Blue Ocean Strategy 2417

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1www.study Marketing.org

Blue Ocean StrategyBlue Ocean Strategy


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ContentsContents

1.1. Blue Ocean Vs. Red Ocean StrategyBlue Ocean Vs. Red Ocean Strategy

2 .2 . Blue Ocean Strategy ToolsBlue Ocean Strategy Tools

3.3. Strategy Canvas and Four Action FrameworkStrategy Canvas and Four Action Framework

4.4. Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy

5.5. Formulating Blue Ocean StrategyFormulating Blue Ocean Strategy

6.6. Executing Blue Ocean StrategyExecuting Blue Ocean Strategy

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Blue Ocean Vs. Red OceanBlue Ocean Vs. Red OceanStrategyStrategy


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Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy

C reate uncontested

market space Make the competition

irrelevant C reate and capture

new demand

Compete in existing

market space Beat the competition

Exploit existing

demand

Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy


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Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy

Break the value- cost

trade off Align the whole system

of a firms activities with

its strategic choice of

differentiation and lowcost

Make the value-cost

trade off Align the whole system

of a firms activities with

its strategic choice of

differentiation or lowcost

Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy


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Blue Ocean Strategy ToolsBlue Ocean Strategy Tools

StrategyStrategyCanvasCanvas

A diagnostic tooldiagnostic tool for building a

compelling blue ocean strategy

It captures the current state of playcurrent state of play in

the known market space Allow you to understand :

where the competition is currently

investing

the factors the industry currently

competes on in product, service and

delivery

what customers receive from existing

competitive offerings on the market


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Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate


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Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate

W hich of the factors that the industrytakes for granted should be eliminated?eliminated?

W hich factors should be reduced wellreduced wellbelowbelow the industrys standard?

W hich factors should be createdcreated thatthe industry has never offered?

W hich factors should be raised wellraised well

aboveabove the industrys standard?


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Four Action FrameworkFour Action FrameworkThe Case of Cirque du Soleil (A Circus Company)The Case of Cirque du Soleil (A Circus Company)

Theme Refined environment Multiple productions Artistic music and dance

EliminateEliminate ReduceReduce

RaiseRaiseCreateCreate

S tar performers Animal shows

Aisle concession sales Multiple show arenas

Fun and humor Thrill and danger

Unique venue


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Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy

1. R econstruct market

boundaries

2 . F ocus on the big picture,

not the numbers

3 . R each beyond existing

demand

4 . G et the strategic

sequence right

5 . O vercome key

organizational

hurdles

6 . B uild execution into

strategy

Formulation PrinciplesFormulation Principles Execution PrinciplesExecution Principles


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FormulatingFormulatingBlue Ocean StrategyBlue Ocean Strategy


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1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries

Focus on rivals within

industry Focuses on competitive

position within strategic

group Focuses on better

serving the buyer group

HeadHead- -toto--Head StrategyHead Strategy Blue Ocean StrategyBlue Ocean Strategy

Looks across alternative

industries Looks across strategic

group within industry Redefines the industry

buyer group


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1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries

Focuses on maximizing

the value of product or service offerings within

the bounds of its

industry Focuses on adapting to

external trends as they

occur

HeadHead- -toto--Head StrategyHead Strategy Blue Ocean StrategyBlue Ocean Strategy

Looks across to

complementary productand service offerings

P articipates in shaping

external trends over time


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2 . Focus on the Big Picture, not the Numbers2 . Focus on the Big Picture, not the Numbers

F ocus on the

Big PictureBig Picture , not

the Numbers

T he F our S teps of Visualizing S trategy

Visual A wakening

Visual E xploration

Visual S trategy F air

Visual C ommunication


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VisualVisualAwakeningAwakening

Compare your business with your competitors by drawing your as isstrategy canvas

S ee where your strategy needs tochange


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VisualVisualExplorationExploration

G o to the field to explore the sixpaths to creating blue oceans

O bserve the distinctive advantages

of alternative products and services S ee which factors you should

eliminate, create, or change


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VisualStrategyFair

Draw your to be strategy canvasbased on insights from fieldobservations

G et feedback on alternativestrategy canvases fromcustomers, competitorscustomers, and noncustomers

Use feedback to build the best tobe future strategy


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VisualCommunication

Distribute your before-and-after strategic profiles on one page for easy comparison

S upport only those projects andoperational moves that allow your company to close the gap toactualize the new strategy


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3.3. Reach Beyond Existing DemandReach Beyond Existing Demand

The ThreeThe Three

Tier of NonTier of Non- -

customerscustomers

First tier: Soon to be nonSoon to be non- -

customerscustomers who are the edge of

your market, waiting to jump ship

S econd tier: Refusing nonRefusing non- -

customerscustomers who consciously

choose against your market

Third tier: Unexplored nonUnexplored non- -customerscustomers who are in markets

distant from yours


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2 0www.study Marketing.org

4.4. Get The Strategic Sequence RightGet The Strategic Sequence Right

The Sequence of Blue Ocean StrategyThe Sequence of Blue Ocean Strategy

Buyer utilityBuyer utilityIs there exceptional buyer

utility in your business idea?

PricePriceIs your price easily

accessible to the mass of

buyers?

CostCostC an you attain your cost

target to profit at your strategic price?

AdoptionAdoptionW hat are the adoption

hurdles in actualizing your business idea?

A commercially viableA commercially viable

blue ocean ideablue ocean idea


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ExecutingExecutingBlue Ocean StrategyBlue Ocean Strategy


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5.5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles

Overcome KeyOvercome KeyOrganizationalOrganizational

HurdlesHurdles

CognitiveCognitiveHurdleHurdle

MotivationalMotivational

HurdleHurdle

ResourceResourceHurdleHurdle

PoliticalPolitical

HurdleHurdle


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CognitiveCognitiveHurdleHurdle

(status quo)(status quo)

ResourceResourceHurdleHurdle

R ide the E lectric S ewer

Meet with D isgruntled C ustomers

Redistribute resources to your hotspots

Redirect resources from your coldspots

Engage in horse trading


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MotivationalMotivationalHurdleHurdle

PoliticalPoliticalHurdleHurdle

Zoom in on Kingpins (key influencers)

P lace kingpins on a fishbowl

Atomize to get the organization to

change itself

S ecure a consigliere on your topmanagement team

Leverage your angels and silenceyour devils


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5. Build Execution Into Strategy5. Build Execution Into Strategy

Fair Process of StrategyFair Process of Strategy

S trategy F ormulation P rocessF air P rocess E ngagement, E xplanation, E xpectation clarity

A ttitudesT rust and C ommitment I feel my opinion counts

B ehavior Voluntary C ooperation Ill go beyond the call of duty

S trategy E xecutionE xceeds E xpectation self initiated


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Source of ReferenceSource of Reference

W. C han Kim and R ene M auborgne, Blue Ocean Strategy ,

HBS P ublication


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End of MaterialEnd of Material

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Blue Ocean Strategy 2417