Book Review-Blue Ocean Strategy

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Book Review-Blue Ocean Strategy

  1. 1. Presented By Group 12-B Chiranjib Saha Daniel Kunzler Meghna Verma Sharvin Bhatt Vikas Singh
  2. 2. Creating Blue Ocean Drivers for Blue Ocean What is Blue Ocean     Untapped Market Space Demand creation Opportunity for high profitability, higher growth Competition is irrelevant      Accelerated technological advances Globalization Commoditization of products Increasing price wars Shrinking profit margins Strategic move  Value Innovation
  3. 3. Analytical Tools and Frameworks  Strategy Canvas Horizontal axis: Tells current state of play in the known market space Vertical axis: Offering levels that buyers receive across key competing factors Shift focus Four Actions Framework Competitors  Alternatives Customers  Non customers Eliminate-Reduce-Raise-Create Grid Eliminate 3 Characteristics of good strategy: Focus, Divergence and a Compelling tagline Raise Reduce Create
  4. 4. Reconstruct Market Boundaries Path 1: Look Across Alternative Industries Path 2: Look across Strategic Groups Within Industries Path 3: Look Across The Chain Of Buyers • Companies compete not only within its own industry, but in alternate products/services industry • Strategic groups- price & performance • understand factors that determines customers’ decision to trade up/down across groups • Competition converge on target buyers • Target the chain of “buyers” • Look across buyer groups, gain insights, redesign value curves to focus on previously overlooked buyers Path 5:Look Across Functional or Emotional Appeal to Buyers Path 6: Look across Time Path 4: Look across Complementary Product and Service Offerings •Untapped value in complementary products and services • Look at whole buying process to identify • Companies converge accepted notion of scope and appeal-price & function •Challenge the functional-emotional orientation of industry • Companies adapt incrementally or passively • Project the trend itself through business insights, i.e. insights in trends itself •Trends- decisive, irreversible, clear trajectory
  5. 5. Focus on Big Picture, Not the Numbers 1. Visual Awakening 2. Visual Exploration 3. Visual Strategy Fair 4. Visual Communication • Compare your Business with your competitors’ by drawing your “as-is” strategy canvas • Go into the field to explore the six paths to create blue oceans • Draw your “to be “ strategy canvas based on insights from field observations •Distribute your before-and –after strategic profiles on one page for easy comparison • Observe the distinctive advantages of alternative products and services • Get feedback on alternative strategy canvases from customers, competitors; consumers, and non-consumers • Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy • See which factors you should eliminate, create or change • Use feedback to build the best “tobe” future strategy • See when your strategy needs to change Eliminate-Reduce-RaiseCreate Grid Eliminate Raise Reduce Create Poineer-Migrator-Settler (PMS) Map
  6. 6. Reach Beyond Existing Demand How do you maximize the size of the blue ocean you are creating? Instead of concentrating on customers, look at noncustomers! They tend to offer far more insight how to unlock and grow a blue ocean. This is a key component of achieving value innovation. By aggregating the greatest demand for a new offering, this approach attenuates the scale risk associated with creating a new market. There are three tiers of noncostumers and how to approach them 1st tier • soon-to-be noncustomers • sit on the edge of the market • waiting to jump the ship • are in the search for better solutions Your market 1) Focus on the commonalities and not on the differences between 1st tier non-customers. By doing so, you will glean insight into how to desegment buyers and possibly, you will come across a huge untapped demand. 2nd tier • refusing noncustomers • people who either do not use or cannot afford to use the current products 2) Look and focus on the commonalities across noncustomer responses. You will glean insight into how to unleash an ocean of latent untapped demand. 3rd tier • unexplored noncustomers • have not been targeted or thought of as potential customers by any player in the industry 3) By concentrating on key commonalities across these noncustomers and existing customers, you can understand how to pull them into the new market
  7. 7. Get the Strategic Sequence Right Buyer utility: Is there exceptional buyer utility in your business idea? The need to assess the buyer utility of your offering Tools: Buyer Utility Map Purchase  Delivery  Use  Supplements  Maintenance  Disposal Price: Is your price easily accessible to the mass of buyers? The right strategic price ensures that buyers not only will want to buy your offering but also will have a compelling ability to pay for it. Step 1: Identify the Price Corridor of the Mass Step 2: Specify a Level Within the Price Corridor Cost: Can you attain your cost target to profit at your strategic price? To maximize the profit potential of a blue ocean idea, a company should start with the strategic price and then deduct its desired profit margin from the price to arrive at the target cost Change the pricing model of the industry if necessary Adoption: What are the adoption hurdles in actualizing your business idea? Are you addressing them up front? Even the best of all business ideas can provoke fear and resistance among the company‘s stakeholders. Before investing in the new idea, the company must at the beginning overcome such fears by the most important stakeholder such as Employees, Business Partners and the General Public
  8. 8. Executing Blue Ocean Strategy Overcome the Key Organizational Hurdles • Numbers don’t show real picture • Make people see & experience harsh reality • Face disgruntled customers Cognitive Resource • Strategic shift can be achieved with same or less resources • Redistribute resources from Cold Spots to Hot Spots • Judiciously Trade Horses • Zoom in on Kingpins • Place kingpins in a Fishbowl • Atomize to get the organization to change itself Motivation Politics • Vested interests will always resist change • Secure a Consigliere in the top management • Leverage Angels to silence Devils
  9. 9. Tipping Point Leadership Tipping point leadership enables the change master to break away from conventional wisdom of red ocean strategy and overcome organizational hurdles fast & at low cost while winning employees’ support. To rock the boat and bring people out of comfort zone, make them see the worst operational problems at the ground level. Gross numbers hide these realities and don’t allow people to realise them. Identify the hot spots i.e. areas that require more resources and the cold spots i.e. the areas that require less resources than currently allotted. Trade ‘horses’ i.e. resources judiciously among these spots. Identify the kingpins i.e. those who can influence people around them. Motivate them and treat them very transparently like a ‘fishbowl’. Leverage them to ‘atomize’ i.e. spread the change to every unit. Rope in a ‘consigliere’ i.e. a respected person in top management who knows potential dangers. Tackle ‘devils’ i.e. vested interests using the ‘angels’ i.e. people who will benefit from the strategic shift.
  10. 10. Build Execution into Strategy Engagement Formulate & execute Blue Ocean Strategy Fair Process Explanation Expectation Clarity Fair Process Intellectual & Emotional Recognition Trust & Commitment Violation of Fair Process Intellectual & Emotional Indignation Distrust & Resentment Voluntary Cooperation Refusal, Sabota ge
  11. 11. Sustainability and Renewal of Blue Ocean Strategy Sustainability can be traced to the following imitation barriers: •Value imitation does not make sense based on conventional strategic logic •Blue Ocean strategy conflicts with the brand image •Natural monopoly: market cannot support another player •Patents/ legal permits block imitation •High volume generated by value innovation leads to rapid cost advantage •Network externalities •Required political, operational and cultural changes •Companies that value innovate earn loyal customer following Almost every blue ocean strategy will be imitated! Rivalry will intensify, competition will commence and turn the ocean red.
  12. 12. Reference  Kim, W. Chan, Mauborgne, R., 2005. Blue Ocean Strategy. Harvard Business School Publishing.
  13. 13. THANK YOU

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