Blue Ocean Strategy (Method Templates)

Project Scope Project Scope Objectives {1 of 3} Step 1 1. Initial objective (brand analysis, new brand, rebranding, advertising)? 2. Resources available (time, people, money)? 3. Maneuverability (what can and cannot be changed)? 4. Implementation (who will and how will the plan be implemented)?

Project Scope Project Scope Objectives {2 of 3} Step 2 5. Possible to have See Fair Process (Blue Ocean Strategy) fair process to build execution into strategy? 6. Finalize project scope with buy-in, create statement of objectives 7. Choose the brand analysis tools; provide rationale 8. Set up critical chain timeline and assign resources 9. Perform post- mortem on Project Scope Stage

Project Scope Project Scope Objectives {3 of 3} Step 3 10. Execute analysis methods as per project plan 11. Provide input into methods use for ongoing improvement 12. Assess and evaluate plan as each method provides input

Visual Awakening (1 of 4) • Draw strategy canvas for industry or competitors and self • Determine which elements of the offering are of value and rank-order them – Can ask customers about these as well as industry insiders • Analyze by viewing through – Four Actions framework – Value Curve goals – Value Curve litmus test

Strategy Map • Excel template

Visual Exploration (2 of 4) • Go into the field to explore the 6 paths – Industry – Strategic group – Buyer group – Scope of product or service offering – Functional-emotional orientation – Time • Observe the distinctive advatages of alternative products and services • See which factors you should elminate, create, or change (the four actions framework)

Visual Exploration (2 of 4) Look across Industry alternative industries, break out of own Look across strategic Strategic groups within industry, group break out of groups Redefines industry Buyer buyer group, who is group the buyer Looks across Offering complementary scope offerings Functional- Rethink functional- emotional orientation emotional of industry Participates in Time shaping external trends over time

Four Actions Framework • Reduce • Which factors should be • reduced well below industry’s standard? • • Eliminate • Which factors the • industry takes for granted should be eliminated? • • Create • Which factors should be • created that the industry has never offered? • • Raise • Which factors should be • raised well above the industry’s standard? •

Value Curve Goals • No overdelivery without payback • High levels across all factors should result in • high profits, otherwise offering too much. Which factors to eliminate and reduce? • • Need coherences to the strategy • Value curve needs to collectively make sense • and not simply have a lot of disparate highs and lows. Functional silos must be bridged. • • Eliminate strategic contradictions • Sometimes a high factor requires another • high factor to make good on promise. Does each factor have the support it needs? • • Label factors in customers terms • Insider jargon does not work, but instead • need outside-in perspective, driven by actual demand (and in customers’ terms) •

Initial Litmus Test for Value Curve • Focus – Focus drives cost factors down – Lack of focus indicates complex business plan • Divergence – Value curve diverges from industry standards – Strategy must deviate from me-too-ism – Need to stand apart in the marketplace • Compelling tag line – Without, it is a sign of innovation for own sake

Visual Strategy Fair (3 of 4) • Draw your “to be” strategy canvas based on insights from field observations • Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers • Use feedback to build the best “to be” future strategy

Visual Strategy Fair Feedback • Feedback form

Visual Communication (4 of 4) • Distribute before-and-after strategic profiles on one page for easy comparison • Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy

Project Evaluation Support Form • Form including projects, evaluation of those projects in terms of moving the strategy forward (closing gap between current and future value curve) • Go or no go on projects based on evaluation • (Note: not needed for our class project)

Blue Ocean Strategy Sequence Buyer Utility Price Cost Adoption Is there Is your price Can you attain What are the exceptional easily accessible your cost target adoption buyer utility in to the mass of to profit at your hurdles? your business? buyers? strategic price?

Buyer Experience Grid • Create form based on previous slide

Location of biggest blocks to customer utility • Create form based on previous slide

Buyer Utility - Purchasing How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Buyer Utility - Delivery How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Buyer Utility - Use How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Buyer Utility - Supplements How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Buyer Utility - Maintenance How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Buyer Utility - Disposal How productive is the Customer customer in this stage? Productivity How moreso can it be? How simple is this Simplicity stage? Can it be made simpler? How convenient is this Convenience stage? Can it be made moreso? How much risk is there Risk involved in this stage? Can risk be reduced? How fun and what level Fun & Image of positive image at this stage? More fun now! Environmental How environmentally friendly is this stage? Friendliness Make it more green. purchase delivery use supplements maintenance disposal

Price Corridor of the Mass • First form – Product/service types – Plot across actual dollar amounts – Using bar graphs or other types • Second form – Levels of protection – Simple table

Profit Model • Excel spreadsheet – Strategic price – Minus target profit – Equals target cost – Partnering – Plus pricing innovation – Equals target cost

Overcome Organizational Hurdles Cognitive Resource Motivational Political Hurdle Hurdle Hurdle Hurdle An organization Limited Unmotivated Opposition from wedded to the resources staff powerful vested status quo interests • Ride the “electric sewer” • Meet with disgruntled customers • Free up resources from cold spots • Multiply value of resources • Move resources to hot spots • Horse trade for resources • Place kingpins in a fishbowl • Make fair process pervasive • Atomization of the larger goal • Secure consigliere • Activate angels • Isolate devils

Organizational Hurdles Forms • Create forms – Cognitive hurdles – Resource hurdles – Motivational hurdles – Poltical hurdles

Method Fair Process Method (Description) Fair Process (Blue Ocean Strategy) {1 of 2} Overview Fair process of engagement, explanation, and expectation of clarity engenders trust and commitment, producing voluntary cooperation, and enabling superior execution. Engagement “Involve individuals in the strategic decisions that affect them by asking for their input and allowing them to refute the merits of one another’s ideas and assumptions.” (p.175) Explanation “Everyone involved and affected should understand why final strategic decisions are made as they are. An explanation of the thinking that underlies decisions makes people confident…. And serves as a powerful feedback.” (p.175-6) Expectation of “After a strategy is set, managers state clearly the new rules clarity of the game…. Employees should know up front what standards they will be judged by and the penalties for failure. What are the goals of the new strategy? What are the new targets and milestones? Who is responsible for what? To achieve fair process, it matters less what the new goals, expectations, and responsibilities are and more that they are clearly understood.” (p.176)

Method Fair Process Method (Form) Fair Process (Blue Ocean Strategy) {2 of 2} 1. Communicate the Has an overview of the fair process so that process been provided and all understand (3E) that process deemed fair? 2. Set up Can everyone make mechanisms and meetings? Have meetings timelines for been given enough time? individual input Has importance been clearly communicated? 3. Create process Are the meetings so that decisions structured for clear flow of are understood information? Are there mechanisms for additional wiki/faq/forums? 4. Set eval criteria, What are the goals of the responsibilities, new strategy? What are and achievement the new targets and targets milestones? Who is responsible for what?

Fair Process Engagement Explanation Expectation of clarity “Involve individuals in the “Everyone involved and “After a strategy is set, strategic decisions that affected should managers state clearly affect them by asking for understand why final the new rules of the their input and allowing strategic decisions are game…. Employees them to refute the merits made as they are. An should know up front of one another’s ideas explanation of the what standards they will and assumptions.” thinking that underlies be judged by and the (p.175) decisions makes people penalties for failure… To confident…. And serves achieve fair process, it as a powerful feedback.” matters less what the (p.175-6) new goals, expectations, and responsibilities are and more that they are clearly understood.” • What are the goals of the new strategy? (p.176) • What are the new targets and milestones? • Who is responsible for what?

Creating Competitive Advantage • Sustainable Competitive Advantage (SCA) – Erect barriers to entry – Discourage new entrants, especially imitators • Blue Oceans may have natural barriers – Competitor brand image may conflict with blue ocean – Blue ocean may not fit conventional industry logic – Blue oceans require cultural, operational, political change • Barriers created by Blue Ocean Strategy – High degree of loyalty – High volume may lead to rapid cost advantages • Other sources – Natural monopolies (one player in a specific market) – Legal via patents or contracts