Slides James Alexander recently used in his discussion w/ mentees of The Product Mentor. The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People. Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community. http://TheProductMentor.com

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Finding Blue Oceans
James Alexander
TPM Mentor
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Source:TidalVisionUSA

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a little about me
• Strategy and delivery
executive at IBM iX
• Product management
executive at Adobe for 7 years
• Three start-ups
• Two exits
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13.5 13.4
10.6 10.4
10 9.9
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2014 R&D Spend ($Bn)
2014 PWC Global Innovation 1000 Study
innovation is a big business…
top 20 R&D spenders invested $165.3 billion in 2014

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Top$20$Spenders
9%
21$0 1000$Spenders
27%
100102000$Spenders
3%
Everyone$Else
61%
$165.3 B
$481.7 B
$48.5 B
$1,083.7 B
The top 1,000 R&D
spenders have 40%
share of innovation
spend.
The next 1,000
companies have just
3% share of spend.
…companies invest on average 3.5% of revenue…
top 1,000 R&D spenders invested $657 billion in 2014

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6.6
13.4
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1.7
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10.4
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Apple Google Amazon Samsung Tesla Motors 3M General Electric Microsoft IBM Procter &
Gamble
Top 10 Most Innovative Companies ($Bn)
2014 PWC Global Innovation 1000 Study
1 2 3 4 5 6 7 8 9 10
…but money can’t buy love.
only 5 top spenders were ranked most innovative…the top
10 most innovative spent 43% less then the top 10 spenders

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3 kinds of
innovation

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is there a golden ratio?
Companies that allocated
about 70% of their
innovation activity to core
initiatives, 20% to adjacent
ones, and 10% to
transformational ones
outperformed their peers,
typically realizinga P/E
premium of 10% to 20%.
Source: Managing Your Innovation Portfolio - HBR
70%...20%...10%
70%
20%
10%
Core
Adjacent
Transformational

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blue ocean strategy
• Proposed by W. Chan Kim
and Renee Mauborgne of
INSEAD in 2004
• Competing in overcrowded
industries is no way to
sustain high performance
• The real opportunity is to
create blue oceans of
uncontested market space
• Blue oceans are not about
technology innovation
why compete at all?
Red Ocean
Blue Ocean

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key differences between red oceans and blue oceans
• Compete in existing market
space
• Beat the competition
• Exploit existing demand
• Make the value/cost trade-off
• Crowded space lowers profits
and growth as products
become commodities
• Create uncontested market
space
• Make the competition
irrelevant
• Create and capture new
demand
• Break the value/cost trade-off
• Growth is profitable and rapid
red oceans and blue oceans are not mutually exclusive

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pioneer-migrator-settler map
create a balanced portfolio; pioneers will be imitated
Settlers are businesses offering me-too value; migrators are businesses with value improvements over competitors'; and pioneers are
businesses that offer unprecedentedvalue—blue ocean offerings.

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pioneer-migrator-settler map
create a balanced portfolio; pioneers will be imitated
Settlers are businesses offering me-too value; migrators are businesses with value improvements over competitors'; and pioneers are
businesses that offer unprecedentedvalue—blue ocean offerings.

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tools for red oceans and blue oceans
• Porter’s Five Forces
• Supplier Power
• Buyer Power
• Threat of New Entrants
• Substitutes
• Rivalry
• Blue Ocean Strategy (BOS)
• Analytical Tools & Frameworks
(Strategy Canvas & Four Actions
Framework)
• Formulating Blue Ocean Strategy
• Reconstructing Market Boundaries
• Focus on Big Picture
• Reach Beyond Existing Demand
• Get Strategic Sequence Right
• Executing BOS
• Overcome Key Org Hurdles
• Build Execution into Strategy

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an assignment: four actions framework
challenging an industry’s business model

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wrap up
• Companies spend $1 trillion annually on innovation
• Innovating thoughtfully saves cost and amplifies impact
• Many existing industries are crowded and commoditized
• One approach is to eliminate competitors by identifying entirely
new markets
• A Blue Oceans Strategy is never complete…pioneers will
eventually face competition
• Successful product managers will build a balanced portfolio
across red and blue ocean opportunities

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sources & resources
• Blue Ocean Strategy (Original HBR Article)
• https://hbr.org/2004/10/blue-ocean-strategy
• Blue Ocean Strategy (Book)
• http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-
Competition/dp/1591396190
• Identify Blue Oceans by Mapping Your Product Portfolio
• https://hbr.org/2015/02/identify-blue-oceans-by-mapping-your-product-
portfolio
• PWC 2015 Global Innovation Study
• http://www.strategyand.pwc.com/innovation1000
• Managing Your Innovation Portfolio
• https://hbr.org/2012/05/managing-your-innovation-portfolio