This document discusses blue ocean strategy and tools for creating one. It summarizes that the US wine industry is large but supply is increasing while demand is flat. The strategy canvas is used to map the current competitive factors and non-customers. The four actions framework eliminates, reduces, raises or creates strategic factors to shift the industry's value curve and unlock uncontested market space, as yellow tail wines did by making wine more fun and accessible. A good strategy focuses on key factors, diverges from competitors, and has a compelling tagline.

1. Blue Ocean Strategy
By: Diana Duran, Candice Brewer, Lane Morgan, Johnathan Angell & Tony Polito

2. U.S. Wine Sales
•$20 billion industry
•California wine captures two-thirds of all U.S.
wine sales. Compete with imported wines.
•Top 8 companies produce 75% of wine in the
U.S., and 1,600 other companies make up
remaining 25%.
•Supply is increasing and demand is flat.

3. The Strategy Canvas
•The Strategy Canvas is a diagnostic and an
action framework for building a compelling
blue ocean strategy
•The Purpose:
- Captures the current state of play in the
known marketplace

4. Current State of Play in the
Marketplace
•Where the competition is investing
•The factors that the industry currently competes
on in products, service & delivery
•What customers receive from the existing
competitive offerings on the market

5. The Value Curve
•The value curve is a graphic depiction of a
company’s relative performance across its industry’s
factors of competition.

6. The Strategy Canvas Cont’d
•To shift the strategy canvas of an industry,
you must begin by reorienting your strategic
focus from competitors to alternatives, and
from customers to noncustomers of the
industry
•Do not worry about benchmarking
competitors and deciding between value and
cost…Shifting the strategy canvas will
eliminate the need for this.
•Example: Casella Wines

7. The Four Actions Framework
Four Key Questions:
• 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 raised well above
the industry’s standard?
• Which factors should be created that the
industry has never offered?

8. The Four Actions Framework
Which of the factors that the industry takes for granted
should be eliminated?
* Eliminated factors that companies in your industry have long competed on
* Taken for granted even though no value
* Change in buyer value
Which factors should be reduced well below the industry’s
standard?
* Have products or services been overdesigned to match and beat competition
Which factors should be raised well above the industry’s
standard?
* Pushes to uncover and eliminate the compromises.
Which factors should be created that the industry has never
offered?
* Helps to discover new sources of value for buyers
* Create new demand and shift strategic pricing of the industry

9. The Four Actions Framework
Casella Wines acted on all four actions: Eliminate, Reduce, Raise, and Create.
-this unlocked uncontested market space that changed the wine industry.

10. • The third tool that is key to creation of
blue oceans.
•Pushes companies to not only ask all four
questions but also act on all for to create a
new value curve.

11. The Eliminate-Reduce-Raise-Create Grid
 The grid gives companies four immediate benefits:
 It pushes them to pursue differentiation and low cost to
break the value-cost trade-off.
 It flags companies that are focused only on raising and
creating and thereby lifting their cost structure and
often overengineering products and services.

12. Eliminate-Reduce-Raise-Create
Grid
 It is easily understood by managers at any level, creating
a high level of engagement in its application.
 It drives companies to robustly scrutinize every factor
the industry competes on.

13. Eliminate-Reduce-Raise-Create
Grid: The Case of [yellow tail]
Eliminate
Enological terminology and
distinctions
Aging qualities
Above-the-line marketing
Raise
Price versus budget wines
Retail store involvement
Reduce
Wine complexity
Wine range
Vineyard prestige
Create
Easy drinking
Ease of selection
Fun and adventure

14. Three Characteristics of a Good
Strategy
• Does it have focus?
– [yellow tail] doesn’t diffuse its efforts across all key
factors of competition.
• Does it diverge from other players?
– [yellow tail]’s curve diverges: a result of not
benchmarking competitors but instead looking across
alternatives.
• Does it have a compelling tagline?
– [yellow tail]’s tagline: a fun and simple wine to be
enjoyed every day.

16. Presentation Take-Aways
 Recognize When You Are in a Red Ocean
 When a company’s value curve closely follows its
competitors, it signals that the company is caught within
a red ocean. Don’t set existing companies as
benchmarks and try to emulate them.

17. Presentation Take-Aways
 Overdelivery Without a Payback
- When a company’s value curve on the strategy canvas is
high across all levels, the company may be offering too
many elements that offer little incremental value to
customers.
•Strategic Contradictions
- These are areas where a company is offering a
high level of one competing factor while ignoring
others that support that factor.

18. Presentation Take-Aways
 Three Characteristics of a Good Strategy
 Focus. You company cannot focus its efforts across all
competitive factors.
 Divergence. Do not form your value curve reactively
with other competitors.
 Compelling Tagline. You should be able to create a
tagline showing the differences between your and your
competitor’s values.