Blue Ocean Strategy

Blue Ocean Strategy - Presentation Transcript

Blue Ocean Strategy

Contents

Blue Ocean Vs. Red Ocean Strategy

Blue Ocean Strategy Tools

Strategy Canvas and Four Action Framework

Six Principles of Blue Ocean Strategy

Formulating Blue Ocean Strategy

Executing Blue Ocean Strategy

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Blue Ocean Vs. Red Ocean Strategy

Blue Ocean vs. Red Ocean Strategy

Create uncontested market space

Make the competition irrelevant

Create and capture new demand

Compete in existing market space

Beat the competition

Exploit existing demand

Blue Ocean Strategy Red Ocean Strategy

Blue Ocean vs. Red Ocean Strategy

Break the value- cost trade off

Align the whole system of a firm’s activities with its strategic choice of differentiation and low cost

Make the value-cost trade off

Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost

Blue Ocean Strategy Red Ocean Strategy

Blue Ocean Strategy Tools Strategy Canvas

A diagnostic tool for building a compelling blue ocean strategy

It captures the current state of play in the known market space

Allow you to understand :

where the competition is currently investing

the factors the industry currently competes on in product, service and delivery

what customers receive from existing competitive offerings on the market

Four Action Framework Eliminate Reduce Raise Create

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

Four Action Framework The Case of Cirque du Soleil (A Circus Company)

Theme

Refined environment

Multiple productions

Artistic music and dance

Eliminate Reduce Raise Create

Star performers

Animal shows

Aisle concession sales

Multiple show arenas

Fun and humor

Thrill and danger

Unique venue

Six Principles of Blue Ocean Strategy

Reconstruct market boundaries

Focus on the big picture, not the numbers

Reach beyond existing demand

Get the strategic sequence right

Overcome key organizational hurdles

Build execution into strategy

Formulation Principles Execution Principles

Formulating Blue Ocean Strategy

1. Reconstruct Market Boundaries

Focus on rivals within industry

Focuses on competitive position within strategic group

Focuses on better serving the buyer group

Head-to-Head Strategy Blue Ocean Strategy

Looks across alternative industries

Looks across strategic group within industry

Redefines the industry buyer group

1. Reconstruct Market Boundaries

Focuses on maximizing the value of product or service offerings within the bounds of its industry

Focuses on adapting to external trends as they occur

Head-to-Head Strategy Blue Ocean Strategy

Looks across to complementary product and service offerings

Participates in shaping external trends over time

2. Focus on the Big Picture, not the Numbers Focus on the Big Picture , not the Numbers The Four Steps of Visualizing Strategy

Visual Awakening

Visual Exploration

Visual Strategy Fair

Visual Communication

2. Focus on the Big Picture, not the Numbers Visual Awakening

Compare your business with your competitors’ by drawing your “as is” strategy canvas

See where your strategy needs to change

2. Focus on the Big Picture, not the Numbers Visual Exploration

Go to 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

2. Focus on the Big Picture, not the Numbers Visual Strategy Fair

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

2. Focus on the Big Picture, not the Numbers Visual Communication

Distribute your 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 gap to actualize the new strategy

3. Reach Beyond Existing Demand The Three Tier of Non-customers

First tier: “Soon to be” non-customers who are the edge of your market, waiting to jump ship

Second tier: “Refusing” non-customers who consciously choose against your market

Third tier: “Unexplored” non-customers who are in markets distant from yours

4. Get The Strategic Sequence Right The Sequence of Blue Ocean Strategy Buyer utility Is there exceptional buyer utility in your business idea? Price Is your price easily accessible to the mass of buyers? Cost Can you attain your cost target to profit at your strategic price? Adoption What are the adoption hurdles in actualizing your business idea? A commercially viable blue ocean idea

Executing Blue Ocean Strategy

5. Overcome Key Organizational Hurdles Overcome Key Organizational Hurdles Cognitive Hurdle Motivational Hurdle Resource Hurdle Political Hurdle

5. Overcome Key Organizational Hurdles Cognitive Hurdle (status quo) Resource Hurdle

Ride the “Electric Sewer”

Meet with Disgruntled Customers

Redistribute resources to your hot spots

Redirect resources from your cold spots

Engage in horse trading

5. Overcome Key Organizational Hurdles Motivational Hurdle Political Hurdle

Zoom in on Kingpins (key influencers)

Place kingpins on a fishbowl

Atomize to get the organization to change itself

Secure a consigliere on your top management team

Leverage your angels and silence your devils

5. Build Execution Into Strategy Fair Process of Strategy Strategy Formulation Process Fair Process – Engagement, Explanation, Expectation clarity Attitudes Trust and Commitment – “I feel my opinion counts” Behavior Voluntary Cooperation – “I’ll go beyond the call of duty” Strategy Execution Exceeds Expectation – self initiated

Source of Reference