Turn back the clock

• Which industries did not exist?– 100 years– 50 years– 30 years– 20 years– 10 years– 5 years

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Blue Ocean StrategyBlue Ocean StrategyBlue Ocean StrategyBlue Ocean Strategy

Cirque du SoleilCirque du SoleilCirque du SoleilCirque du Soleil

Creating Uncontested Market Space and Creating Uncontested Market Space and

Making the Competition IrrelevantMaking the Competition IrrelevantCreating Uncontested Market Space and Creating Uncontested Market Space and

Making the Competition IrrelevantMaking the Competition Irrelevant

Red Ocean StrategyRed Ocean Strategy Blue Ocean StrategyBlue Ocean Strategy

Summary of Blue Ocean StrategySummary of Blue Ocean Strategy

New Market Space New Market Space

Continuing Creation of Blue OceansContinuing Creation of Blue Oceans

Impact of Creating Blue OceansImpact of Creating Blue Oceans

Rising Imperative of Creating Blue OceansRising Imperative of Creating Blue Oceans

From Company and Industry to Strategic MoveFrom Company and Industry to Strategic Move

Value InnovationValue Innovation

Formulating and Executing Blue OceansFormulating and Executing Blue Oceans

Continuing Creation of Blue OceansContinuing Creation of Blue Oceans

Ford’s 1908 Model T

CNN 1980 Real-Time News 24/7

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2002 Apple’s ipod

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1970 The First Mouse

New Market Space New Market Space Creating Blue Oceans Is Consistent Across Time Creating Blue Oceans Is Consistent Across Time

Regardless of IndustryRegardless of Industry

Impact of Creating Blue OceansImpact of Creating Blue Oceans

Rising Imperative of Creating Blue OceansRising Imperative of Creating Blue Oceans

Driving forces include:Driving forces include:

Technological advances & improved industrial productivityTechnological advances & improved industrial productivity

Unprecedented array of products and services availableUnprecedented array of products and services available

Supply exceeds demandSupply exceeds demand

Globalization, niche markets and monopolies disappearGlobalization, niche markets and monopolies disappear

20th century strategy and management approach waning 20th century strategy and management approach waning

Formulating and Executing Blue OceansFormulating and Executing Blue Oceans

Value Innovation, Blue Oceans CornerstoneValue Innovation, Blue Oceans Cornerstone

From Company and Industry to Strategic MoveFrom Company and Industry to Strategic Move

The Paradox of strategy

• The very language of strategy is deeply imbued with military references - chief executive "officers" in "headquarters,“ "troops" on the "front lines."

• Described this way, strategy is all about red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory.

• Blue ocean strategy, by contrast, is about doing business where there is no competitor. It is about creating new land, not dividing up existing land.

A blue ocean is created in the region where a company's actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made from eliminatingand reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.

The Simultaneous Pursuit of Differentiation and Low Cost

The Book and the Authors

Prof Renee Mauborgne

© JOHN ABBOTT

Prof Chan Kim

© JOHN ABBOTT

Accolades

• Over 2 million copies sold

• Translated into over 41 foreign languages – a world record

• Taught as the major theory of strategy at leading business schools

• Gives insights to CEOs, Executives, Heads of State and Prime Ministers

What is the Blue Ocean?• High profit growth at low risk

• Industries not in existence today

• Untapped market demand

• Unknown market space

Conventional LogicConventional Logic Blue Ocean LogicBlue Ocean Logic

IndustryAssumption

Industry conditions are given

Industry condition can be shaped.

Summary

Strategic Focus

Build competitive advantages to beat the competition.

Create a quantum leap in buyer value to dominate the market.

Customers Retain and expand the customer base through further segmentation and customization.Think in terms of embracing customer differences.

Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.

Conventional LogicConventional Logic Blue Ocean LogicBlue Ocean Logic

Summary

Assets &Capabilities

Think in terms of a company’s existing assets and capabilities.Build on what it has.

Think free from a company’s existing assets and capabilities.Ask, what if we start anew?

Product/Serviceofferings

Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings.

Think in terms of buyers’ solution even if that transcends the industry. Seek to solve buyers’ major bottlenecks/chief compromises in using the products/services of the industry.

What factors should be

eliminated that the industry has taken

for granted?

Eliminate

What factors should be reduced

well below the industry standard?

Reduce

What factors should be created that the industry has never

offered?

Create

What factors should be raised well beyond the

industry standard?

Raise

Four Actions to create a Blue Ocean