Blue ocean strategy

1. Creating NEW market spaces© Kim & Mauborgne

2. Blue Ocean Strategy
Creating New BRANDED Export Market Spaces
Presented by : Ravi Fernando

3. © Kim & Mauborgne
March 2015
RED OCEAN TRAPS
May 2015
 BLUE OCEAN LEADERSHIP

4. © Kim & Mauborgne
Is Sri Lanka in a RED OCEAN ‘Commodity’ TRAP?
Mental Assumption – Export Brand market spaces, NO WAY !!
© Kim & Mauborgne
• 90% + of exports
•TEA
•APPAREL
•CINNAMON
•RUBBER
•COCONUT
•NATURAL RESOUCES
- ILMENITE Titanium
- GRAPHITE
 Rewarded Operations
 Loadstar
 Dilmah
 Virtusa
 Rewarded creativity

5. Trap 1:
Seeing Market-Creating Strategies as Customer-Oriented
Approaches
© Kim & Mauborgne
• A focus on the demands of existing customers tends to drive organizations
to come up with better /lower cost solutions than what competitors
currently offer – but this keeps them moored in Red Oceans
Better!
More!
Existing
Customers
© Kim & Mauborgne

6.  Red Ocean of Commodity suppliers
Margins & Share
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
 Apparel
 Rubber
 Cinnamon
 Tea
 Graphite
 Ilmenite
 Value add FOR BRANDS!
 Close to Consumption
 Industrial 3D printers
 Amazon

7. Creating New Market spaces
 RED OCEAN TRAPS - Is Sri Lanka in One?
 Blue Ocean Strategy and global impact
 Blue Ocean Strategy concept & 3 tools
 Creating New Market spaces – Cases
 Opportunities for SL Export Market spaces !
© Kim & Mauborgne
SL Branded

8. © Kim & Mauborgne
Sold over 3.5 Million Copies !

9. BOS in 1,800 universities in over 110 countries
584
North
America 584
South
America 164
Africa
45
Europe
581
Asia
334
Oceania
32
Middle
East
60
© Kim & Mauborgne
Sri Lanka?

10. © Kim & Mauborgne 2020 Advanced nation
US$ 10,796- 15,000
The Eleventh Malaysia Plan used
Blue Ocean strategy tools & frameworks ..
• 60 NBOS initiatives
• 80 ministries & agencies

11. • Data: 150 blue ocean Moves , in more than 30 industries,
over 100 years (1880-2000)
– Hotel, cinema, retailing, airline, energy, computer, broadcasting, construction,
home, automobile, steel manufacturing, chemicals, cosmetics, software, etc.
• Variables considered: industrial, organizational, strategic
39% 61%Profit Impact
62% 38%Revenue Impact
14%86%Business Launch
Launches within red oceans Launches into blue oceans
The basis of Blue Ocean Strategy
© Kim & Mauborgne

12. Red Ocean Approach Blue Ocean Approach
Differentiation
OR
Low Cost
BOS
Low Cost
Differentiation
© Kim & Mauborgne

13. New Market Spaces & BOS tools

14. © Kim & Mauborgne
Eliminate Raise
Reduce Create
BOS ERRC GRID 3 TIERS OF NON CUSTOMERS
Astra/ Tea/CoffeeLow Cost High Value

15. Value Innovation in Hospitality
Hyatt – Mkt.cap 8b
-Mkt.cap13b
 Low cost, High Value
levering existing rooms!
5y moreroom nights than
Hilton
Truly global. Present
in 190+ countries
and 30,000cities
Longeraverage stay than in hotel (5.5
days vs. 3.5). Higher total spend per trip.
© Kim & Mauborgne
Soon to be non customer &…

16. • Ownership • Options
• Cost • New Market space
ERRC Grid
ELIMINATE
REDUCE
RAISE
CREATE
blueoceanstrategy.com |
@blueoceanstrtgy
© Kim & Mauborgne
© Kim & Mauborgne
Low cost Creating high value

17. © Kim & Mauborgne
2012

18. Red Ocean Approach Blue Ocean Approach
Created New Market Spaces
Competing in the
Existing Value Space
Competitiveness Creativity
© Kim & Mauborgne
© Kim & Mauborgne

19. © Kim & Mauborgne

20. © Kim & Mauborgne

21. © Kim & Mauborgne
 Rev. 38% vs. 22%
 Profit 61% vs. 51% with 4% Volume Share

22. Apple vs Microsoft
Huge payoffs of market creation
20151998
Market Value
(US$)
Year
$244.8 bn
$4.3 bn
iPod
iMac
iPhone
iPad
A series of successful
market-creating moves
$742 bn
iTunes
AppStore
Apple Watch
$347 bn
Lack of compelling
market-creating moves
© Kim & Mauborgne© Kim & Mauborgne

23. BOS Six Paths Framework
© Kim & Mauborgne
1 32
4 65
Alternative industries Strategic groups
within industries
Different chain
of buyers
Complementary
products
Look across functional
and emotional appeal
to buyers
Look across time
Product
attributes
Functional
benefits
Emotional
benefits
Influencers

24. Costa Rica – World leader in ‘ecotourism’
Created a new Blue Ocean Market space!
Leveraged existing rich biodiversity !
• Government /Private sector jointly created an ‘ECO TOURISM NATION’ to
drive the economy
• New legislation to protect nature and the environment
– 1987 arrivals 329,000 to 2.34 million in 2012, Now 2.5!
– Avg. stay 10-12 days vs. 4-6 days / US $ 250 vs. US $ 80 per night
• Ranks 3rd on Environmental Performance Index out of 163 economies
– Goal to be carbon neutral ,100% Renewable energy by 2021
– Tourism 14 percent of GDP © Kim & Mauborgne

25. SpaceX
Tesla Motor Tesla Gigafactory
SolarCity
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne

26. © Kim & Mauborgne
 70,000 to 500,000 Tesla’s & Power wall units !
Biggest building on Earth? 24 Million Sq.ft

27. © Kim & Mauborgne
Electric Super Charger station network

28. ERRC of Tesla Motors
Eliminate Raise
1. Fossil Fuel usage
2. Automotive Carbon emissions
3. Car dealership
1. Driving range of EV’s
2. Car’s design and image
3. Battery Manufacturing capacity
Reduce Create
1. Vehicle options
2. Battery charge time vs old EV’s
1. Sustainable automobiles
2. Supercharger station network
3. Dual Energy Solution – Home & Auto
© Kim & Mauborgne

29. SL Opportunities to create
branded export market
spaces!

30. The 3 tiers of Non-customers
3rd Tier: Unexplored
Noncustomers
(Applications)
2nd Tier: Refusing
Noncustomers
(Application)
1st Tier: Soon-to-be
Noncustomers
Retail brands
Existing
Market
© Kim & Mauborgne

31. Sri Lanka’s Natural Black Gold!
Bulk Exporter -200y @ Peak 32,000mt
 99% Pure Vein graphite
 Strongest material on the planet
 Avg.US $ per ton 300
 Export 3-10,000 Mt.
 Global Market US $ 2b +
 Processed US$ 4 - 20,000
 EV Batteries - Space shuttle
 Graphene US$ 150 M by 2020 -11y
 Monolayer pack on quartz 4” wafer $ 849
 SL Graphene brand
Salt water Fresh water
© Kim & Mauborgne

32. Blue Oceans ‘wash’ it ashore!
 Titanium (Ilmenite)
 9th largest global resource
 75% pure
 US $ 300-500 per Mt
 60-100,000mt Ilmenite
 SL Brand Of Titanium
- Application specific
- Nano Titanium
 US $ 2,000-20,000 per Mt.
© Kim & Mauborgne

33.  Blue Ocean mind set
 JVs’/Collaborations
-Distribution
-Innovation capability
-Technology /R&D
-Marketing
 Non Value adding costs
 Compete as a ‘supplier’
 Global mind set teams
 Scale –up
- Processing capability
 Take risks & Invest
Can Sri Lanka create NEW export market spaces ?
ELIMINATE
 Commodity /Bulk mind set
 No we can’t Assumptions!
REDUCE
RAISE
CREATE
blueoceanstrategy.com |
@blueoceanstrtgy
© Kim & Mauborgne
© Kim & Mauborgne
Low cost Creating high value

34. Blue Ocean mind set
-Creating vs. Competing
- Non – Customers
- Time –Future
Global mind set - China
© Kim & Mauborgne

35. © Kim & Mauborgne
Blue Oceans ahead!
Thank you

36. Creating Blue Ocean Market spaces in Sri Lanka
© Kim & Mauborgne
• Vision
• To re-position Sri Lanka as a
‘smart’ nation by developing
Sustainable Nanotechnology
solutions to increase the
‘Global Competitiveness of
its Strategic industries’
‘
• Economic Sustainability
- Differentiation to compete globally
• Environmental Sustainability
- Must not impact the ecology
negatively and contribute to ‘more
from less for more’
• Social Sustainability
- Minimize risk of negative societal
impact in terms of ‘nano safety’
RAF SEPT 2009

37. Blue Ocean Strategy

38. NBOS
To date, more than 60 NBOS initiatives have been formulated
and executed successfully by over 80 ministries & agencies
High Value Low Cost
Blue
Ocean
Policing
1AMAN
Campaig
n
CR
P
Military Building
Rural
Infrastructure
Health Fairs in
Sabah &
Sarawak
High-value
Farming on
Unused Land
1MWISE
Blue Ocean
Communicatio
n of GST
1Malaysia
Social
Entrepreneurs
VIP
VIBE
Tourist
First
Repositioning
Teachers
1Malaysia
Discount
Card
Certified
Security Guards
1MBEO
N
Military
Adventure
World
MICRO PPP
1Malaysia Civil
Service Retirement
Support
Military-Police
Collaboration
CTC
1Malaysia
Youth
Cities
1Malaysia
Customer Service
of Civil Servants
1ASEAN
Entrepreneursh
ip Summit
1Malaysia
Support for
Housewives
My Beautiful
Malaysia Day
Repositio
n-ing of
police
Key NBOS Initiatives
Confidential © Kim & Mauborgne
BOL

39. © Kim & Mauborgne
mSLNBOS
T
To Create global Blue Ocean Market
spaces for Sri Lankan branded exports

40. © Kim & Mauborgne
SLBOSI
T
 Purpose - To Create global Blue Ocean Market
spaces for Sri Lankan brand exports
 How - A SL Private sector driven platform to identify key focus sectors
to drive Sri Lankan brand export growth with public sector
involvement when needed.
Focus sectors
 Nanotechnology driven (Tio2/Graphite/Graphene)
 Tea / Rubber/Cinnamon
 IT
 Apparel body fit garments
 Process – Select and engage key sector players with established export
business and all relevant and strategic players to ‘identify and create
new blue ocean market spaces’

41. Can Sri Lanka create new market spaces ?
Top 10 National Geo. Eco –destinations
Dubai /Costa Rica/ Laos
Eco- Tourism –small to medium destination
Sustainable Nano Materials
- Titanium & Graphite
© Kim & Mauborgne

42. Sri Lanka can create a New Market space!
 Titanium (Ilmenite)
 9th Global
 75% pure
 US $ 2,000 per Mt 150,000Mt
If we CREATE a NEW Market
space….investing in processing!
 US $ 25,000 per Mt.
 US$ 250,000 per kg!
© Kim & Mauborgne

43. Sri Lanka can create a New Market space!
© Kim & Mauborgne

44. Global Competitiveness Index sustainability adjusted
GCI 2012 – 2013 GCI 2012 – 2013 Sustainability adjusted
GCI
Country/Economy Rank Score Score
Switzerland 1 5.72 6.85
Germany 6 5.48 6.14
United States 7 5.47 5.31
United Kingdom 8 5.45 5.82
Japan 10 5.40 5.76
Korea Republic 19 5.12 4.89
Australia 20 5.12 5.46
Malaysia 25 5.06 5.14
China 29 4.83 4.44
India 59 4.32 3.73
Sri Lanka 68 +10 = 78 4.19 3.96
Venezuela 126 3.46 3.28
© Kim & Mauborgne

45. Nations ‘Create Market spaces’
Wine Industry Automobile Industry Electronic Industry Apparel Industry
Made in France
Made in Australia
Made in Germany
Made in Japan
Made in The England
Made in Korea
Designed in
Italy
Designed in
Spain
Made in
The UK
Made in China
Fashion
Industry
© Kim & Mauborgne

46. 50% OF THE WORLDS FORESTS
DESTROYED IN THE LAST 30 YEARS!
52% of the Worlds animal species have
been destroyed in the past 40yearsR.A. Fernando © RAF SCS 2015
© Kim & Mauborgne

47. R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne

48. Global carbon emissions & carbon
concentrations 1992-2014
1992 2014 %
• Global Carbon emissions 21 Gt 32 Gt +52
• Global ‘Air Pollution’ PPM 250ppm 400ppm +60
• Its 22y since all World leaders met at the Rio Earth summit!
Many declarations, commitments, agreements, 20 COP meetings later and
after the 20th anniversary ………..
• WHAT HAS THE UN AND ALL WORLD LEADERS ACHIEVED FOR THE PLANET?
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne

49. Divider/ title

50. Presentation title
sub
Presented by :

51. Header title – Helvetica 40point
Sub head – Helvetica 28 point
Body copy – Helvetica 16 – 20 point
• Bullet points – Helvetica 14 point bold
• Bullet points – Helvetica 14 point bold
• Bullet points – Helvetica 14 point bold

52. Divider/ title

53. Divider/ title