Blueoceanstrategy Benny Hersanto

BLUE OCEAN STRATEGY by Prof. W. Chan Kim, Prof. Renee Mauborgne

Cirque’s productions have been seen by almost 40 mn people in 90 cities around the world In less than 20 years Cirque du soleil has achieved a level of revenues that took Ringling Bros. and Barnum & Bailey - the global champion of the circus industry- more than 100 years to attain

Declining industry & limited potential for growth Strong supplier power on the part of star performers and buyer power Steadily decreasing audiences Increasing sentiments against the use of animals UNATTRACTIVE INDUSTRY

It created uncontested new market space that made the competition irrelevant
Cirque du soleil DID NOT compete with Ringling Bros. and Barnum & Bailey

MARKET SPACE
Industries in existence today
Known market space
Industry boundaries are defined and accepted
Competitive rules of the games are known
Reduced profit and growth
Industries NOT in existence today
UNKNOWN and untapped market space
Rules of the game are WAITING to be set
Opportunity for highly profitable growth
RED OCEAN BLUE OCEAN

Profit & growth consequences of creating blue oceans 39% 61% 38% 62% 14% 86% PROFIT IMPACT REVENUE IMPACT BUSINESS LAUNCH Launches within red ocean launches for creating blue oceans

BLUE OCEAN STRATEGY
Accelerated technological advancement
Rising imperative

BLUE OCEAN STRATEGY

BLUE OCEAN STRATEGY
Trend towards globalization

BLUE OCEAN STRATEGY
Unit of analysis

BLUE OCEAN STRATEGY
Company

BLUE OCEAN STRATEGY
Company
Industry

BLUE OCEAN STRATEGY
Company
Industry
Strategic move
Set of managerial actions and decisions involved in making a major market-creating business offering

VALUE INNOVATION BUYER VALUE COSTS VALUE INNOVATION

STRATEGY
Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade-off
Align the system with differentiation OR low cost
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost trade-off
Align the system in pursuit of differentiation AND low cost
Blue ocean Red ocean

BLUE OCEAN STRATEGY
Formulation principles

BLUE OCEAN STRATEGY
Reconstruct market boundaries search

BLUE OCEAN STRATEGY
Focus on the big picture, not numbers planning

BLUE OCEAN STRATEGY
Focus on the big picture, not numbers planning
Reach beyond existing demand scale

BLUE OCEAN STRATEGY
Focus on the big picture, not number planning
Reach beyond existing demand scale
Get strategic sequence right business model

BLUE OCEAN STRATEGY
Execution principles

BLUE OCEAN STRATEGY
Overcome key organizational hurdles
organizational

BLUE OCEAN STRATEGY
organizational
Build execution into strategy management

BLUE OCEAN STRATEGY
Analytical tools and frameworks

BLUE OCEAN STRATEGY
Strategy canvas
Captures current state of play
Value curve of competitors
Company’s strategic profile

Strategy canvas of the U.S. wine industry in the late 1990s price Use of enological terminology and distinction in wine communication Above-the-line marketing Aging quality Vineyard prestige and legacy Wine range Wine complexity High Low Premium wines Budget wines

BLUE OCEAN STRATEGY
Strategy canvas
The four actions framework

The four actions framework Eliminate Factors to eliminate that industry has taken For granted Raise Factors to raise well Above industry standard Reduce Factors to reduce well below industry standards Create Factors to create that Industry has never offered A new value curve

BLUE OCEAN STRATEGY
Strategy canvas
The four actions framework
The eliminate-Reduce-Raise-Create Grid

The Eliminate-Reduce-Raise-Create Grid Eliminate Enological terminology and distinctions Aging qualities Above-the-line-marketing Raise Price versus budget wines Retail store involvement Reduce Wine complexity Wine range Vineyard prestige Create Easy drinking Ease of selection Fun and adventure

BLUE OCEAN STRATEGY
Three characteristics of a good strategy

BLUE OCEAN STRATEGY
Focus

BLUE OCEAN STRATEGY
Focus
Divergent

BLUE OCEAN STRATEGY
Focus
Divergent
Tagline

BLUE OCEAN STRATEGY
Reading value curves

BLUE OCEAN STRATEGY
A blue ocean strategy

BLUE OCEAN STRATEGY
Company caught in the red ocean

BLUE OCEAN STRATEGY
Overdelivery without payback

BLUE OCEAN STRATEGY
An incoherent strategy

BLUE OCEAN STRATEGY
Strategic contradiction

BLUE OCEAN STRATEGY
Strategic contradiction
An internally driven company

BLUE OCEAN STRATEGY
Reconstruct market boundaries

BLUE OCEAN STRATEGY
Look across alternative industries

BLUE OCEAN STRATEGY
Look across strategic groups within industries

BLUE OCEAN STRATEGY
Look across chain of buyers

BLUE OCEAN STRATEGY
Look across complementary product and service offerings

BLUE OCEAN STRATEGY
Look across functional or emotional appeal

BLUE OCEAN STRATEGY
Look across functional or emotional appeal
Look across time

BLUE OCEAN STRATEGY
Focus on the big picture, not the numbers

Steps of visualizing strategy 1. Visual awakening 2. Visual exploration 3. Visual strategy fair 4. Visual communication
compare with “as is” business
areas needed for change
field exploration
advantages of alternate products and all
eliminate, create, or change
draw “to be” canvas
get feedback on alternative strategy canvas
use feedback to get “to be”
compare before and after strategies
Support moves that close the gaps to actualize new strategy

BLUE OCEAN STRATEGY
visualizing strategy at the corporate level

BLUE OCEAN STRATEGY
using strategy canvas

BLUE OCEAN STRATEGY
using strategy canvas
using pioneer - migrator – settler (PMS) map

Growth potential of portfolios of businesses pioneers migrators settlers today tomorrow

BLUE OCEAN STRATEGY
Reach beyond existing demand

BLUE OCEAN STRATEGY
first tier non-customer

BLUE OCEAN STRATEGY
second tier non-customer

BLUE OCEAN STRATEGY
second tier non-customer
third tier non-customer

BLUE OCEAN STRATEGY
Get the strategic sequence right

Sequence of blue ocean strategy Buyer utility price cost adoption Commercially Viable BOI YES YES YES YES NO - RETHINK NO - RETHINK NO - RETHINK NO - RETHINK

Blue ocean idea (BOI) index Philips CD-i Motorola iridium DoCoMo i-Mode Japan Utility Price Cost Adoption - - + - - + - - + - +/- +

BLUE OCEAN STRATEGY

Four organizational hurdles COGNITIVE HURDLE RESOURCE HURDLE MOTIVATIONAL HURDLE POLITICAL HURDLE

BLUE OCEAN STRATEGY
Cognitive hurdles
Ride the “electric sewer”
Meet the disgruntled customer

BLUE OCEAN STRATEGY
Resource hurdles
Redistribute resources to your hot spots
Redirect resources from your cold spots

BLUE OCEAN STRATEGY
Motivational hurdles
Zoom in on kingpins
Place kingpins in a fishbowl
Atomize to get the organization to change itself

BLUE OCEAN STRATEGY
Political hurdles
Select a consigliere on your top management team
Leverage your angels and silence your devils

BLUE OCEAN STRATEGY
Build execution into strategy

The three E principles of fair process ENGAGEMENT EXPLANATION EXPECTATION CLARITY

How fair process affects people’s attitude and behavior FAIR PROCESS TRUST & COMMITMENT VOLUNTARY COOPERATION EXCEEDS EXPECTATIONS STRATEGY FORMULATION PROCESS ATTITUDES BEHAVIOR STRATEGY EXECUTION

Thank you For your patience throughout the presentation

Inspired by
Hersanto R. Benny Wahyuadi

http://benny69b.multiply.com/ Prepared by:

Blueoceanstrategy Benny Hersanto

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Blueoceanstrategy Benny Hersanto Presentation Transcript