2. About the Authors W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. 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.
3. How to survive in the bloody “red ocean” of rivals fighting over a shrinking profit pool? In today’s head-to-head competition…… And overcrowded industries…
10. The Strategy Canvas High Low Wine range Above-the-line marketing Vineyard prestige and legacy Price Use of enological terminology Aging quality Wine complexity
11. The Four Actions Framework Reduce Which factors should be reduced well below the industry’s standard? Eliminate Create A New Value Curve Which of the factors that the industry takes for granted should be eliminated? Which factors should be created that the industry has never offered? Raise Which factors should be raised well above the industry’s standard?
16. Six Paths to Create Blue Ocean Path 6 Look Across Time Path 5 Look Across Functional or Emotional Appeal to Buyers Path 4 Look Across Complementary Product and Service Offerings Path 3 Look Across the Chain of Buyers Path 2 Look Across Strategic Groups within Industries Path 1 Look Across Alternative Industries
33. The Sequence of Blue Ocean Strategy No – Rethink Yes No – Rethink Yes No – Rethink Yes A Commercially Viable Blue Ocean Idea Yes
34. Testing for Exceptional Utility 1 - The Buyer Utility Map The Six Stages of the Buyer Experience Cycle The Six Utility Levers
35. Testing for Exceptional Utility 2 - The Buyer Experience Cycle Purchase How long does it take to find the product you need? Is the place of purchase attractive and accessible? How secure is the transaction environment? How rapidly can you make a purchase? Delivery How long does it take to get the product delivered? How difficult is it to unpack and install the new product? Do buyers have to arrange delivery themselves? If yes, how costly and difficult is this? Use Does the product require training or expert assistance? Is the product easy to store when not in use? How effective are the product’s features and functions? Does the product or service deliver far more power or options than required by the average user? Is in overcharged with bells and whistles? Supplements Do you need other products and services to make this product work? If so, how costly are they? How much time do they take? How easy are they to obtain? Maintenance Does the product require external maintenance? How easy is it to maintain and upgrade the product? How costly is maintenance? Disposal Does use of the product create waste items? How easy is it to dispose of the product? Are there legal or environmental issues in disposing of the product safely? How costly is disposal?
37. Strategic Pricing – the Price Corridor of the Mass Step 1: Identify the price corridor of the mass. Step 2: Specify a price level within the price corridor. Three alternative product/service types: Different form and function, same objective Same form Different form, same function Upper-level pricing Price Corridor of the Mass Mid-level pricing Lower-level pricing
38. Target Costing – the Profit Model The Strategic Price The Target Profit The Target Cost Streamlining and Cost Innovations Partnering Pricing Innovation
43. Challenging Conventional Wisdom Conventional Wisdom Versus Tipping Point Leadership Conventional Wisdom Mass of Employees Company Tipping Point Leadership Extremes Extremes Company
45. How Fair Process Affects People’s Attitudes and Behavior Fair Process Engagement Explanation Expectation Clarity Strategy Formulation Process Trust and Commitment “I feel my opinion counts.” Attitudes Voluntary Cooperation “I’ll go beyond the call of duty.” Behavior Exceeds Expectations Self-initiated Strategy Execution
46. The Three E Principles of Fair Process Engagement Explanation Expectation clarity
47. Fair Process and Blue Ocean Strategy Fair Process Intellectual and Emotional Recognition Trust and Commitment Voluntary Cooperation in Strategy Execution Violation of Fair Process Intellectual and Emotional Indignation Distrust and Resentment Refusal to Execute Strategy
49. Barriers to Imitation 1. Conflict with conventional logic 2. Conflict with brand image 3. Natural monopoly 4. Patents or legal permits 5. High volume leads to rapid cost advantage for the value innovator, discouraging followers 6. Network externalities 7. Imitation requires significant political, operational, and cultural changes. 8. Brand buzz and a loyal customer following
50. When to Value-Innovate Again Monitor value curves on the strategy canvas. Ensure the strategy has focus, divergence, and a compelling tagline. Use the six principles to think about future strategy.
