Blue ocean strategy


Published on

Published in: Education, Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Blue ocean strategy

  1. 1. Blue Ocean Strategy<br />Summarized by <br />Vanessa Yang<br />Aug 9, 2010<br />
  2. 2. About the Authors<br />W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. <br />Renee Mauborgneis the INSEAD Distinguished Fellow and a professor of strategy and management at INSEAD in Fontainebleau, France, and Fellow of the World Economic Forum.<br />
  3. 3. How to survive in the bloody “red ocean” of rivals fighting over a shrinking profit pool?<br />In today’s head-to-head competition……<br />And overcrowded industries…<br />
  4. 4. Creating “blue oceans” of uncontested market space ripe for growth.<br />
  5. 5. Creating Blue Oceans<br />
  6. 6. Value Innovation: <br />The Cornerstone of Blue Ocean Strategy<br />Costs<br />Value <br />Innovation<br />Buyer Value<br />
  7. 7. Red Ocean Versus Blue Ocean Strategy<br />
  8. 8. The Six Principles of Blue Ocean Strategy<br />
  9. 9. Analytical Tools and Frameworks<br />
  10. 10. The Strategy Canvas<br />High<br />Low<br />Wine range<br />Above-the-line marketing<br />Vineyard prestige and legacy<br />Price<br />Use of enological terminology<br />Aging quality<br />Wine complexity<br />
  11. 11. The Four Actions Framework<br />Reduce<br />Which factors should be reduced well below the industry’s standard? <br />Eliminate<br />Create<br />A New Value Curve<br />Which of the factors that the industry takes for granted should be eliminated? <br />Which factors should be created that the industry has never offered?<br />Raise<br />Which factors should be raised well above the industry’s standard?<br />
  12. 12. The Eliminate-Reduce-Raise-Create Grid:<br />The Case of [yellow tail]<br />
  13. 13. Three Characteristics of a Good Strategy<br />Focus<br />Divergence<br />Compelling Tagline<br />3 Characteristics of a good strategy<br />
  14. 14. Reading the Value Curves<br />
  15. 15. Reconstruct Market Boundaries<br />Formulating<br />Executing<br />
  16. 16. Six Paths to Create Blue Ocean<br />Path 6<br />Look Across Time<br />Path 5<br />Look Across Functional or Emotional Appeal to Buyers<br />Path 4<br />Look Across Complementary Product and Service Offerings<br />Path 3<br />Look Across the Chain of Buyers<br />Path 2<br />Look Across Strategic Groups within Industries<br />Path 1<br />Look Across Alternative Industries<br />
  17. 17. From Head-to-Head Competition to Blue Ocean Creation<br />
  18. 18. Focus on the Big Picture,<br />Not the Numbers<br />Formulating<br />Executing<br />
  19. 19. The Four Steps of Visualizing Strategy<br />Visual Awakening<br />Visual Exploration<br />Visual <br />Strategy Fair<br />Visual Communications<br /><ul><li>Compare your business with your competitors’ by drawing your “as is” strategy canvas.
  20. 20. See where your strategy needs to change
  21. 21. Go into the field to explore the six paths to creating blue oceans.
  22. 22. Observe the distinctive advantages of alternative products and services.
  23. 23. See which factors you should eliminate, create, or change.
  24. 24. Draw your “to be” strategy canvas based on insights from field observations.
  25. 25. Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers.
  26. 26. Use feedback to build the best “to be” future strategy.
  27. 27. Distribute your before-and-after strategic profiles on one page for easy comparison.
  28. 28. Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy.</li></li></ul><li>The Pioneer-Migrator-Setting (PMS) Map<br />Pioneers<br />Migrators<br />Settlers<br />Today<br />Tomorrow<br />
  29. 29. Reach Beyond Existing Demand<br />Formulating<br />Executing<br />
  30. 30. The Three Tiers of Noncustomers<br />Third Tier<br />Second Tier<br />First Tier<br />Your Market<br />
  31. 31. Noncustomers<br />1st<br />Tier<br />2rd<br />Tier<br />3rd<br />Tier<br />“soon-to-be” noncustomers<br />“refusing” noncustomers<br />“unexplored” noncustomers<br />
  32. 32. Get the Strategic Sequence Right<br />Formulating<br />Executing<br />
  33. 33. The Sequence of Blue Ocean Strategy<br />No – Rethink<br />Yes<br />No – Rethink<br />Yes<br />No – Rethink<br />Yes<br />A Commercially Viable Blue Ocean Idea<br />Yes<br />
  34. 34. Testing for Exceptional Utility 1<br />- The Buyer Utility Map<br />The Six Stages of the Buyer Experience Cycle<br />The Six Utility Levers<br />
  35. 35. Testing for Exceptional Utility 2<br />- The Buyer Experience Cycle<br />Purchase<br />How long does it take to find the product you need?<br />Is the place of purchase attractive and accessible?<br />How secure is the transaction environment?<br />How rapidly can you make a purchase?<br />Delivery<br />How long does it take to get the product delivered?<br />How difficult is it to unpack and install the new product?<br />Do buyers have to arrange delivery themselves? If yes, how costly and difficult is this?<br />Use<br />Does the product require training or expert assistance?<br />Is the product easy to store when not in use?<br />How effective are the product’s features and functions?<br />Does the product or service deliver far more power or options than required by the average user? Is in overcharged with bells and whistles?<br />Supplements<br />Do you need other products and services to make this product work?<br />If so, how costly are they?<br />How much time do they take?<br />How easy are they to obtain?<br />Maintenance<br />Does the product require external maintenance?<br />How easy is it to maintain and upgrade the product?<br />How costly is maintenance?<br />Disposal<br />Does use of the product create waste items?<br />How easy is it to dispose of the product?<br />Are there legal or environmental issues in disposing of the product safely?<br />How costly is disposal?<br />
  36. 36. Testing for Exceptional Utility 3<br />- Uncovering the Blocks to Buyer Utility<br />
  37. 37. Strategic Pricing – the Price Corridor of the Mass<br />Step 1: Identify the price corridor of the mass.<br />Step 2: Specify a price level within the price corridor.<br />Three alternative product/service types:<br />Different form and function, same objective<br />Same form<br />Different form, same function<br />Upper-level pricing<br />Price Corridor of the Mass<br />Mid-level pricing<br />Lower-level pricing<br />
  38. 38. Target Costing – the Profit Model<br />The Strategic Price<br />The Target Profit<br />The Target Cost<br />Streamlining and <br />Cost Innovations<br />Partnering<br />Pricing Innovation<br />
  39. 39. Adoption<br />
  40. 40. Blue Ocean Idea (BOI) Index<br />
  41. 41. Overcome Key Organizational Hurdles<br />Formulating<br />Executing<br />
  42. 42. Four Organizational Hurdles to Strategy Execution<br />
  43. 43. Challenging Conventional Wisdom<br />Conventional Wisdom Versus Tipping Point Leadership<br />Conventional Wisdom<br />Mass of Employees<br />Company<br />Tipping Point Leadership<br />Extremes<br />Extremes<br />Company<br />
  44. 44. Build Execution into Strategy<br />Formulating<br />Executing<br />
  45. 45. How Fair Process Affects <br />People’s Attitudes and Behavior<br />Fair Process<br />Engagement<br />Explanation<br />Expectation Clarity<br />Strategy Formulation Process<br />Trust and Commitment<br />“I feel my opinion counts.”<br />Attitudes<br />Voluntary Cooperation<br />“I’ll go beyond the call of duty.”<br />Behavior<br />Exceeds Expectations<br />Self-initiated<br />Strategy Execution<br />
  46. 46. The Three E Principles of Fair Process<br /> Engagement<br /> Explanation<br />Expectation clarity<br />
  47. 47. Fair Process and Blue Ocean Strategy<br />Fair Process<br />Intellectual and Emotional Recognition<br />Trust and Commitment<br />Voluntary Cooperation in Strategy Execution<br />Violation of Fair Process<br />Intellectual and Emotional Indignation<br />Distrust and Resentment<br />Refusal to Execute Strategy<br />
  48. 48. Conclusion: The Sustainability and Renewal of Blue Ocean Strategy<br />
  49. 49. Barriers to Imitation<br />1. Conflict with conventional logic<br />2. Conflict with brand image<br />3. Natural monopoly<br />4. Patents or legal permits<br />5. High volume leads to rapid cost advantage for the value innovator, discouraging followers<br />6. Network externalities<br />7. Imitation requires significant political, operational, and cultural changes.<br />8. Brand buzz and a loyal customer following<br />
  50. 50. When to Value-Innovate Again<br />Monitor value curves on the strategy canvas.<br />Ensure the strategy has focus, divergence, and a compelling tagline.<br />Use the six principles to think about future strategy.<br />
  51. 51. Create Uncontested Market Space and Make the Competition Irrelevant.<br />
  52. 52. THANK YOU!<br />