Trio

Libo-on
Yandall
Villavicencio

Blue Ocean Strategy

“Don’t compete with Rivals, make them irrelevant”
 Introduction to
Blue Ocean Strategy
Blue Ocean Strategy
• This discipline has been developed by W.Chan Kim and Renée Mauborgne,
professors at INSEAD, who are co-authors of the book, Blue Ocean Strategy,
and are co-directors of the Blue Ocean Institute

• Blue oceans are defined by untapped market space, demand creation and
the opportunity or highly profitable growth.

• The term Blue Ocean is an analogy to describe the wider potential of market
space that is vast, deep, and not yet explored.

• In blue oceans, competition is irrelevant because the rules of the game are
waiting to be set.

• To seize new profit and growth opportunities, they also need to create blue
oceans.
Red Ocean vs. Blue Ocean
Blue Ocean aims to
create uncontested market
space and make the
competition irrelevant.
Companies in the Creating blue
red ocean followed oceans builds
conventional approach brands
of trying to out
perform their rivals to
grab a greater share
of existing demand.
As market space gets
crowded, prospects for
profits and growth
are reduced.
 Formulating
Blue Ocean Strategy
 Value Innovation is the cornerstone of blue ocean
strategy. It focuses on making the competition irrelevant by
creating a leap of value for buyers and for the company, thereby
opening up new and uncontested market space.
Four Actions Framework

Create
Raise
Eliminate
Reduce
Six Paths to Blue Ocean Strategy

Industry

Strategic group

From Buyer group To

Competing Creating
Within Scope of product or service
Across
offering
Functional-emotional
orientation of an industry

Time
Six Paths to Blue Ocean Strategy
1. Look Across Alternative Industries

2. Look Across Strategic Groups Within Industries

3. Look Across the Chain of Buyers

4. Look Across Complementary Product and Service Offerings

5. Look Across Functional or Emotional Appeal to Buyers

6. Look Across Time

By focusing on key commonalities across these noncustomers and
existing customers, companies can understand how to pull them into
their new market.
Four Steps of Visualizing Strategy

Visual
Awakening
Visual
Exploration

Visual
Strategy Fair

Visual
Communication
Four Organizational Hurdles to Strategy Execution
Breaking Through Hurdles

• A cognitive hurdle - waking up employees to the need for a strategic shift.

Red oceans may not be the paths to future profitable growth, but they feel
comfortable to people and may have even served an organization well until
now, so why rock the boat?

• Limited resources - The greater the shift in strategy, the greater it is

assumed are the resources needed to execute it. But many companies find
resources in notoriously short supply

• Motivation - How do you motivate key players to move fast and tenaciously
to carry out a break from the status quo?

• Politics - As one manager put it, “In our organization you get shot down
before you stand up.
Breaking through Hurdles
Imitation Barriers to BOS
How does BOS affect
Architectural firms?
How does BOS affect Architectural firms?

Although BOS is more likely to be applied in

Business sectors, BOS can be applied in Architectural
firms. The importance of the Blue Ocean Strategy in
firms is that it provides services with little or no
competition from other firms. This strategy is useful
for new architectural firms that does not have a lot of
money available for advertising and does not want to
be in service in a market where other companies have
already established strong brands.
How does BOS affect Architectural firms?

www.architectureboard.ph
has recorded 27,638 Philippine
Registered Architects in the span of 90 years
starting in 1921 until 2011. It may not be easy
being an architect in 2012. New projects may
be scarce and the number of architects out of
work would be seemingly to be growing.
How does BOS affect Architectural firms?

Blue Ocean emphasizes a company's individuality, not rivalry with the competition.

It is particularly important, when projects become scarce, that architects

see themselves as allies rather than competition. The strategy's principle is that
businesses succeed when they change their focus from beating the competition to
becoming companies that provide such one-of-a-kind value that there are no
other firms for them to compete with for control of the market. "Blue Ocean"
refers to a vast market in which all innovative efforts that provide true value can
succeed. Many businesses have capitalized on this idea.
How does BOS affect Architectural firms?

Blue Ocean emphasizes a company's individuality, not rivalry with the competition.

Red oceans which are markets which are known today – the mainstream where
companies try to outperform their rivals to get a greater share of existing demand.

Blue oceans which are markets that are unknown (yet to be created). Companies
in blue oceans are creating demand and new markets – making competition
irrelevant.
How does BOS affect Architectural firms?

INSTRUCTIONs

Eliminate a part of the offering that is expected

Eliminate from your product or service what has become a given feature
in your industry.

Reduce an offering
Reduce factors that have been overdesigned.

Enhance an offering
Raise factors well above the industry standard where they create new
value for customers.

Create a new offering that is unexpected

Create a new way of providing an old service or product.
 Examples of
Blue Ocean Strategy
Companies who choose to use the Blue Ocean Strategy
Examples of Blue Ocean Strategy

“Reconstructing Market Boundaries”

Consider how Ralph Lauren, the U.S. designer created a blue ocean of
“high fashion with no fashion” by understanding the factors that determine
buyers’ decisions to trade up or down from one strategic group to another.

In creating Polo, Ralph Lauren combined the best features of haute

couture (designer name, elegance of their stores, and fine materials) with the
best features of lower-priced classical lines (classical look, lower prices) to not
only capture share from both strategic groups, but to also draw new customers
into the market. That’s the second path to reconstructing markets termed
“Looking across strategic groups.”
Blue Ocean Strategy

“A blue ocean in music”

Apple observed the flood of illegal

music file sharing that began in the late 1990s.

With the technology out there for anyone to digitally download music
free instead of paying $19 for an average CD, the trend toward digital music was
clear. This trend was underscored by the fast growing demand for MP3 players
that played mobile digital music, such as Apple’s hit iPod. Apple capitalized on
this decisive trend with a clear trajectory by launching the iTunes online music
store in 2003.
Blue Ocean Strategy

“Looking across complementary

products and services”

Consider the British teakettle industry, which, despite its importance

to British culture, had flat sales and shrinking profit margins until Philips
Electronics, the Dutch consumer electronics company, came along with a
teakettle that turned the red ocean blue.
By thinking in terms of solving the major pain points in customers’
total solution, Philips saw the water problem as its opportunity. The result:
Philips created a kettle having a mouth filter that effectively captured the lime
scale as the water was poured. Lime scale would never again be found
swimming in British homebrewed tea. The industry was again kick-started on a
strong growth trajectory as people began replacing their old kettles with the
new filtered kettles.
Blue Ocean Strategy in Architectural Firms

2e Architects, an architectural firm who

used blue ocean strategy. Its unique services
include how they approached light in their
designs. 2e Architects would measure where the
sun was in the sky at different times of day during
different seasons, and then use this information to
enhance their design.

Ultimately, this site appears simple. But its elegance communicates so

much more.