external trends over time

2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS Focus on the big picture, not the numbers The Four Steps of Visualizing Strategy

Visual Awakening Visual Exploration Visual Strategy Fair Visual Communication

2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS Cont.

Visual Awakening

Compare your business with your competitors by drawing your as is strategy canvas See where your strategy needs to change Go to the field to explore the six paths to creating blue oceans Observe the distinctive advantages of alternative products and services See which factors you should eliminate, create, or change

Visual Exploration

2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS Cont.

Visual Strategy Fair

Draw your to be strategy canvas based on insights from field observations Get feedback on alternative strategy canvases from customers, competitors customers, and noncustomers Use feedback to build the best to be future strategy

2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS Cont.

Visual Communication

Distribute your before-andafter strategic profiles on one page for easy comparison Support only those projects and operational moves that allow your company to close the gap to actualize the new strategy

3. REACH BEYOND EXISTING DEMAND

The Three Tier of Noncustomers

First tier: Soon to be noncustomers who are the edge of your market, waiting to jump ship Second tier: Refusing noncustomers who consciously choose against your market Third tier: Unexplored noncustomers who are in markets distant from yours

4. Get The Strategic Sequence Right

The Sequence of Blue Ocean Strategy

Buyer utility
Is there exceptional buyer utility in your business idea?

Price
Is your price easily accessible to the mass of buyers?

Adoption
What are the adoption hurdles in actualizing your business idea?

Cost
Can you attain your cost target to profit at your strategic price?

A commercially viable blue ocean idea

EXECUTING BLUE OCEAN STRATEGY

1. OVERCOME KEY ORGANIZATIONAL HURDLES

Overcome Key Organizational Hurdles

Cognitive Hurdle

Resource Hurdle

Motivational Hurdle

Political Hurdle

1. OVERCOME KEY ORGANIZATIONAL HURDLES Cont.

Cognitive Hurdle (Status Quo)

Ride the Electric Sewer Meet with Disgruntled Customers

Resource Hurdle

Redistribute resources to your hotspots Redirect resources from your cold spots Engage in horse trading

1. OVERCOME KEY ORGANIZATIONAL HURDLES Cont. Zoom in on Kingpins (key influencers) Place kingpins on a fishbowl Atomize to get the organization to change itself Secure a consigliore on your top management team Leverage your angels and silence your devils

Motivational Hurdle

Political Hurdle

2. BUILD EXECUTION INTO STRATEGY

Fair Process of Strategy

Strategy

Formulatio n Process

Fair Process Engagement, Explanation, Expectation clarity

Attitudes

Trust and Commitment I feel my opinion counts

Voluntary Cooperation Ill go beyond the call of duty Exceeds Expectation self initiated

Behaviour

Strategy Execution

THANK YOU