“… convert this huge latent demand into real demand in the form of thriving new customers, companies need to deepen their understanding of the universe of noncustomers.” ( Chan and Mauborgne, Blue Ocean Strategy, page 103)
What is the thought process to put a strategy together to go after the non-drinker of wine?
Wine Red Ocean Strategy High Low Vineyard Prestige and Legacy Use enological terminology and distinctions in wine communication Price Above-the-line marketing Aging Quality Wine Complexity Budget Wines Wine Range Premium Wines How to make fun and nontraditional wine that’s easy to drink for everyone—particularly non-wine drinkers?
Kim & Mauborgne 2005 Which factors should be reduced well below the industry’s standards Reduce A New Value Curve Raise Which factors should be raised well above the industry’s standard? Eliminate Create Which of the factors that the industry takes for granted should be eliminated ? Which factors should be created that the industry has never offered? What happens when you think you have something?
For (yellow tail)… Eliminate Raise Enological terminology and distinctions Aging qualities Above-the-line marketing Price versus budget wines Retail store involvement Reduce Create Wine complexity Wine range Vineyard prestige Easy drinking Ease of selection Fun and adventure
Production could not follow either. Not only was the equipment insufficient but additional quantities of wine had to be bought on the bulk market, further cutting into Casella's thin margins, estimated at 75 cents per bottle.
Nonetheless, Casella Wines sold 200,000 cases of Yellow Tail wines in 2001, and 2.2 million the following year.
They invested in a $2.5 million bottling line to reach their goal of 4 million cases for 2003.
Strategy of Cirque du Soleil Price Star Performers Multiple show arenas Animal Shows Artistic music and dance Aisle concessions Fun & humor Multiple productions Refined watching environment Theme Unique venue Thrills & danger Low High Cirque du Soleil Value Curve Ringling Bros. and Barnum & Bailey Value Curve Smaller Regional Circuses
The first was too cumbersome, no discipline, no place
The second was too Manly, to isolating and no fun
A new solution -- Curves
Curves Curves is the largest fitness franchise in the world with 10,000 locations worldwide. Curves Clubs can be found in over 42 countries, including the United States, Canada, Europe, South America, The Caribbean, Mexico, Australia, New Zealand, South Africa, Japan, and we're still growing. We are the first fitness and weight loss facility dedicated to providing affordable, one-stop exercise and nutritional information for women. Only one place can give you the strength of over 4 million women...
To an audience thought to be oversaturated with customers who wouldn’t want it.
Strategy Canvas of Curves Curves Home Exercise Traditional Health Clubs low high Price Amenities Workout Equipment Workout Time Availability of Instructors Environment encourages discipline and motivation Non-threatening Same-Sex environment Convenience Womanly Environment
Fundamentally shift strategy canvas of an industry you must begin to reorient your strategic focus:
To Value Innovation + Cost Reduction
And from Customers to Non-users
From Competitors to Alternatives
Let’s try to build your Strategic Canvas today and that of your Market Space Down here go each of those attributes/traits/values that matter to that audience you have using your services or products today
Six Paths to a Blue Ocean Kim & Mauborgne 2005 From Competing Within To Creating Across Find a new Blue Ocean if you look across … Industry Strategic group Buyer group Scope of product or service offering Functional-emotional orientation of an industry Time
This may be what you've been looking for all your life. The largest Japan chain barber shop "QB House" opened three new shops in Hong Kong. QB (short for quick barber) offers 10-min just-cut service for HK$50.
Reconstruct Market Boundaries 6. Look across time—Participate in shaping trends over time
Shifting the Focus of Strategy Conventional Boundaries of Competition Head-to-Head Competition Creating New Market Space Industry Focus on rivals within industry Looks across substitute industries Strategic Group Focus on competitive position within strategic group Looks across strategic groups within industry Buyer Group Focuses on better serving the buyer group Redefines the buyer group of the industry Scope of product or service offerings Focuses on maximizing the value of product and service offerings within the bounds of its industry Looks across to complementary product and service offerings that go beyond the bounds of its industry Functional-emotional orientation of an industry Focuses on improving price-performance in line with the functional-emotional orientation of its industry Re-thinks the functional-emotional orientation of its industry Time Focuses on adapting to external trends as they occur Participates in shaping external trends over time
List all the major elements of your company from a customer’s perspective
For each element, select its opposite
Then using the opposites as a new company, discuss as many ways as you can how you could do the opposite from what you think you do today.
Reverse Assumptions for a Restaurant Today Opposite Menus No Menus Serve food Don’t serve food Pay for food Don’t pay for food Sit at tables Don’t sit at tables
A new kind of restaurant Today Opposite New Element Menus No Menus Owner comes out and tells us what he found at the market today for our meal Serve food Don’t serve food Bring your own food and we entertain you—picnic style Pay for food Don’t pay for food Rent the space for a period of time and we give you free food Sit at tables Don’t sit at tables Chairs set up like a stadium and you watch oversized TV’s with exclusive entertainment on them
All about alignment, people, execution and strategy
But really necessary
The Four Steps of Visualizing Strategy Visual Awakening Visual Exploration Visual Strategy Fair Visual Communications Compare your Business with competitors’ by drawing your “as is” strategy canvas. See where your strategy needs to change. Go into 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 Draw your “to be” strategy canvas based on insights from field observations. Get feedback on alternative strategy canvases from customers, competitors’ customers, and non-customers. Use feedback to build the best “to be” future strategy. Distribute your before-and-after strategic profiles on one page for easy comparison. Support only those projects and operational moves that allow our company to close the gaps to actualize the new strategy
Blue Oceans vs. Red Oceans Kim & Mauborgne 2005 Red Ocean Strategy Blue Ocean Strategy Compete in existing marketplace Create uncontested market space Beat the competition Make the competition irrelevant Exploit existing demand Create and capture new demand Make the value-cost trade off Break the value-cost trade-off Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Blue Ocean Strategy Kim & Mauborgne 2005 Getting the Right Sequence Blue Ocean Idea! BUYER UTILITY – Is there exceptional buyer utility in our idea? PRICE – Is our price easily accessible to the mass of buyers? COST – Can we attain our cost target to profit adequately at our strategic price? ADOPTION – What are the adoption hurdles in actualizing our business idea? Are we addressing them up front?