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Blue ocean strategy –part 1

The document discusses the concept of Blue Ocean Strategy, which focuses on creating uncontested market spaces that make competition irrelevant. It contrasts this with Red Ocean Strategy, where companies compete in crowded markets, highlighting the importance of value innovation to attract non-customers. Through case studies like NetJets and Indochino, the document illustrates how companies can innovate and redefine their industries to achieve growth and profitability.

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Blue Ocean Strategy The science of making competition irrelevant
What is blue ocean strategy about? • Based on the best selling books HBR press – translated in over 41 languages • It’s a culmination of a decade long study by Renee Mauborgne and Chan Kim , who studied over 150 strategic moves spanning more than 30 industries over 100 years (1880-2000) • BOS focuses on making competition irrelevant by creating uncontested marketspaces. • BOS covers both strategy formulation and strategy execution. • BOS offers a set of methodologies, tools and frameworks that makes it a structured, learnable system.
Blue Ocean Strategy In Today’s webinar In the concluding part 4 Actions Search Risk framework Planning Risk Strategy 6 Paths BUM Model Formula Scale Risk Framework BOS - tion Tools & Framew Business orks Model Risk Organizatio Strategy nal Risk PMS Non Customer Executio Framework Analysis n Manageme nt Risk
The Color - Red and Blue
A quick reality check of how red or blue your company is? Does your company feel that Is your company increasing Does your company depend on they are facing increasing advertising and marketing offering deeper and deeper competition from rivals? spends every year, yet the Domestic , International , Small player, price discounts to make sales impact of these efforts keeps Large Player, MNC’s, basically scared of happen? everybody falling? Is your company focusing on Do people in your company Is your company seeing cost cutting and quality control blame slow economic and outsourcing and job cuts as a at the expense of growth, market conditions most of the way to regain competitiveness innovation, and brand time? and profitability? creation? Does your company Does your company think that management sees mergers Is your company now starting it easier to follow competitors and acquisitions as one of the to worry that the marketplace than to break away from principal means to grow in has become crowded? them? future? if your answer to three or more questions is YES - You are in Red Ocean
The Red Ocean • A Marketplace where companies compete with each other on a daily basis. • When companies compete, it becomes battle field for : • Acquiring market shares • Increasing revenues • Maximization of profit by reducing costs and value • Basically beating competition consumes most of the effort, time and resources • Such companies are called Red Ocean companies. Such companies fight for competitive advantage with two strategic weapons - Differentiation and Price
Cost and Differentiation Dilemma But there can be only one price leader in an Industry And differentiation would mean higher cost. • More the differentiation – Higher the segmentation • Higher the segmentation – lower would be the market size.
Also The Size Of The Market Pie Is Fixed i.e almost all the companies in an industry are competing for an increased slice of the same pie But the real objective of business is not fighting – its about creating profit and value
“Skillful leaders win wars without any fighting” ------ Sun Tzu ‘ Art of War’
Brief: Blue ocean strategy • Blue ocean strategy builds new businesses where none existed – By tapping the untapped market space Price – By creating demand – Thereby making competition irrelevant • Blue ocean strategy is about simultaneous pursuit of Value innovation – value innovation and low cost simultaneous • Value innovation is defined in terms of value/ utility pursuit of high value & for customer low cost • Blue ocean markets are usually more profitable Value/ product than markets with head to head competitors features Characteristics of a good Value innovation Strategy Compelling Tag line : The value FOCUS: Not to diffuse efforts DIVERGENCE: The shape of the curve can be translated into a across all key factors of value curve diverges from those clear, strong, truthful and competition. of other players. compelling TAGLINE.
Red Ocean Vs. Blue Ocean Red Ocean Strategy Blue Ocean Strategy Compete in existing market space Create uncontested / New market space Beat the competition Make the competition irrelevant Create a value – cost trade off Break the value-cost trade off Competitive Advantage Value Innovation Segment existing customers Attract noncustomers Exploit existing demand Create and capture new demand
How Do You Identify These Companies? Blue Ocean with ipod, iphone & ipad Blue ocean from prescription drug to lifestyle Blue ocean by making Music portable Blue Ocean in low cost travel Blue Ocean in Luxury Travel Blue ocean in Search Blue ocean with making no frills barbershop Blue Ocean by increasing Customer productivity Blue Ocean in Insulin market Blue Ocean through tipping point leadership Blue Ocean by looking across complimentary products Blue Ocean in coffee bars Blue Ocean in Apparels Blue Ocean by making copiers a desktop utility and not office equipment Blue Ocean in Gaming These are the companies that questioned the norms and boundaries set by the industry and seized their market shares without fighting with anyone!
Lets Explore How These Companies Got There •Case Study 1: NETJETS •Case Study 2: Indochino.com •Case Study 3: Zynga Games •Case Study 4 : Khan Academy
Six Path To Blue Ocean Strategy Conventional boundaries in a competitive marketplace Industry - industry size & dependencies Strategic groups – strategic groups i.e customer , vendors etc Buyer group- individual customer From competing buying processes Creating value within across Scope of product: scope of adding value with complementing products Functional/ emotional orientation of the industry: functionality vs. Blue ocean Strategy Emotional appeal tradeoff Time: value that an attribute might deliver tomorrow • Blue oceans can be created by exploring outside of industry boundaries • Break out of the traditional boundaries of the industry to unlock value • “out of the boundaries” thinking framework for unlocking value
6 PATHS: Exploration Outside of Traditional Boundaries Path 1 - Industry What are the alternative industries to your industry? Path 2 – Strategic Group Why do buyers trade across to them? What are the strategic groups in your industry? Why do buyers trade up for the higher group, and why do NTT DoCoMo, Federal Express, Southwest Airlines, NetJets they trade down for the lower one? Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus Path 3 - Buyer Group What is the chain of buyers in your industry? Which buyer group does your industry typically focus on? If you shifted the buyer group of your industry, how can you unlock new value? Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips Alto Path 4 - Scope of product or service offering What is the context in which your product or service is used? What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a complementary product or service offering? Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis Kiné-kids, Zenick Salick’s Cancer Centers Path 6 - Time Path 5 - Functional-emotional orientation of an industry What trends have a high probability of impacting your industry, are Does your industry focus on functionality or emotional appeal? If you irreversible, and evolving in a clear trajectory? How will these trends compete on emotional appeal, what elements can you strip out to make it impact your industry? Given this, how can you open up unprecedented functional? If you compete on functionality, what elements can be added customer utility? to make it more emotional? Apple Music, Cisco Systems, CNN, Starbucks, QB House, Direct Line Group, Pfizer’s Viagra HBO’s “Sex and the City”
More Understanding Of The Frameworks & Tools Case Study - 1 • Introduction to Strategy Canvas • Introduction to 4 Actions framework
World’s 2nd Largest airline! • Over 800 aircrafts • Over 6300 employees • 285000 flights annually •Flying across 170 countries and 2200 airports
Strategic questions before NETJETS – How to enter into the aviation space when the market was dominated by the big airline groups? – 1983. The red ocean •Over 20 domestic and international airlines • All of them catering to similar customer groups – i.e. Business travelers, holiday travelers and casual travelers •Corporates – biggest strategic groups - spent millions on executive travel every year •All travelers – including executive travelers had to go through the long check ins, security checks, hectic flight transfers, congested airports, baggage claims …. •Business travelers only have the option of business class/ first class or corporate jet The blue ocean • Business travelers are the most frequent and regular flyers • NETJETS offered business travelers “ the convenience of a private jet at the price of a airline ticket” • NETJETS also provided fractional 1/16 ownership of the aircraft • NETJETS provided Private aircraft at 4 hours notice ( much less than flight booking) • NETJETS provided no hassles or responsibilities of aircraft maintenance • Customized in flight services – much better than business class or first class services NETJETS Converted a B2C industry into a B2B Industry
The Strategy Canvas NETJETS High Medium Business / 1st Class Travel Relevance Scale Low Commercial Airline Industry Dead head Hassle free Time Savings/ Flexibility & Price Faster Travel Jet Ownership In Flight Service Costs Travel Reliability Attributes of Industry & Competitors NETJETS Commercial Airline Business / 1st Industry Class Travel • The strategy canvas is the central diagnostic and action framework for building a compelling blue ocean strategy. • The Strategy canvas serves two purposes: – It captures the current state of play in the known market space. This allows you to know where you are viz competition – It propels you to action by reorienting your focus: • From competitors to alternatives • From customers to non customers of the industry.
The Four Actions Framework REDUCE Factors that should be well below the industry standard ELIMINATE CREATE Create A Factors that the industry New Value Factors that the industry takes for granted and need Curve has never created to be eliminated RAISE Factors that should be raised above the industry standard We use the four actions framework, to reconstruct buyer value elements in crafting a new value curve.
Net Jets 4 Actions Framework Eliminate Raised • Airport check ins, waiting time, •Convenience, comfort & luxury baggage, transfers and other time •Customized in-flight services losses for customer •Entire private jet for the user/s •The tiredness and hassles endured • Service standards during a journey by the corporate • On time take off & arrival • Available on 4 hours notice traveler Reduced Created • Private jet buying, maintenance and administrative costs • Time for travelers – same distance now •Fractional ownerships of plane took half the time because there is no • B2B industry when the entire checking, boarding or baggage claim time industry was still B2C • Other dead head costs : •Loyal customer base scheduling, ticketing, administrative or marketing costs
Case Study – 2: The Story of
The Story is … • Heikal Gani needed a suit for an important presentation. He faced a major challenge. – Affordable suits didn't fit well or were not comfortable – Ones that fitted well were not of latest trend / design – One hardly has the time to go to a tailor to get a customized suit done – Designer suits of latest design & trend were too expensive There had to be a better way for men to find a great-fitting suit • World’s first self service virtual suit company • Customers can choose the fabric, design style and Results : accessories • Started in end of 2009 – have started averaging • Customers get customization of suits through the site sales of over 30,000 suits a year across 60 countries, • Customers measure themselves and provide fitting details with about 30 + employees through online video tutorial • Most suits priced under $500 ( Much lesser than designer • Student start up to a global brand in less than 2 year suites ) •Sales growth rate of over 200% every year • Suit tailoring in Shanghai’s network of tailors • A beeline of Venture Capitalist wanting to invest – • Delivery in two to three weeks – have already raised over 20 mn for operational • If order is less than perfect, indochino pays for local expansion in Vancouver & Shanghai tailoring or remake the suit free
Creating the Blue Ocean Traditional apparel / suit companies Indochino.Com 1) Industry divided into five segments • Haute couture • Luxury • Affordable luxury 1) Indochino.com does not compete • Mainstream in any of the segment • Discount 2) Indochino.com does not get affected 2) The traditional companies competed by the industry factors among each other on the following factors: 3) Indochino.com built its brand • No of stores reputation by delivering value • Location of stores – premium stores – premium brand 4) Indochino.com outsources all suits • Range or no of lines offered to quality and reputed tailor network • Hi fashion vs customization vs price in shanghai - China tradeoff Created and captured a new market 3) Marketing & brand reputation demand ( Top brands associated with designer labels) 4) High customization costs
Indochino.com 4 Actions Eliminate Raised • Need to go to store • Customer satisfaction & Quality • Store presence in hi end posh locations • Convenience / ease of shopping • Inventory and Store management costs • Affordability of quality suits • Separate costs for customization / tailor Reduced Created • Price • Delivery & customization hassles •Fully self service customization • Marketing costs • 100% return policy • No of lines offered
The Strategy Canvas – Indochino.com Indo Chino High Medium Low # of Lines Customiz Ease of Return Self Relevance Scale Price Location Marketing Offered Quality Online stores ation Shopping Policy Service Indo Chino Hi End – Designer Suits Low End Suit Market Attributes of Industry & Competitors • Indochino.com - expanded the market by making good quality suits affordable • It used technology to make things simple, functional and to add value
The Technology Trap Use of technology challenges the conventional systems & process. • But companies should not get carried away by the “technology” • Technology innovation is not necessarily value innovation for buyer / customer every time. – Because use of cutting edge technology does not mean cutting edge utility for the buyers – Unless technology makes buyers lives simpler The buyer utility map helps managers to : • Avoid the technology trap • Refine value innovation • Enables a birds eye view of buyer utility • Takes into account the buyer experience cycle and utility leavers
Buyer Utility Map A buyer’s experience can usually be broken into a cycle of six stages, running more or less sequentially from purchase to disposal. Each stage encompasses a wide variety of specific experiences. At each stage, managers need to ask a set of questions to gauge the quality of buyer’s experience. Purchase Delivery Use Supplements Maintenance Disposal •How long does it •How long does it •Does the •Do you need •Does the •Does use of the take to find the take to get the product require other products product require product create product you need? product training or and services to external waste items? delivered? assistance? make this product maintenance? •Is the place of •How easy is it to work? purchase •How difficult is it •Is the product •How easy is it to dispose of the attractive and to unpack and easy to store •If so, how costly maintain and product? accessible? install the new when not in use? are they? upgrade the •Are there legal product? product? •How secure is the •How effective •How much time or environmental transaction •Do buyers have are the product’s do they take? •How costly is issues in environment? to arrange features and maintenance? disposing of the •How easy are delivery functions? product safely? •How rapidly can they to obtain? themselves? you make a •Does the •How costly is purchase? product or disposal? service deliver far more power or options than required by the average user? Is in overcharged with bells and whistles?
Uncovering Blocks to Buyer Utility Uncovering blocks to buyer utility can identify the most compelling hot spots to unlock exceptional utility. By locating your proposed offering on the thirty-six space of the buyer utility map, you can clearly see how, and whether the new idea not only creates a different utility proposition from existing offerings but also removes the biggest blocks to utility that stand in the way of converting noncustomers into customers. Customer Productivity: In which stage are the biggest blocks to customer productivity? Simplicity: In which stages are the biggest blocks to simplicity? Convenience: In which stage are the biggest blocks to convenience? Risk: In which stage are the biggest blocks to reducing risks? Fun and Image: In which stage are the biggest blocks to fun and image? Environmental In which stage are the biggest blocks to environmental friendliness? Friendliness:
The Buyer Utility Map – Indochino.com Buyer Experience from Decision to Disposal – (For Emerging Industries) Purchase Delivery Supplements Disposal Choosing a Does the suit The Usage and Choosing a Store Suit ( Color, Return Policy Maintenance require tailoring How Fast can the Style, & Fabric) experience in this case transaction be made? remains constant / Getting Suit How Time Secure consuming same for existing Transaction Delivered industry as well as blue Environment oceans Is it Productive for the buyer? Utility Leavers Does the buyer find it simple? Does the buyer find it Blocks in Blocks in Blocks in Convenient? tradition tradition New al al industry as well Buyer Buyer Does it reduce buyers' as new Utility Utility Risk Utility Buying Experience • Buyer Utility Score – Lower than what is prevalent in the current industry • Therefore Indochino.com raised the Buyer Utility and Experience
Case Study - 3 • Introduction to three tiers of non customers
The Story of Zynga • Founded Zynga in April 2007 with a mission “Connect the world through games” • Has over 3000 Employees and 270 million customers, 60 mn daily active users • Largest Social games developer of Facebook • Now provides games in multiple platforms like: – Facebook, Myspace, Android, ipad, iphone, yahoo & Farmville.com • Successful IPO to raise up to $1 billion in an initial public offering on July 1, 2011; Valuation of over $7 billion • Has made over 15 game studio acquisitions in last 2 years • Generates over $1.16 billion in annual revenues in 2011 • Zynga is approached billion dollars revenue after only four years. – Surpassing the market value of the longtime console game company EA Sports
Creating the blue ocean Traditional Gaming Companies Zynga 1) Industry divided into four segments • Console based games Zynga’s Farm Ville • Online Games • Mobile Games & Flash Games 1) Zynga did not compete in any of the 2) Console based games dominated the marketplace segment or market player dominance with 75% of the revenues. 3) The big four of the gaming dominated 95% of the 2) Zynga’s (Farm Ville) did not get affected console marketplace (sony, Nintendo, Xbox ..) by the industry factors 4) The Traditional gaming companies competed among each other on the following factors: • Consoles – Type speed, capabilities 3) Zynga built its brand reputation by • No of titles in each genre sharing and word of mouth connect • Speed of Title Release – weekly, monthly • Hi end real time graphics • Hi end accessories 4) Zynga caterered to all – children, 5) Catered only to gamers – Teenage boys to parents, professionals … professional gamers 5) Zynga created a new genre of education / simulation games 6) Addictive and had lot of side effects – Too much violence, addiction, Lack of exercise, not mind Created and captured a new market stimulating 7) Parents usually do not recommend / Buy demand
4 Actions Framework - Zynga Eliminate Raise • Game consoles • High cost of playing games – free • Community & sharing qualities in games • Violence in games • Interactivity with friends • Genere based games • Creativity, education & learning quotient • Winner – loser syndrome Reduce Create • New revenue models • Graphics • no console or title based revenue • Hi-end technology – leveraging facebook • Partnerships & advertising based • Effort & time involved in playing games revenue • Entry barriers for users • Games that makes friends •Marketing costs
The Strategy Canvas- Zynga (Farm Ville) High Medium Low Consoles Time & Winner/ Graphi Game Marketin Commun Educati Relevance Scale & Cost Violence Loser ity Sharing Creativity Hardware Effort cs Genere g on Traditional Gaming Industry Zynga Attributes of Industry & Competitors
The Three Tiers of Non Customers Tier 3 Non Customers Tier 3 non customers: “unexplored” non customers who are in markets distant from yours. Tier 2 Non Customers Tier 2 non customers: refusing noncustomers who consciously choose against your market Tier 1 – Non Customers Tier 1 non customers : “soon-to-be” noncustomers who are on the edge of your market, waiting to jump ship Non Customers Managing the three tiers of Non customers Tier 1 non customers : Investigate un satisfaction Key commonalities across needs & desires E.G. PRET A MANGER- british fast food chain Tier 2 non customers: Eliminate access barriers Economic, functional, education, geographical Tier 3 non customers: Remove long held assumption on customer needs & behavior
How Did Zynga Attract Non Customers? Tier 1 Non-Customers Tier 2 Non-Customers Tier 3 Non –Customers Non Regular players – young Casual Players - working Non Player Parents- women/ Audience boys & girls bored out of men/ women not enough housewives traditional games time to play Change 1 Changed genres completely – Cost of acquisition – free Removed violence from shooting, arcade, racing, to simulation Change 2 Made social networking fun Eliminated hassles of consoles, Play with friends and family – and more exciting game titles, accessories, not necessarily together / real hardware & setups time Results Fun lasts longer, with reduced Non serious casual play to relax No winner – no loser time and effort / unwind • Zynga looked across non customers and attracted new buyer groups to create an industry that did not exist earlier • Zynga also capitalized on the ongoing trends of Social media to mount its games offering to provide an unprecedented customer utility
Case Study - 4 • Introduction to PMS maps
The Story of Khan Academy • The Khan academy is a non-profit educational organization created in 2006 by salman khan- A MIT & harvard business school alumni • Free online collection of more than 3,300 micro lectures – Think out loud video tutorials in mathematics, sciences, engineering & medicine, economics, finance, arts, history, civics and even computer science – Automated exercises with continuous assessment – Content delivered offline in community colleges, charter schools and other schools across US – Providing a high quality education to anyone, anywhere • Mission : to accelerate learning for students of all ages • Khan academy has eclipsed mit’s open courseware ( OCW) in terms of videos viewed – Its youtube channel has more than 172 million total views, compared to mit's 38 million. – It also has twice as many subscribers, at more than 369,000 – Over 177 million lessons delivered till date – Close to quarter billion dollars in donation – Team size of just 20 people – Amongst the 100 most influential people of the world
Creating the Blue Ocean Traditional Learning Khanacademy + Schools 1) Khanacademy filled the gaps existing in 1) Industry divided into 2 segments traditional brick & mortar school learning • Brick & mortar Learning – Schools/ Colleges • Videos & Exercises to be used as a teaching aid • Online learning and not replacement for teacher 2) Learning was centered around students • Use analytics and technology to figure out the Strengths & weakness of students 3) The factors the industry was competing on: • Student teacher ratio 2) Learning is centered around students, • Class room Interaction teachers and parents • Cost of learning / Education • Interactive Learning 4) Everybody gets equal opportunity / 4) Smart kids get more attention than other kids attention/ Learning 5) Focused pedagogy – Teacher talks – Students listen 5) Unique Pedagogy - – Therefore Students learn • Stop, rewind, understand and then play 6) Teachers Judge student’s strength / weakness 6) Analytics drive the understanding of each students strengths & Weakness
4 Actions Framework – Khan Academy Eliminate Raise • Quality of Learning • Equality of Learning • Need of classrooms for learning • Simplicity in learning • Boring teachers and lectures • Progress & Tracking management • Cost of education •Sharing and mentoring • Emotional Connect Reduce Create • Difficulty level /s in Learning • Enriched and vibrant class rooms • Entry barriers for quality education ( for •Interactivity and fun while learning students across the world) • More involvement from parents, • Pedagogy based learning teachers & kids
The Strategy Canvas- Khan Academy High Medium Low Cost of Teacher Learnin Involve Enriched Relevance Scale Classroo Learning Learning Student Simplici Emotiona Learning/ student g ment Sharing Classroom ms pedagogy Quality Tracking ty Levels l Appeal Teaching ratio equality s Traditional Education/ Schooling Industry KhanAcademy.org Attributes of Industry & Competitors
Khan Academy + Classroom Learning = Blended Learning Regular students– Audience Students Teachers Parents Change 1 Classroom teaching now done Forced the teachers to view Started re learning and at home videos and exercises refreshing their concepts Change 2 Pairing classmates with each Deep analytics and data to Understand their child’s other facilitated easier learning understand the student strengths and talents better learning behaviors and interests Change 3 Classroom is enriched – with Equality of learning Understanding their higher level discussions and aspirations better problem solving Change 4 Mentoring and coaching by More quality time with More quality time with students – to students across students parents the world – Empowered learning • Clubbed the best of both worlds – More constructive and enriched classroom based learning • Teachers have more quality time with students – Teacher provides more time to students who need them – If a student gets stuck in a subject / topic – he / she is paired with other student - to facilitate easy learning • Students can coach and mentor other students ( to anyone -across the world) • Parents really know what their kids are doing and what they are good at – with analytics
Introduction to Pioneer, Migrator and Settler Maps Blended Learning Pioneer Khan Academy (Online + Classroom) •Online teaching aids / Supplements ( Value Innovation) classroom teaching Migrator Online Learning ( Value Improvement) (Online, mobile, ipad, Social) Settlers Traditional brick & mortar learning ( Value Imitation) (Schooling System) Today Tomorrow • Settlers are defined as me-too businesses, Migrators are business offerings better than most in the marketplace, and a pioneers is the businesses that offer unprecedented value. • Every thriving market place has high no of Settlers, moderate migrators and low / medium pioneers. The classification is also directly proportional to the growth potentials • This framework can be used to help a company align its internal product portfolios – Today's market share is a reflection of how well a business has performed historically. – Thereby help in determining which businesses experience the highest and lowest growth and cash flow. – Clearly, what companies should be doing is shifting the balance of their future portfolio toward pioneers – If current portfolio and the planned offerings consist mainly of settlers then the company has low growth trajectory
Challenging The Boundaries
What Did They Do Differently? Private Jet Convenience + Looking Most Marginal beyond the profitable increase in current strategic group cost + Industry NETJETS Fractional Ownership Corporate and business Private jet industry class travelers Looked at Leveraged the unique Customized , Indochino.com Strategic Scope of product/ No Hassles groups within affordable suit Service offering the industry Reduced the consumer’s effort by eliminating Audience who wanted a good the need to choose store, Tailors, Customization fitting suit at a nominal price costs etc
What Did They Do Differently? Looked Looking across Increased beyond Newer time to Gaming Zynga the Buyer scope of product/ leverage with current Groups social Friends games Industry networkin g Made a Niche Looked at Non Buyer Made games Looked at the audience Industry Groups more trends and to a mass by eliminating their Social & Provided unprecedented industry. pain points Educational value Reduced Improved Functional Looked Empower the Newer & across ed & Khan Academy scope of Product Buyer Groups Increased emotional time to leverage Enriched classroom Offerings orientatio trends s n Eliminated the pain Expanded the • No frills service – just Looked at the points in a horizon by click, play, watch, learn audience needs conventional involving & practice utility and system teachers & • Commitment to Used his learning through a parents quality education – medium to blend complementary increased emotional with Conventional service offering appeal learning
Summary Of The Webinar • Blue ocean strategy is about creating value innovation to the buyers • Its about questioning and challenging the current industry boundaries and breaking out of them • We also learnt through case studies – How a B2C industry was made into B2B Industry – Net Jets – How a new niche industry was created by providing buyer utility and convenience values - IndoChino.com – How a Niche industry was made into a mass industry – Zynga – How two industries could work together to create unprecedented value & utility to the audience – Khan academy
Blue Ocean Strategy Principles Strategy Formulation Strategy Execution Business Model Organizational Management Search Risks Planning Risks Scale Risks Risks Risks Risks Strategic Business Management 6 Paths Approach Market Sizing Mobilization Planning Model Risks Getting the Reconstruct Focus on Big Reach Beyond Overcoming Building strategic Market Picture – Not Existing Organization Execution Sequence Boundaries Numbers Demand al hurdles into Strategy Right Plan beyond incremental •Sequence the •Alternative improvements using business Model to Industries a visualization •Challenge capture newly Tipping Point •Strategic groups approach Conventional created value leadership to Execution •Buyer Groups •Visual Awakening practices •Buyer Utility Tackle through: •Complementary • Visual Exploitation •Consolidate Mapping • Cognitive hurdles Engagement Product offerings • Strategy Fair demand by •Pricing & corridors •Resource Hurdles •Explanation •Functional • Visual focusing on Non of Masses •Motivational •Clarity of Emotional Communication Customers • Cost Targets •Use PMS map to Hurdles expectations Orientation • Three tiers of based on margins identify current & • Political Hurdles •Time Non Customers desired future orientation of • Potential business Adoption obstacles To be Continued in next Webinar
Questions ? 50

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Blue ocean strategy –part 1

  • 1.
    Blue Ocean Strategy Thescience of making competition irrelevant
  • 2.
    What is blueocean strategy about? • Based on the best selling books HBR press – translated in over 41 languages • It’s a culmination of a decade long study by Renee Mauborgne and Chan Kim , who studied over 150 strategic moves spanning more than 30 industries over 100 years (1880-2000) • BOS focuses on making competition irrelevant by creating uncontested marketspaces. • BOS covers both strategy formulation and strategy execution. • BOS offers a set of methodologies, tools and frameworks that makes it a structured, learnable system.
  • 3.
    Blue Ocean Strategy InToday’s webinar In the concluding part 4 Actions Search Risk framework Planning Risk Strategy 6 Paths BUM Model Formula Scale Risk Framework BOS - tion Tools & Framew Business orks Model Risk Organizatio Strategy nal Risk PMS Non Customer Executio Framework Analysis n Manageme nt Risk
  • 4.
    The Color -Red and Blue
  • 5.
    A quick realitycheck of how red or blue your company is? Does your company feel that Is your company increasing Does your company depend on they are facing increasing advertising and marketing offering deeper and deeper competition from rivals? spends every year, yet the Domestic , International , Small player, price discounts to make sales impact of these efforts keeps Large Player, MNC’s, basically scared of happen? everybody falling? Is your company focusing on Do people in your company Is your company seeing cost cutting and quality control blame slow economic and outsourcing and job cuts as a at the expense of growth, market conditions most of the way to regain competitiveness innovation, and brand time? and profitability? creation? Does your company Does your company think that management sees mergers Is your company now starting it easier to follow competitors and acquisitions as one of the to worry that the marketplace than to break away from principal means to grow in has become crowded? them? future? if your answer to three or more questions is YES - You are in Red Ocean
  • 6.
    The Red Ocean •A Marketplace where companies compete with each other on a daily basis. • When companies compete, it becomes battle field for : • Acquiring market shares • Increasing revenues • Maximization of profit by reducing costs and value • Basically beating competition consumes most of the effort, time and resources • Such companies are called Red Ocean companies. Such companies fight for competitive advantage with two strategic weapons - Differentiation and Price
  • 7.
    Cost and DifferentiationDilemma But there can be only one price leader in an Industry And differentiation would mean higher cost. • More the differentiation – Higher the segmentation • Higher the segmentation – lower would be the market size.
  • 8.
    Also The SizeOf The Market Pie Is Fixed i.e almost all the companies in an industry are competing for an increased slice of the same pie But the real objective of business is not fighting – its about creating profit and value
  • 9.
    “Skillful leaders winwars without any fighting” ------ Sun Tzu ‘ Art of War’
  • 10.
    Brief: Blue oceanstrategy • Blue ocean strategy builds new businesses where none existed – By tapping the untapped market space Price – By creating demand – Thereby making competition irrelevant • Blue ocean strategy is about simultaneous pursuit of Value innovation – value innovation and low cost simultaneous • Value innovation is defined in terms of value/ utility pursuit of high value & for customer low cost • Blue ocean markets are usually more profitable Value/ product than markets with head to head competitors features Characteristics of a good Value innovation Strategy Compelling Tag line : The value FOCUS: Not to diffuse efforts DIVERGENCE: The shape of the curve can be translated into a across all key factors of value curve diverges from those clear, strong, truthful and competition. of other players. compelling TAGLINE.
  • 11.
    Red Ocean Vs.Blue Ocean Red Ocean Strategy Blue Ocean Strategy Compete in existing market space Create uncontested / New market space Beat the competition Make the competition irrelevant Create a value – cost trade off Break the value-cost trade off Competitive Advantage Value Innovation Segment existing customers Attract noncustomers Exploit existing demand Create and capture new demand
  • 12.
    How Do YouIdentify These Companies? Blue Ocean with ipod, iphone & ipad Blue ocean from prescription drug to lifestyle Blue ocean by making Music portable Blue Ocean in low cost travel Blue Ocean in Luxury Travel Blue ocean in Search Blue ocean with making no frills barbershop Blue Ocean by increasing Customer productivity Blue Ocean in Insulin market Blue Ocean through tipping point leadership Blue Ocean by looking across complimentary products Blue Ocean in coffee bars Blue Ocean in Apparels Blue Ocean by making copiers a desktop utility and not office equipment Blue Ocean in Gaming These are the companies that questioned the norms and boundaries set by the industry and seized their market shares without fighting with anyone!
  • 13.
    Lets Explore HowThese Companies Got There •Case Study 1: NETJETS •Case Study 2: Indochino.com •Case Study 3: Zynga Games •Case Study 4 : Khan Academy
  • 14.
    Six Path ToBlue Ocean Strategy Conventional boundaries in a competitive marketplace Industry - industry size & dependencies Strategic groups – strategic groups i.e customer , vendors etc Buyer group- individual customer From competing buying processes Creating value within across Scope of product: scope of adding value with complementing products Functional/ emotional orientation of the industry: functionality vs. Blue ocean Strategy Emotional appeal tradeoff Time: value that an attribute might deliver tomorrow • Blue oceans can be created by exploring outside of industry boundaries • Break out of the traditional boundaries of the industry to unlock value • “out of the boundaries” thinking framework for unlocking value
  • 15.
    6 PATHS: ExplorationOutside of Traditional Boundaries Path 1 - Industry What are the alternative industries to your industry? Path 2 – Strategic Group Why do buyers trade across to them? What are the strategic groups in your industry? Why do buyers trade up for the higher group, and why do NTT DoCoMo, Federal Express, Southwest Airlines, NetJets they trade down for the lower one? Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus Path 3 - Buyer Group What is the chain of buyers in your industry? Which buyer group does your industry typically focus on? If you shifted the buyer group of your industry, how can you unlock new value? Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips Alto Path 4 - Scope of product or service offering What is the context in which your product or service is used? What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a complementary product or service offering? Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis Kiné-kids, Zenick Salick’s Cancer Centers Path 6 - Time Path 5 - Functional-emotional orientation of an industry What trends have a high probability of impacting your industry, are Does your industry focus on functionality or emotional appeal? If you irreversible, and evolving in a clear trajectory? How will these trends compete on emotional appeal, what elements can you strip out to make it impact your industry? Given this, how can you open up unprecedented functional? If you compete on functionality, what elements can be added customer utility? to make it more emotional? Apple Music, Cisco Systems, CNN, Starbucks, QB House, Direct Line Group, Pfizer’s Viagra HBO’s “Sex and the City”
  • 16.
    More Understanding OfThe Frameworks & Tools Case Study - 1 • Introduction to Strategy Canvas • Introduction to 4 Actions framework
  • 17.
    World’s 2nd Largestairline! • Over 800 aircrafts • Over 6300 employees • 285000 flights annually •Flying across 170 countries and 2200 airports
  • 18.
    Strategic questions beforeNETJETS – How to enter into the aviation space when the market was dominated by the big airline groups? – 1983. The red ocean •Over 20 domestic and international airlines • All of them catering to similar customer groups – i.e. Business travelers, holiday travelers and casual travelers •Corporates – biggest strategic groups - spent millions on executive travel every year •All travelers – including executive travelers had to go through the long check ins, security checks, hectic flight transfers, congested airports, baggage claims …. •Business travelers only have the option of business class/ first class or corporate jet The blue ocean • Business travelers are the most frequent and regular flyers • NETJETS offered business travelers “ the convenience of a private jet at the price of a airline ticket” • NETJETS also provided fractional 1/16 ownership of the aircraft • NETJETS provided Private aircraft at 4 hours notice ( much less than flight booking) • NETJETS provided no hassles or responsibilities of aircraft maintenance • Customized in flight services – much better than business class or first class services NETJETS Converted a B2C industry into a B2B Industry
  • 19.
    The Strategy Canvas NETJETS High Medium Business / 1st Class Travel Relevance Scale Low Commercial Airline Industry Dead head Hassle free Time Savings/ Flexibility & Price Faster Travel Jet Ownership In Flight Service Costs Travel Reliability Attributes of Industry & Competitors NETJETS Commercial Airline Business / 1st Industry Class Travel • The strategy canvas is the central diagnostic and action framework for building a compelling blue ocean strategy. • The Strategy canvas serves two purposes: – It captures the current state of play in the known market space. This allows you to know where you are viz competition – It propels you to action by reorienting your focus: • From competitors to alternatives • From customers to non customers of the industry.
  • 20.
    The Four ActionsFramework REDUCE Factors that should be well below the industry standard ELIMINATE CREATE Create A Factors that the industry New Value Factors that the industry takes for granted and need Curve has never created to be eliminated RAISE Factors that should be raised above the industry standard We use the four actions framework, to reconstruct buyer value elements in crafting a new value curve.
  • 21.
    Net Jets 4Actions Framework Eliminate Raised • Airport check ins, waiting time, •Convenience, comfort & luxury baggage, transfers and other time •Customized in-flight services losses for customer •Entire private jet for the user/s •The tiredness and hassles endured • Service standards during a journey by the corporate • On time take off & arrival • Available on 4 hours notice traveler Reduced Created • Private jet buying, maintenance and administrative costs • Time for travelers – same distance now •Fractional ownerships of plane took half the time because there is no • B2B industry when the entire checking, boarding or baggage claim time industry was still B2C • Other dead head costs : •Loyal customer base scheduling, ticketing, administrative or marketing costs
  • 22.
    Case Study –2: The Story of
  • 23.
    The Story is… • Heikal Gani needed a suit for an important presentation. He faced a major challenge. – Affordable suits didn't fit well or were not comfortable – Ones that fitted well were not of latest trend / design – One hardly has the time to go to a tailor to get a customized suit done – Designer suits of latest design & trend were too expensive There had to be a better way for men to find a great-fitting suit • World’s first self service virtual suit company • Customers can choose the fabric, design style and Results : accessories • Started in end of 2009 – have started averaging • Customers get customization of suits through the site sales of over 30,000 suits a year across 60 countries, • Customers measure themselves and provide fitting details with about 30 + employees through online video tutorial • Most suits priced under $500 ( Much lesser than designer • Student start up to a global brand in less than 2 year suites ) •Sales growth rate of over 200% every year • Suit tailoring in Shanghai’s network of tailors • A beeline of Venture Capitalist wanting to invest – • Delivery in two to three weeks – have already raised over 20 mn for operational • If order is less than perfect, indochino pays for local expansion in Vancouver & Shanghai tailoring or remake the suit free
  • 24.
    Creating the BlueOcean Traditional apparel / suit companies Indochino.Com 1) Industry divided into five segments • Haute couture • Luxury • Affordable luxury 1) Indochino.com does not compete • Mainstream in any of the segment • Discount 2) Indochino.com does not get affected 2) The traditional companies competed by the industry factors among each other on the following factors: 3) Indochino.com built its brand • No of stores reputation by delivering value • Location of stores – premium stores – premium brand 4) Indochino.com outsources all suits • Range or no of lines offered to quality and reputed tailor network • Hi fashion vs customization vs price in shanghai - China tradeoff Created and captured a new market 3) Marketing & brand reputation demand ( Top brands associated with designer labels) 4) High customization costs
  • 25.
    Indochino.com 4 Actions Eliminate Raised • Need to go to store • Customer satisfaction & Quality • Store presence in hi end posh locations • Convenience / ease of shopping • Inventory and Store management costs • Affordability of quality suits • Separate costs for customization / tailor Reduced Created • Price • Delivery & customization hassles •Fully self service customization • Marketing costs • 100% return policy • No of lines offered
  • 26.
    The Strategy Canvas– Indochino.com Indo Chino High Medium Low # of Lines Customiz Ease of Return Self Relevance Scale Price Location Marketing Offered Quality Online stores ation Shopping Policy Service Indo Chino Hi End – Designer Suits Low End Suit Market Attributes of Industry & Competitors • Indochino.com - expanded the market by making good quality suits affordable • It used technology to make things simple, functional and to add value
  • 27.
    The Technology Trap Useof technology challenges the conventional systems & process. • But companies should not get carried away by the “technology” • Technology innovation is not necessarily value innovation for buyer / customer every time. – Because use of cutting edge technology does not mean cutting edge utility for the buyers – Unless technology makes buyers lives simpler The buyer utility map helps managers to : • Avoid the technology trap • Refine value innovation • Enables a birds eye view of buyer utility • Takes into account the buyer experience cycle and utility leavers
  • 28.
    Buyer Utility Map Abuyer’s experience can usually be broken into a cycle of six stages, running more or less sequentially from purchase to disposal. Each stage encompasses a wide variety of specific experiences. At each stage, managers need to ask a set of questions to gauge the quality of buyer’s experience. Purchase Delivery Use Supplements Maintenance Disposal •How long does it •How long does it •Does the •Do you need •Does the •Does use of the take to find the take to get the product require other products product require product create product you need? product training or and services to external waste items? delivered? assistance? make this product maintenance? •Is the place of •How easy is it to work? purchase •How difficult is it •Is the product •How easy is it to dispose of the attractive and to unpack and easy to store •If so, how costly maintain and product? accessible? install the new when not in use? are they? upgrade the •Are there legal product? product? •How secure is the •How effective •How much time or environmental transaction •Do buyers have are the product’s do they take? •How costly is issues in environment? to arrange features and maintenance? disposing of the •How easy are delivery functions? product safely? •How rapidly can they to obtain? themselves? you make a •Does the •How costly is purchase? product or disposal? service deliver far more power or options than required by the average user? Is in overcharged with bells and whistles?
  • 29.
    Uncovering Blocks toBuyer Utility Uncovering blocks to buyer utility can identify the most compelling hot spots to unlock exceptional utility. By locating your proposed offering on the thirty-six space of the buyer utility map, you can clearly see how, and whether the new idea not only creates a different utility proposition from existing offerings but also removes the biggest blocks to utility that stand in the way of converting noncustomers into customers. Customer Productivity: In which stage are the biggest blocks to customer productivity? Simplicity: In which stages are the biggest blocks to simplicity? Convenience: In which stage are the biggest blocks to convenience? Risk: In which stage are the biggest blocks to reducing risks? Fun and Image: In which stage are the biggest blocks to fun and image? Environmental In which stage are the biggest blocks to environmental friendliness? Friendliness:
  • 30.
    The Buyer UtilityMap – Indochino.com Buyer Experience from Decision to Disposal – (For Emerging Industries) Purchase Delivery Supplements Disposal Choosing a Does the suit The Usage and Choosing a Store Suit ( Color, Return Policy Maintenance require tailoring How Fast can the Style, & Fabric) experience in this case transaction be made? remains constant / Getting Suit How Time Secure consuming same for existing Transaction Delivered industry as well as blue Environment oceans Is it Productive for the buyer? Utility Leavers Does the buyer find it simple? Does the buyer find it Blocks in Blocks in Blocks in Convenient? tradition tradition New al al industry as well Buyer Buyer Does it reduce buyers' as new Utility Utility Risk Utility Buying Experience • Buyer Utility Score – Lower than what is prevalent in the current industry • Therefore Indochino.com raised the Buyer Utility and Experience
  • 31.
    Case Study -3 • Introduction to three tiers of non customers
  • 32.
    The Story ofZynga • Founded Zynga in April 2007 with a mission “Connect the world through games” • Has over 3000 Employees and 270 million customers, 60 mn daily active users • Largest Social games developer of Facebook • Now provides games in multiple platforms like: – Facebook, Myspace, Android, ipad, iphone, yahoo & Farmville.com • Successful IPO to raise up to $1 billion in an initial public offering on July 1, 2011; Valuation of over $7 billion • Has made over 15 game studio acquisitions in last 2 years • Generates over $1.16 billion in annual revenues in 2011 • Zynga is approached billion dollars revenue after only four years. – Surpassing the market value of the longtime console game company EA Sports
  • 33.
    Creating the blueocean Traditional Gaming Companies Zynga 1) Industry divided into four segments • Console based games Zynga’s Farm Ville • Online Games • Mobile Games & Flash Games 1) Zynga did not compete in any of the 2) Console based games dominated the marketplace segment or market player dominance with 75% of the revenues. 3) The big four of the gaming dominated 95% of the 2) Zynga’s (Farm Ville) did not get affected console marketplace (sony, Nintendo, Xbox ..) by the industry factors 4) The Traditional gaming companies competed among each other on the following factors: • Consoles – Type speed, capabilities 3) Zynga built its brand reputation by • No of titles in each genre sharing and word of mouth connect • Speed of Title Release – weekly, monthly • Hi end real time graphics • Hi end accessories 4) Zynga caterered to all – children, 5) Catered only to gamers – Teenage boys to parents, professionals … professional gamers 5) Zynga created a new genre of education / simulation games 6) Addictive and had lot of side effects – Too much violence, addiction, Lack of exercise, not mind Created and captured a new market stimulating 7) Parents usually do not recommend / Buy demand
  • 34.
    4 Actions Framework- Zynga Eliminate Raise • Game consoles • High cost of playing games – free • Community & sharing qualities in games • Violence in games • Interactivity with friends • Genere based games • Creativity, education & learning quotient • Winner – loser syndrome Reduce Create • New revenue models • Graphics • no console or title based revenue • Hi-end technology – leveraging facebook • Partnerships & advertising based • Effort & time involved in playing games revenue • Entry barriers for users • Games that makes friends •Marketing costs
  • 35.
    The Strategy Canvas-Zynga (Farm Ville) High Medium Low Consoles Time & Winner/ Graphi Game Marketin Commun Educati Relevance Scale & Cost Violence Loser ity Sharing Creativity Hardware Effort cs Genere g on Traditional Gaming Industry Zynga Attributes of Industry & Competitors
  • 36.
    The Three Tiersof Non Customers Tier 3 Non Customers Tier 3 non customers: “unexplored” non customers who are in markets distant from yours. Tier 2 Non Customers Tier 2 non customers: refusing noncustomers who consciously choose against your market Tier 1 – Non Customers Tier 1 non customers : “soon-to-be” noncustomers who are on the edge of your market, waiting to jump ship Non Customers Managing the three tiers of Non customers Tier 1 non customers : Investigate un satisfaction Key commonalities across needs & desires E.G. PRET A MANGER- british fast food chain Tier 2 non customers: Eliminate access barriers Economic, functional, education, geographical Tier 3 non customers: Remove long held assumption on customer needs & behavior
  • 37.
    How Did ZyngaAttract Non Customers? Tier 1 Non-Customers Tier 2 Non-Customers Tier 3 Non –Customers Non Regular players – young Casual Players - working Non Player Parents- women/ Audience boys & girls bored out of men/ women not enough housewives traditional games time to play Change 1 Changed genres completely – Cost of acquisition – free Removed violence from shooting, arcade, racing, to simulation Change 2 Made social networking fun Eliminated hassles of consoles, Play with friends and family – and more exciting game titles, accessories, not necessarily together / real hardware & setups time Results Fun lasts longer, with reduced Non serious casual play to relax No winner – no loser time and effort / unwind • Zynga looked across non customers and attracted new buyer groups to create an industry that did not exist earlier • Zynga also capitalized on the ongoing trends of Social media to mount its games offering to provide an unprecedented customer utility
  • 38.
    Case Study -4 • Introduction to PMS maps
  • 39.
    The Story ofKhan Academy • The Khan academy is a non-profit educational organization created in 2006 by salman khan- A MIT & harvard business school alumni • Free online collection of more than 3,300 micro lectures – Think out loud video tutorials in mathematics, sciences, engineering & medicine, economics, finance, arts, history, civics and even computer science – Automated exercises with continuous assessment – Content delivered offline in community colleges, charter schools and other schools across US – Providing a high quality education to anyone, anywhere • Mission : to accelerate learning for students of all ages • Khan academy has eclipsed mit’s open courseware ( OCW) in terms of videos viewed – Its youtube channel has more than 172 million total views, compared to mit's 38 million. – It also has twice as many subscribers, at more than 369,000 – Over 177 million lessons delivered till date – Close to quarter billion dollars in donation – Team size of just 20 people – Amongst the 100 most influential people of the world
  • 40.
    Creating the BlueOcean Traditional Learning Khanacademy + Schools 1) Khanacademy filled the gaps existing in 1) Industry divided into 2 segments traditional brick & mortar school learning • Brick & mortar Learning – Schools/ Colleges • Videos & Exercises to be used as a teaching aid • Online learning and not replacement for teacher 2) Learning was centered around students • Use analytics and technology to figure out the Strengths & weakness of students 3) The factors the industry was competing on: • Student teacher ratio 2) Learning is centered around students, • Class room Interaction teachers and parents • Cost of learning / Education • Interactive Learning 4) Everybody gets equal opportunity / 4) Smart kids get more attention than other kids attention/ Learning 5) Focused pedagogy – Teacher talks – Students listen 5) Unique Pedagogy - – Therefore Students learn • Stop, rewind, understand and then play 6) Teachers Judge student’s strength / weakness 6) Analytics drive the understanding of each students strengths & Weakness
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    4 Actions Framework– Khan Academy Eliminate Raise • Quality of Learning • Equality of Learning • Need of classrooms for learning • Simplicity in learning • Boring teachers and lectures • Progress & Tracking management • Cost of education •Sharing and mentoring • Emotional Connect Reduce Create • Difficulty level /s in Learning • Enriched and vibrant class rooms • Entry barriers for quality education ( for •Interactivity and fun while learning students across the world) • More involvement from parents, • Pedagogy based learning teachers & kids
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    The Strategy Canvas-Khan Academy High Medium Low Cost of Teacher Learnin Involve Enriched Relevance Scale Classroo Learning Learning Student Simplici Emotiona Learning/ student g ment Sharing Classroom ms pedagogy Quality Tracking ty Levels l Appeal Teaching ratio equality s Traditional Education/ Schooling Industry KhanAcademy.org Attributes of Industry & Competitors
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    Khan Academy +Classroom Learning = Blended Learning Regular students– Audience Students Teachers Parents Change 1 Classroom teaching now done Forced the teachers to view Started re learning and at home videos and exercises refreshing their concepts Change 2 Pairing classmates with each Deep analytics and data to Understand their child’s other facilitated easier learning understand the student strengths and talents better learning behaviors and interests Change 3 Classroom is enriched – with Equality of learning Understanding their higher level discussions and aspirations better problem solving Change 4 Mentoring and coaching by More quality time with More quality time with students – to students across students parents the world – Empowered learning • Clubbed the best of both worlds – More constructive and enriched classroom based learning • Teachers have more quality time with students – Teacher provides more time to students who need them – If a student gets stuck in a subject / topic – he / she is paired with other student - to facilitate easy learning • Students can coach and mentor other students ( to anyone -across the world) • Parents really know what their kids are doing and what they are good at – with analytics
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    Introduction to Pioneer,Migrator and Settler Maps Blended Learning Pioneer Khan Academy (Online + Classroom) •Online teaching aids / Supplements ( Value Innovation) classroom teaching Migrator Online Learning ( Value Improvement) (Online, mobile, ipad, Social) Settlers Traditional brick & mortar learning ( Value Imitation) (Schooling System) Today Tomorrow • Settlers are defined as me-too businesses, Migrators are business offerings better than most in the marketplace, and a pioneers is the businesses that offer unprecedented value. • Every thriving market place has high no of Settlers, moderate migrators and low / medium pioneers. The classification is also directly proportional to the growth potentials • This framework can be used to help a company align its internal product portfolios – Today's market share is a reflection of how well a business has performed historically. – Thereby help in determining which businesses experience the highest and lowest growth and cash flow. – Clearly, what companies should be doing is shifting the balance of their future portfolio toward pioneers – If current portfolio and the planned offerings consist mainly of settlers then the company has low growth trajectory
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    What Did TheyDo Differently? Private Jet Convenience + Looking Most Marginal beyond the profitable increase in current strategic group cost + Industry NETJETS Fractional Ownership Corporate and business Private jet industry class travelers Looked at Leveraged the unique Customized , Indochino.com Strategic Scope of product/ No Hassles groups within affordable suit Service offering the industry Reduced the consumer’s effort by eliminating Audience who wanted a good the need to choose store, Tailors, Customization fitting suit at a nominal price costs etc
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    What Did TheyDo Differently? Looked Looking across Increased beyond Newer time to Gaming Zynga the Buyer scope of product/ leverage with current Groups social Friends games Industry networkin g Made a Niche Looked at Non Buyer Made games Looked at the audience Industry Groups more trends and to a mass by eliminating their Social & Provided unprecedented industry. pain points Educational value Reduced Improved Functional Looked Empower the Newer & across ed & Khan Academy scope of Product Buyer Groups Increased emotional time to leverage Enriched classroom Offerings orientatio trends s n Eliminated the pain Expanded the • No frills service – just Looked at the points in a horizon by click, play, watch, learn audience needs conventional involving & practice utility and system teachers & • Commitment to Used his learning through a parents quality education – medium to blend complementary increased emotional with Conventional service offering appeal learning
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    Summary Of TheWebinar • Blue ocean strategy is about creating value innovation to the buyers • Its about questioning and challenging the current industry boundaries and breaking out of them • We also learnt through case studies – How a B2C industry was made into B2B Industry – Net Jets – How a new niche industry was created by providing buyer utility and convenience values - IndoChino.com – How a Niche industry was made into a mass industry – Zynga – How two industries could work together to create unprecedented value & utility to the audience – Khan academy
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    Blue Ocean StrategyPrinciples Strategy Formulation Strategy Execution Business Model Organizational Management Search Risks Planning Risks Scale Risks Risks Risks Risks Strategic Business Management 6 Paths Approach Market Sizing Mobilization Planning Model Risks Getting the Reconstruct Focus on Big Reach Beyond Overcoming Building strategic Market Picture – Not Existing Organization Execution Sequence Boundaries Numbers Demand al hurdles into Strategy Right Plan beyond incremental •Sequence the •Alternative improvements using business Model to Industries a visualization •Challenge capture newly Tipping Point •Strategic groups approach Conventional created value leadership to Execution •Buyer Groups •Visual Awakening practices •Buyer Utility Tackle through: •Complementary • Visual Exploitation •Consolidate Mapping • Cognitive hurdles Engagement Product offerings • Strategy Fair demand by •Pricing & corridors •Resource Hurdles •Explanation •Functional • Visual focusing on Non of Masses •Motivational •Clarity of Emotional Communication Customers • Cost Targets •Use PMS map to Hurdles expectations Orientation • Three tiers of based on margins identify current & • Political Hurdles •Time Non Customers desired future orientation of • Potential business Adoption obstacles To be Continued in next Webinar
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