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Blue Ocean Strategy and the Transistor Radio
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Blue Ocean Strategy and the Transistor Radio

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A description of the blue ocean strategy canvas is given, as well as an illustrative example from the radio industry.

A description of the blue ocean strategy canvas is given, as well as an illustrative example from the radio industry.

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  • nice presentation ... maybe I should have chosen different pictures to better describe arguments, but I'm a photo addict ;-)
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  • 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  • 2. Is your company in a red or blue ocean?
  • 3. Count the your number of times you answer ’yes’ to the following questions:
  • 4. 1. Is your company facing heightened competition from domestic and international rivals? 2. Do your sales people increasingly argue they need to offer deeper and deeper price discounts to make sales?3. Are you finding your need to advertise more to get noticed in the marketplace, yet the impact of these efforts keeps falling?
  • 5. 4. Is your company focused more on cost cutting, quality control, and brandmanagement at the expense of growth, innovation, and brand creation?5. Do you blame your slow growth on your market?6. Do you see outsourcingto low cost companies or countries as a principal prerequisite to regain competitiveness?
  • 6. 7. Are mergers and acquisitions the principalmeans your company sees to grow?8. Is it easier to get funding for efforts to follow yourcompetitor than it is to getfunding for breaking away from competition? 9. Is commoditization ofofferings a frequent worry of your company? 10. List your key competitive factors and then those of your competitors. Are they highly similar?
  • 7. If you answered ’yes’ to 6-10 out of those questions, you are in a red ocean.
  • 8. If you answered ’yes’ to 1-5 out of those questions, you are in a blue ocean.
  • 9. Red Ocean Blue OceanCompete in existing markets Create a new market
  • 10. Red Ocean Blue OceanCompete in existing markets Create a new marketBeat the competition Avoid the competition
  • 11. Red Ocean Blue OceanCompete in existing markets Create a new marketBeat the competition Avoid the competitionExploit existing demands Explore new demands
  • 12. Red Ocean Blue OceanCompete in existing markets Create a new marketBeat the competition Avoid the competitionExploit existing demands Explore new demandsCustomer value or low cost Customer value and low cost
  • 13. Red Ocean Blue OceanCompete in existing markets Create a new marketBeat the competition Avoid the competitionExploit existing demands Explore new demandsCustomer value or low cost Customer value and low costDifferentiation or low cost Differentiation and low cost
  • 14. Sounds like yet another management fad, doesn’t it?
  • 15. The question remains:What should we do on Monday?
  • 16. The Strategy Canvas will help us to find new markets and thereby avoid competition.
  • 17. Start with mapping up the different performance parameters that matter in your industry.
  • 18. For example: in the camera industry you’ll find price, image quality, design, compatibility, weight etc.
  • 19. Try to make an (unbiased) plot of how your company performs along your keydimensions. And also try to plot where your competitors have positioned themselves.
  • 20. You will end up with something like this.109876 Our products5 Competitor 1 Competitor 243210 Price Factor Factor Factor Factor Factor Factor 2 3 4 5 6 7
  • 21. Now you have a pretty good idea about what the competitive climate looks like…
  • 22. If your line intersects with those of yourcompetitors to a large extent - you are in a red ocean. Eat or be eaten.
  • 23. Now it’s time to find a way out of that place…
  • 24. … This is done with the ERIC framework…
  • 25. ERIC stands for Eliminate, Reduce, Increase and Create.
  • 26. Basically, you eliminate some performancedimensions, reduce others, increase some and who knows, maybe create some new ones as well. 10 9 8 7 6 Our products 5 Competitor 1 Competitor 2 4 3 2 1 0 Price Factor Factor Factor Factor Factor Factor 2 3 4 5 6 7
  • 27. By doing so, you do not try to compete with others, you look for ways of avoid competition.
  • 28. You change the value proposition, and by doing so,you will be able to find new customers, who are not served yet by the industry.
  • 29. And thus, you’ll find a blue ocean.
  • 30. Show us a better example than this one!
  • 31. We’ll take alook at the radioindustry…
  • 32. Analogue radios were big and beautiful…
  • 33. ”At thedearestplace inYourHome….”
  • 34. ’If You want good sound - Ask for Radiola’
  • 35. So, the established Radio companies focused on sound, sound and sound…
  • 36. Transistor radios, on the other hand, had very different performance dimensions.
  • 37. They were smaller, cheaper, had a worse sound quality and were portable.
  • 38. Now let’s compare them byusing the strategy canvas.
  • 39. 109876 Analogue radios5 Transistor radios43210 Price Design Sound Size Portability quality This is my (unbiased) interpretation.
  • 40. Now you have to find some customers…
  • 41. What about young people, who can’t afford a nice, big and clumsy furniture radio?
  • 42. They’d love to bring theradio along to the beach.
  • 43. Home transistorAn ideal, portable, ’second radio’ and for your summer house
  • 44. What about a radio to have in the car?
  • 45. A ’travel radio’?
  • 46. Sony, Grundig and Luxor among others targeted non-consumers and created a huge market!
  • 47. While the analogue companies were trapped in a red ocean, focusing on sound.
  • 48. Some estimates suggest that there are 7 billion transistor radios in use today.
  • 49. This kind of opportunities can be identified whentrying to avoid competition, instead of fighting it.
  • 50. Good luck on Monday!
  • 51. Sources W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy, 2005.Lecture by Bengt Järrehult at Chalmers 2009-02-19
  • 52. Image attributionsCrocodile photos by Thomas Hordern.Radio and landscape images taken by Christian Sandström
  • 53. Find out more:www.christiansandstrom.org

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