Blue Ocean Strategy

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Blue Ocean Strategy

  1. 1. BLUE OCEAN STRATEGY
  2. 2. Cirque’s productions have been seen by almost 40 mn people in 90 cities around the world In less than 20 years Cirque du soleil has achieved a level of revenues that took Ringling Bros. and Barnum & Bailey - the global champion of the circus industry- more than 100 years to attain
  3. 3. Declining industry & limited potential for growth Strong supplier power on the part of star performers and buyer power Steadily decreasing audiences Increasing sentiments against the use of animals UNATTRACTIVE INDUSTRY
  4. 4. It created uncontested new market space that made the competition irrelevant <ul><li>Cirque du soleil DID NOT compete with Ringling Bros. and Barnum & Bailey </li></ul>
  5. 5. MARKET SPACE <ul><li>Industries in existence today </li></ul><ul><li>Known market space </li></ul><ul><li>Industry boundaries are defined and accepted </li></ul><ul><li>Competitive rules of the games are known </li></ul><ul><li>Reduced profit and growth </li></ul><ul><li>Industries NOT in existence today </li></ul><ul><li>UNKNOWN and untapped market space </li></ul><ul><li>Rules of the game are WAITING to be set </li></ul><ul><li>Opportunity for highly profitable growth </li></ul>RED OCEAN BLUE OCEAN
  6. 6. Profit & growth consequences of creating blue oceans 39% 61% 38% 62% 14% 86% PROFIT IMPACT REVENUE IMPACT BUSINESS LAUNCH Launches within red ocean launches for creating blue oceans
  7. 7. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Rising imperative </li></ul>
  8. 8. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Accelerated technological advancement </li></ul>
  9. 9. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Accelerated technological advancement </li></ul><ul><li>Trend towards globalization </li></ul>
  10. 10. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Unit of analysis </li></ul>
  11. 11. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Company </li></ul>
  12. 12. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Company </li></ul><ul><li>Industry </li></ul>
  13. 13. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Company </li></ul><ul><li>Industry </li></ul><ul><li>Strategic move </li></ul>Set of managerial actions and decisions involved in making a major market-creating business offering
  14. 14. VALUE INNOVATION BUYER VALUE COSTS VALUE INNOVATION
  15. 15. STRATEGY <ul><li>Compete in existing market space </li></ul><ul><li>Beat the competition </li></ul><ul><li>Exploit existing demand </li></ul><ul><li>Make the value-cost trade-off </li></ul><ul><li>Align the system with differentiation OR low cost </li></ul><ul><li>Create uncontested market space </li></ul><ul><li>Make the competition irrelevant </li></ul><ul><li>Create and capture new demand </li></ul><ul><li>Break the value-cost trade-off </li></ul><ul><li>Align the system in pursuit of differentiation AND low cost </li></ul>Blue ocean Red ocean
  16. 16. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Formulation principles </li></ul>
  17. 17. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reconstruct market boundaries search </li></ul>
  18. 18. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reconstruct market boundaries search </li></ul><ul><li>Focus on the big picture, not numbers planning </li></ul>
  19. 19. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reconstruct market boundaries search </li></ul><ul><li>Focus on the big picture, not numbers planning </li></ul><ul><li>Reach beyond existing demand scale </li></ul>
  20. 20. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reconstruct market boundaries search </li></ul><ul><li>Focus on the big picture, not number planning </li></ul><ul><li>Reach beyond existing demand scale </li></ul><ul><li>Get strategic sequence right business model </li></ul>
  21. 21. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Execution principles </li></ul>
  22. 22. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Overcome key organizational hurdles </li></ul><ul><li>organizational </li></ul>
  23. 23. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Overcome key organizational hurdles </li></ul><ul><li>organizational </li></ul><ul><li>Build execution into strategy management </li></ul>
  24. 24. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Analytical tools and frameworks </li></ul>
  25. 25. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Strategy canvas </li></ul><ul><li>Captures current state of play </li></ul><ul><li>Value curve of competitors </li></ul><ul><li>Company’s strategic profile </li></ul>
  26. 26. Strategy canvas of the U.S. wine industry in the late 1990s price Use of enological terminology and distinction in wine communication Above-the-line marketing Aging quality Vineyard prestige and legacy Wine range Wine complexity High Low Premium wines Budget wines
  27. 27. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Strategy canvas </li></ul><ul><li>The four actions framework </li></ul>
  28. 28. The four actions framework Eliminate Factors to eliminate that industry has taken For granted Raise Factors to raise well Above industry standard Reduce Factors to reduce well below industry standards Create Factors to create that Industry has never offered A new value curve
  29. 29. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Strategy canvas </li></ul><ul><li>The four actions framework </li></ul><ul><li>The eliminate-Reduce-Raise-Create Grid </li></ul>
  30. 30. The Eliminate-Reduce-Raise-Create Grid 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
  31. 31. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Three characteristics of a good strategy </li></ul>
  32. 32. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Focus </li></ul>
  33. 33. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Focus </li></ul><ul><li>Divergent </li></ul>
  34. 34. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Focus </li></ul><ul><li>Divergent </li></ul><ul><li>Tagline </li></ul>
  35. 35. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reading value curves </li></ul>
  36. 36. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul>
  37. 37. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul><ul><li>Company caught in the red ocean </li></ul>
  38. 38. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul><ul><li>Company caught in the red ocean </li></ul><ul><li>Overdelivery without payback </li></ul>
  39. 39. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul><ul><li>Company caught in the red ocean </li></ul><ul><li>Overdelivery without payback </li></ul><ul><li>An incoherent strategy </li></ul>
  40. 40. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul><ul><li>Company caught in the red ocean </li></ul><ul><li>Overdelivery without payback </li></ul><ul><li>An incoherent strategy </li></ul><ul><li>Strategic contradiction </li></ul>
  41. 41. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>A blue ocean strategy </li></ul><ul><li>Company caught in the red ocean </li></ul><ul><li>Overdelivery without payback </li></ul><ul><li>An incoherent strategy </li></ul><ul><li>Strategic contradiction </li></ul><ul><li>An internally driven company </li></ul>
  42. 42. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reconstruct market boundaries </li></ul>
  43. 43. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul>
  44. 44. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul><ul><li>Look across strategic groups within industries </li></ul>
  45. 45. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul><ul><li>Look across strategic groups within industries </li></ul><ul><li>Look across chain of buyers </li></ul>
  46. 46. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul><ul><li>Look across strategic groups within industries </li></ul><ul><li>Look across chain of buyers </li></ul><ul><li>Look across complementary product and service offerings </li></ul>
  47. 47. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul><ul><li>Look across strategic groups within industries </li></ul><ul><li>Look across chain of buyers </li></ul><ul><li>Look across complementary product and service offerings </li></ul><ul><li>Look across functional or emotional appeal </li></ul>
  48. 48. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Look across alternative industries </li></ul><ul><li>Look across strategic groups within industries </li></ul><ul><li>Look across chain of buyers </li></ul><ul><li>Look across complementary product and service offerings </li></ul><ul><li>Look across functional or emotional appeal </li></ul><ul><li>Look across time </li></ul>
  49. 49. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Focus on the big picture, not the numbers </li></ul>
  50. 50. Steps of visualizing strategy 1. Visual awakening 2. Visual exploration 3. Visual strategy fair 4. Visual communication <ul><li>compare with “as is” business </li></ul><ul><li>areas needed for change </li></ul><ul><li>field exploration </li></ul><ul><li>advantages of alternate products and all </li></ul><ul><li>eliminate, create, or change </li></ul><ul><li>draw “to be” canvas </li></ul><ul><li>get feedback on alternative strategy canvas </li></ul><ul><li>use feedback to get “to be” </li></ul><ul><li>compare before and after strategies </li></ul><ul><li>Support moves that close the gaps to actualize new strategy </li></ul>
  51. 51. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>visualizing strategy at the corporate level </li></ul>
  52. 52. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>using strategy canvas </li></ul>
  53. 53. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>using strategy canvas </li></ul><ul><li>using pioneer - migrator – settler (PMS) map </li></ul>
  54. 54. Growth potential of portfolios of businesses pioneers migrators settlers today tomorrow
  55. 55. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Reach beyond existing demand </li></ul>
  56. 56. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>first tier non-customer </li></ul>
  57. 57. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>first tier non-customer </li></ul><ul><li>second tier non-customer </li></ul>
  58. 58. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>first tier non-customer </li></ul><ul><li>second tier non-customer </li></ul><ul><li>third tier non-customer </li></ul>
  59. 59. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Get the strategic sequence right </li></ul>
  60. 60. Sequence of blue ocean strategy Buyer utility price cost adoption Commercially Viable BOI YES YES YES YES NO - RETHINK NO - RETHINK NO - RETHINK NO - RETHINK
  61. 61. Blue ocean idea (BOI) index Philips CD-i Motorola iridium DoCoMo i-Mode Japan Utility Price Cost Adoption - - + - - + - - + - +/- +
  62. 62. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Overcome key organizational hurdles </li></ul>
  63. 63. Four organizational hurdles COGNITIVE HURDLE RESOURCE HURDLE MOTIVATIONAL HURDLE POLITICAL HURDLE
  64. 64. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Cognitive hurdles </li></ul><ul><li>Ride the “electric sewer” </li></ul><ul><li>Meet the disgruntled customer </li></ul>
  65. 65. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Resource hurdles </li></ul><ul><li>Redistribute resources to your hot spots </li></ul><ul><li>Redirect resources from your cold spots </li></ul>
  66. 66. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Motivational hurdles </li></ul><ul><li>Zoom in on kingpins </li></ul><ul><li>Place kingpins in a fishbowl </li></ul><ul><li>Atomize to get the organization to change itself </li></ul>
  67. 67. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Political hurdles </li></ul><ul><li>Select a consigliere on your top management team </li></ul><ul><li>Leverage your angels and silence your devils </li></ul>
  68. 68. BLUE OCEAN STRATEGY <ul><li>Accelerated technological advancement </li></ul><ul><li>Build execution into strategy </li></ul>
  69. 69. The three E principles of fair process ENGAGEMENT EXPLANATION EXPECTATION CLARITY
  70. 70. How fair process affects people’s attitude and behavior FAIR PROCESS TRUST & COMMITMENT VOLUNTARY COOPERATION EXCEEDS EXPECTATIONS STRATEGY FORMULATION PROCESS ATTITUDES BEHAVIOR STRATEGY EXECUTION
  71. 71. Thank you For your patience throughout the presentation
  72. 72. Inspired by <ul><li>Accelerated technological advancement </li></ul>Guy Kawasaki Tom Peters
  73. 73. http://kaizenthecontinuous.wordpress.com Prepared by:

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