Course of Blue Ocean Strategy University College Cork Visiting professor: François Cazals (ISC Paris School of Management)

2. Academic Journey
E-Business MBA Program – ISC Paris
University College Cork
Course of Blue Ocean
Strategy
February 21st , 2012
Professor François Cazals
2

3. Agenda
 ISC Paris School of
Management
 The Professor
 Competition-based
strategy
 A little film
 Blue Ocean Strategy
3

4. ISC Paris group
 1800 students « grande
école »
 250 students MBA’s
Business Executive
MBA
School Education
4

5. François Cazals
 CEO Distriforce
 ISC Paris
 Affiliate Professor
 Head
 ISC Executive Education
 E-Business MBA Program
 Speaker
 HEC Paris Executive
fcazals@iscparis.com Education
Twitter: @distriforce  ESSEC Paris Executive
Blog: cazals.fr Education
5

6. Blue Ocean
Strategy
Creating
new market
space

7. Competition-based
strategy

8. Subtle War Brutal War
Blue Red
“To subdue the enemy “ War is an act of violence
without fighting is the acme intended to compel our
of skill”. opponent to fulfill our will”.
Sun Tzu (544-496 BC J.-C.) Clausewitz (1780-1831)
8

9. A founding principle
“Competition is at the core
of the success or failure of
firms”.
1st sentence of Michael Porter’s
most important book
9
Michael PORTER

10. Two generic strategies
Low Cost Differentiation
Paris-Dublin
Ryanair 55 €
Air France 286 €
10

11. A little film
http://distriforce.net/insead.wmv
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12. The Book and the Authors
Prof Chan Kim
Prof Renée
Mauborgne
12

13. 10
Strategy Canvas
9
8
The value curve, the basic
component of the strategy
7 canvas, is a graphic
6 depiction of a company’s
relative performance across
5
its industries factors of
4 competition.
3
2
1
0
Comp Fact 1 Comp Fact 2 Comp Fact 3 Comp Fact 4 Comp Fact 5 Comp Fact 6 Comp Fact 7 Comp Fact 8
Firm Competitor
13

14. Strategic corridor
10
9
8
7
6
5
Corridor
4
3
2
1
0
Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 8
Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6
14

15. Industry Cycle
Start Growth Maturity Decline
Loyalty
One to One
Innovation
Low Cost
15

16. Red Ocean Vs. Blue Ocean
 Compete in existing market  Create uncontested market
space space
 Beat the competition  Make the competition
 Exploit existing demand irrelevant
 Make the value-cost trade-  Create and capture new
off demand
 Align the whole system of a  Break the value-cost trade-
firm’s activities with its off
strategic choice of  Align the whole system of a
differentiation or low cost firm’s activities in pursuit of
differentiation and low cost

17. 4 actions framework
Reduce
Create a
new
Eliminate
value
Create
curve
Raise
17

18. Raise
What factors
should be raised
well beyond the
industry standard?
Eliminate Create
What factors What factors should
should be be created that the
eliminated that the industry has never
industry has taken offered?
for granted?
Reduce
What factors
should be reduced
well below the
industry standard?

19. 6 Paths Framework Head-to-head competition Blue Ocean Creation
Focuses on rivals within its Looks across alternative
Industry industry industries
Focuses on competitive Looks across strategic
Strategic Group position within strategic groups within industry
group
Focuses on better serving Redefines the industry
Buyer Group the buyer group buyer group
Focuses on maximizing the Looks across to
Scope of product or value of product and service complementary product
service offering offerings within the bounds and service offerings
of its industry
Focuses on improving price Rethinks the functional-
Functional-Emotional performance within the emotional orientation of its
orientation functional-emotional industry
orientation of its industry
Focuses on adapting to Participates in shaping
Time external trends as they external trends over time
occur
19

20. Look across alternative
industries
Rent a apartment
+
Go to the hotel
= Corporate Apartements
= apart-hotel concept 20

21. Look across strategic groups within
industry
+
=
21

22. Redefine the industry buyer group
22

23. Look across to complementary product and
service offerings

24. Rethink the functional-emotional orientation
of its industry
Functional Emotional
Fonctionnel
24

25. Participate in shaping external
trends over time
3D TV
Ultra Flat TV
Connected TV
25

26. Blue ocean?
26

27. 3 Tiers of Non-customers
27

28. The
Gamers
• Men
• Under 35
• Sports, Fig
hts, Cars,…

29. 3 Tiers of Non-customers
 « Soon-to-be » non-
customers
Men aged over 35
 « Refusing » non-
costumers
Old people, parents, women
 « Unexplored » non-
customers
Families
29

30. Business Case
How Apple has created a new
market space with the iPad

31. 3 examples
Sony Vaio VPC-SB3L9E SAMSUNG Netbook iPad 2 64Go Wi-Fi
W 13,3" LED USB 3.0 N145Plus
31

32. Red Ocean
Variables Sony Samsung
Price 899 € 239 €
Weight 1,720 kg 1,240 kg
Screen 13,3 inches 10,1 inches
Hard Drive 500 Go 250 Go
Connectivity 10/10 7/10
Keyboard Yes Yes
Design 7/10 5/10
Market Laptops Netbooks
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33. Strategy canvas
Differentiation
Low Cost
Price Weight Screen Hard Drive Connectivity Keyboard Design
33

34. Blue ocean
Variables iPad
Price 489 €
Weight 0,613 kg
Screen 9,7 inches
Hard Drive 64 Go
Connectivity 3/10
Keyboard No
Design 9/10
Touch New
interface
iCloud New
AppStore New
Market Touch Pads 34

35. Blue Ocean vs. Laptops
E R R C
35

36. Blue Ocean vs. Laptops
Three Tests of a
Blue Ocean Strategy:
E
1) R
Focussed R C
2) Divergent
3) Compelling Tagline
36

37. Blue ocean vs. Netbooks
E R R C
37

38. “If you dream it, you can do it”.
Walt Disney
38

39. Annex

40. Exercise
• 1. List Factors of
Competition
• 2. Top 2 or 3 in ERRC
Grid Quadrants
• Clearly define the
group of “non-
customer” that you are
going after.

41. Examples

42. Exercise
3. Write on
Worksheet: E
left, C right
4. Draw “As Is”
5. Draw “To Be”

43. Examples

44. Exercise
Demonstrate
that iphone is a
blue ocean
strategy
compared to
blackberry (at
the beginning)