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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 If you find this presentation useful, please consider telling others about our site  (www.studyMarketing.org)
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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 W. Chan Kim (Author) and Renée Mauborgne (Author),  Blue Ocean Strategy , HBS Publication
End of Material

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Blue Ocean Strategy

  • 2. 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 If you find this presentation useful, please consider telling others about our site (www.studyMarketing.org)
  • 3. www.studyMarketing.org You can download this presentation at: Please visit www.studyMarketing.org for more presentations on strategy, marketing, branding, and innovation
  • 4. Blue Ocean Vs. Red Ocean Strategy
  • 5. 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
  • 6. 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
  • 7. 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
  • 8. Four Action Framework Eliminate Reduce Raise Create
  • 9. 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?
  • 10. 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
  • 11. 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
  • 12. Formulating Blue Ocean Strategy
  • 13. 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
  • 14. 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
  • 15. 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
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. 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
  • 20. 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
  • 21. 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
  • 23. 5. Overcome Key Organizational Hurdles Overcome Key Organizational Hurdles Cognitive Hurdle Motivational Hurdle Resource Hurdle Political Hurdle
  • 24. 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
  • 25. 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
  • 26. 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
  • 27. Source of Reference W. Chan Kim (Author) and Renée Mauborgne (Author), Blue Ocean Strategy , HBS Publication