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Blue Ocean Strategy

Blue Ocean Strategy

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Blue Ocean Strategy

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  1. Blue Ocean Strategy Book Review Daisy, Sara, Cher, Sarah, Sean

  2. Ch. 1 Creating Blue Oceans

  3. Value Innovation: Cornerstone of BOS • Approach to strategy separates the winners from the losers. • Creators do not use the competition as a benchmark. • Value Innovation • Instead of beating the competition, focus on making competition irrelevant. • Value innovation occurs when innovation is aligned with utility, price, and cost positions. • Create Blue Oceans by pursuing differentiation and low cost simultaneously.

  4. Six Principles of Blue Ocean Strategy • Reconstruct market boundaries • Focus on the big picture, not the numbers • Reach beyond existing demand • Get the strategic sequence right • Overcome key organizational hurdles • Build execution into strategy

  5. Ch. 2 Analytical Tool and Frameworks • Strategy Canvas • An analytic framework that is central to value innovation and the creation of blue oceans. • Value Curve • graphic depiction of a company’s relative performance across its industry’s factors of competition. • Four Actions Framework • Questions to challenge strategic logic and business model • Eliminate-Reduce-Raise-Create Grid • Act on Four Actions to create a new value curve • Characteristics of a Good Strategy • Focus, Divergence, & Compelling Tagline • Company is on the right track if it meets the criteria.

  6. CH 3: Breaking from Competition • Break from the competition to create blue oceans • Are there systematic patterns for reconstructing market boundaries to create blue oceans? • If so, can they be applied across all industry sectors? • Yes, there are six basic approaches to remaking market boundaries. • Six Paths Framework

  7. CH 3: Six Paths Framework • Path 1: Look across Alternative Industries • Path 2: Look Across Strategic Groups Within Industry • Path 3: Look Across the Chain of Buyers • Path 4: Look Across Complementary Product and Service Offerings • Path 5: Look Across Functional or Emotional Appeal to Buyers • Path 6: Look Across Time

  8. CH 4: Visual Awakening Strategy • Step 1: Visual Awakening • As-Is strategy- compare your company with competitors • Step 2: Visual Exploration • Send managers into field to study use of products • Observe advantages of alternative products • Find factors to eliminate, create or change in your business • Step 3: Visual Strategy Fair • Business units present their strategy to everyone to see business portfolio and big picture

  9. CH 4: Using the Pioneer-Migrator-Settler (PMS) Map • Pioneer- the businesses that offer unprecedented value • Pioneers have maximum growth potential but often consume cash to finance growth as they expand. • Settler - the businesses whose value curves conform to the basic shape of the industry’s • Even though settlers have marginal growth potential, they are frequently today’s cash generators. • Migrators- lie somewhere in between the pioneers and the settlers, and fall between red oceans and blue oceans.

  10. Chapter 5: Reach Beyond Existing Demand • How do you maximize the size of the blue ocean you are creating? • You reach beyond existing demand (the 3rd principle of blue ocean strategy) • To maximize the size of your blue ocean you need to concentrate your focus on non-customers and commonalities in what those buyers value • Non-customers before customers • Commonalties before differences • De-segmentation before finer segmentation

  11. Chapter 5: Reach Beyond Existing Demand • Three tiers of non-customers • Soon-to-be non-customers • Refusing non-customers • Unexplored non-customers • Within these three groups there is an ocean of untapped demand waiting to be released

  12. Chapter 5: Reach Beyond Existing Demand Remember you should go for the biggest catchment, or the biggest group of non-customers

  13. Chapter 6: Get the Strategic Sequence Right • The 4th principle of blue ocean strategy: get the strategic sequence right • Discusses the strategic sequence of fleshing out and validating blue ocean ideas to ensure their commercial viability

  14. Chapter 6: Get the Strategic Sequence Right Your business must pass all of these four tests to become a viable blue ocean idea

  15. CH 7: Breaking through Hurdles • Break through the cognitive hurdle • Jump the resource hurdle • Jump the motivational hurdle • Knock over the political hurdle

  16. CH 7: Tipping Point Leadership • Tipping Point Leadership-allows you to overcome these four hurdles fast and at low cost while winning employees’ backing in executing a break from the status quo. • Ex. Target

  17. CH 8: The power of fair process • Strategy formulation process- fair process • Attitudes-trust and commitment • Behavior-voluntary cooperation • Strategy Execution-exceeds expectations

  18. CH 8: Successful companies • Successful companies do not consist of top, middle, and bottom hierarchies; it is a collective process that includes all who make up the organization. • Intangible capital(commitment, trust, voluntary cooperation) is a must have in order to be successful. • Ex. Target in the community

  19. CH 9: Imitators • Once a company creates a blue ocean and their performance is known… • Sooner or later there will be companies trying to imitate • As they succeed and expand the blue ocean, more companies will try to join themselves. • Barriers to Imitation • Some are operational, and others are cognitive. • Most often a blue ocean strategy will go without competition for 10 to 15 years. • This is due to imitation barriers rooted in blue ocean strategy

  20. CH 9: Imitation Barriers • Value innovation does not make sense to a company’s conventional logic. • Blue ocean strategy may conflict with other companies’ brand image. • Natural Monopoly: The market often cannot support a second player. • Patents of legal permits block imitation. • High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market

  21. CH 9: When to Value-Innovate Again • Almost every blue strategy will be imitated. • Avoid the trap of competing by monitoring value curves on the strategy canvas. • This will signal when to value-innovate and when not to. • You should swim as far as possible in the blue ocean, making yourself a moving target, distancing yourself from your early imitators, and discouraging them in the process. • You need to dominate the blue ocean over your imitators for as long as possible.

  22. Conclusion: Blue Ocean Strategy • Ch 2: Six Principles to Blue Ocean Strategy • Ch 3: Six Paths Framework • Ch 5: Go for the biggest catchment • Ch 6: The four tests: Utility, Price, Cost, Adoption • Ch 7: Breaking through Hurdles • Ch 9: Imitation Barriers