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Transcript of Blue Ocean Strategy
© DKD Page 125 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
A SUMMARY OFTHOUGHTS
© DKD Page 225 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY – THE NEW MARKET SPACE
The only way to beat the competition is to stop trying to beat the competition.The only way to beat the competition is to stop trying to beat the competition.
RED OCEANS.RED OCEANS.
Known Market Space.Represent all the industries in existence
today.
Known Market Space.Represent all the industries in existence
today.
Industry boundaries are defined andaccepted. Competitive rules of the
games are accepted.
Industry boundaries are defined andaccepted. Competitive rules of the
games are accepted.
BLUE OCEANS.BLUE OCEANS.
Unknown Market Space.Denotes all the industries not in existence
today. Largely uncharted.
Unknown Market Space.Denotes all the industries not in existence
today. Largely uncharted.
Defined by untapped market space,demand creation, and the opportunity
for highly profitable growth.
Defined by untapped market space,demand creation, and the opportunity
for highly profitable growth.
Blue Oceans are created well beyond existing industry boundaries.Most are created within red oceans by expanding existing industry boundaries.
Blue Oceans are created well beyond existing industry boundaries.Most are created within red oceans by expanding existing industry boundaries.
Overriding focus of strategic thinking has been on competition-based red oceanstrategies, thus accepting the key constraining factors of war – limited terrain andthe need to beat the enemy to succeed, and to deny the distinctive strength of thebusiness world i.e. the capacity to create new market space that is uncontested.
Overriding focus of strategic thinking has been on competition-based red oceanstrategies, thus accepting the key constraining factors of war – limited terrain andthe need to beat the enemy to succeed, and to deny the distinctive strength of thebusiness world i.e. the capacity to create new market space that is uncontested.
© DKD Page 325 December 2006 – 3RD JANUARY 2007
THE IMPACT OF CREATING BLUE OCEANS
• 86% of launches were line extensions accounting for 62% of revenues and 29% ofprofits.
• 14% of launches were aimed at creating blue oceans and generated 38% of revenuesand 61% of profits.
• 86% of launches were line extensions accounting for 62% of revenues and 29% ofprofits.
• 14% of launches were aimed at creating blue oceans and generated 38% of revenuesand 61% of profits.
The Profit and Growth Consequences of Creating Blue OceansThe Profit and Growth Consequences of Creating Blue Oceans
86%86% 14%14%
62%62% 38%38%
39%39% 61%61%
BUSINESS LAUNCH
REVENUE IMPACT
PROFIT IMPACT
Launches with Red Oceans Launches for creating Blue Oceans
© DKD Page 425 December 2006 – 3RD JANUARY 2007
THE RISING IMPERATIVE OF CREATING BLUE OCEANS
DRIVING FORCESDRIVING FORCES
Accelerated TechnologicalAdvances ImprovedIndustrial Productivity
Accelerated TechnologicalAdvances ImprovedIndustrial Productivity
Globalization TradeBarriers are dismantled
Globalization TradeBarriers are dismantled
Unprecedented array ofProducts and Services
Unprecedented array ofProducts and Services
Supply Exceeds DemandsInstant information on
products & prices
Supply Exceeds DemandsInstant information on
products & prices
AcceleratedCommoditization of
Products & ServicesIncreasing Price Wars andshrinking Profit Margins
AcceleratedCommoditization of
Products & ServicesIncreasing Price Wars andshrinking Profit Margins
Brands are becomingmore similar Increased
purchased based uponprice
Brands are becomingmore similar Increased
purchased based uponprice
The business environment in which most strategy and managementapproaches of the 20th century evolved is increasingly disappearing
The business environment in which most strategy and managementapproaches of the 20th century evolved is increasingly disappearing
© DKD Page 525 December 2006 – 3RD JANUARY 2007
FROM COMPANY & INDUSTRY TO STRATEGIC MOVE
Strategic Move is the Right Unit of Analysis for explaining the creation of blueOceans and Sustained High Performance.
Strategic Move is the Right Unit of Analysis for explaining the creation of blueOceans and Sustained High Performance.
• Creators of Blue Oceans did not use the competition as their benchmark.• Instead they followed a strategic logic – “Value Innovation” – which places equal
emphasis on VALUE & INNOVATION vs. Competition-based Strategy, the value-costtrade-off.
• Value Innovation occurs when companies align innovation with utility, price and costpositions i.e. pursuing differentiation and low cost simultaneously.
• Creators of Blue Oceans did not use the competition as their benchmark.• Instead they followed a strategic logic – “Value Innovation” – which places equal
emphasis on VALUE & INNOVATION vs. Competition-based Strategy, the value-costtrade-off.
• Value Innovation occurs when companies align innovation with utility, price and costpositions i.e. pursuing differentiation and low cost simultaneously.
A Strategic Move is the Set of ManagerialActions and Decisions involved in makinga Major Market Creating Business Offering
A Strategic Move is the Set of ManagerialActions and Decisions involved in makinga Major Market Creating Business Offering
Strategic Move Delivers Products andServices that opened and captured NewMarket Space, with a significance leap in
Demand
Strategic Move Delivers Products andServices that opened and captured NewMarket Space, with a significance leap in
Demand
Value Innovation – The Cornerstone of Blue Ocean StrategyValue Innovation – The Cornerstone of Blue Ocean Strategy
© DKD Page 625 December 2006 – 3RD JANUARY 2007
VALUE INNOVATION – THE CORNERSTONE OF BLUEOCEAN STRATEGY
ValueInnovation
COSTS
BUYER VALUE
• Value innovation is created in the region where a company’s actions favorably effectboth its cost structure and its value proposition to buyers.
• Cost savings are made by eliminating and reducing the factors an industry andcompetes 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 that superior value generates.
• Value innovation is created in the region where a company’s actions favorably effectboth its cost structure and its value proposition to buyers.
• Cost savings are made by eliminating and reducing the factors an industry andcompetes 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 that superior value generates.
The Simultaneous Pursuit of Differentiation and Low Cost
• Value Innovation is MORE THANInnovation.
• Its is about strategy thatembraces the entire system of acompany's’ activities.
• Value Innovation requirescompanies to orient the wholesystem toward achieving a LEAPin VALUE for both buyers andthemselves.
• Value Innovation is MORE THANInnovation.
• Its is about strategy thatembraces the entire system of acompany's’ activities.
• Value Innovation requirescompanies to orient the wholesystem toward achieving a LEAPin VALUE for both buyers andthemselves.
© DKD Page 725 December 2006 – 3RD JANUARY 2007
RED OCEAN VS. BLUE OCEAN STRATEGY
• Align the Whole System of a Firm’sActivities in pursuit of Differentiationand Low Cost
• Align the Whole System of a Firm’sActivities with its Strategic Choice ofDifferentiation or Low Cost
• Break the Value-Cost Trade-off• Make the Value-Cost Trade-off
• Create and Capture New Demand• Exploit Existing Demand
• Make the Competition Irrelevant• Beat the Competition
• Create Uncontested Market Space• Compete in Existing Market Space
BLUE
OCEAN STRATGEY
RED
OCEAN STRATEGY
In the “Reconstructionist” World – the Strategic aim is to create New Best-Practice Rules by breaking the existing Value-Cost Trade-off and thereby
creating Blue Ocean.
In the “Reconstructionist” World – the Strategic aim is to create New Best-Practice Rules by breaking the existing Value-Cost Trade-off and thereby
creating Blue Ocean.
© DKD Page 825 December 2006 – 3RD JANUARY 2007
FORMULATING AND EXECUTING BLUE OCEANSTRATEGY
How can Companies systematically Maximize the Opportunities while simultaneouslyMinimizing the Risks of Formulating and Executing Blue Ocean Strategy?
Strategy will always involve both Opportunity and Risk!
How can Companies systematically Maximize the Opportunities while simultaneouslyMinimizing the Risks of Formulating and Executing Blue Ocean Strategy?
Strategy will always involve both Opportunity and Risk!
The Six Principles of Blue of Blue Ocean StrategyFORMULATION PRINCIPLES
1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries
2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
3. Reach Beyond Existing Demand3. Reach Beyond Existing Demand
4. Get the Strategic Sequence Right4. Get the Strategic Sequence Right
EXECUTION PRINCIPLES
5. Overcome Key Organizational Hurdles5. Overcome Key Organizational Hurdles
6. Build Execution into Strategy6. Build Execution into Strategy
RISK FACTOR FOR EACH PRINCIPLEATTENUATES
Search RiskSearch Risk
Planning RiskPlanning Risk
Scale RiskScale Risk
Business Model RiskBusiness Model Risk
RISK FACTOR EACH PRINCIPLEATTENUATES
Organizational RiskOrganizational Risk
Management RiskManagement Risk
© DKD Page 925 December 2006 – 3RD JANUARY 2007
ANALYTICAL TOOLS AND FRAMEWORKS
1. The Strategy Canvas
The Strategy Canvas is both a Diagnostic and an Action Framework for building a Compelling Blue Ocean Strategy.Captures the Current State-of-Play in the Known Market Space.
Effective Blue Ocean Strategy should be about Risk Minimization and not Risk Taking
The Strategy Canvas is both a Diagnostic and an Action Framework for building a Compelling Blue Ocean Strategy.Captures the Current State-of-Play in the Known Market Space.
Effective Blue Ocean Strategy should be about Risk Minimization and not Risk Taking
• To set a company on a strong, profitable growth trajectory in the face of these industry conditions, benchmarking against the competitors and tryingto out-compete them by offering a little more for a little less will not work. Such a strategy may nudge sales up but will hardly drive a company to openup uncontested market space.
• Nor is extensive customer research the path to blue oceans.
An illustration of a Strategy Canvas [yellow tail] WineHIGH
LOW
Premium Wines
[yellow tail]
Budget Wines
Price Use ofenological
terminology
Above theline
marketing
AgingQuality
Vineyardprestige
and legacy
Winecomplexity
Wine range Easydrinking
Ease ofselection
Fun &adventure
THE FOUR ACTIONFRAMEWORKQUESTIONS
1st Consider eliminating factors thatcompanies in your industry have longcompeted on – No longer have value ORmay detract value.
2nd Determine whether products orservices have been over-designed in therace to match the competition – over-serve the customers, increasing coststructure for no gain.
3rd Uncover and eliminate thecompromises your industry forcescustomers to make.
4th Discover entirely new sources ofvalue for buyers and to creae newdemand and shift the strategic pricing forthe industry.
THE FOUR ACTIONFRAMEWORKQUESTIONS
1st Consider eliminating factors thatcompanies in your industry have longcompeted on – No longer have value ORmay detract value.
2nd Determine whether products orservices have been over-designed in therace to match the competition – over-serve the customers, increasing coststructure for no gain.
3rd Uncover and eliminate thecompromises your industry forcescustomers to make.
4th Discover entirely new sources ofvalue for buyers and to creae newdemand and shift the strategic pricing forthe industry.
© DKD Page 1025 December 2006 – 3RD JANUARY 2007
ANALYTICAL TOOLS AND FRAMEWORKS
2. The Eliminate-Reduce-Raise-Create Grid
The Strategy Canvas is both a Diagnostic and an Action Framework for building aCompelling Blue Ocean Strategy. Captures the Current State-of-Play in the Known
Market Space.Effective Blue Ocean Strategy should be about Risk Minimization and not Risk Taking
The Strategy Canvas is both a Diagnostic and an Action Framework for building aCompelling Blue Ocean Strategy. Captures the Current State-of-Play in the Known
Market Space.Effective Blue Ocean Strategy should be about Risk Minimization and not Risk Taking
A NewValueCurve
A NewValueCurve
2. REDUCEWhich factors should bereduced well below the
industry’s standard?
2. REDUCEWhich factors should bereduced well below the
industry’s standard?
3. RAISEWhich factors should be
raised well above the theindustry’s standard?
3. RAISEWhich factors should be
raised well above the theindustry’s standard?
1. ELIMINATEWhich of the factors that
the industry takes forgranted should be
eliminated?
1. ELIMINATEWhich of the factors that
the industry takes forgranted should be
eliminated?
4. CREATEWhich factors should becreated that the industry
has never offered?
4. CREATEWhich factors should becreated that the industry
has never offered?
THE FOURACTION
FRAMEWORKELIMINATE
• Enologicaldistinctions
• Aging qualities• Above-the-line
marketing
RAISE
• Price vs. budgetwines
• Retail storeinvolvement
REDUCE
• Wine complexity• Wine range• Vineyard prestige
CREATE
• Easy drinking• Ease of selection• Fun and
adventure
Eliminate-Reduce-Raise-Create Grid – [yellow tai]
© DKD Page 1125 December 2006 – 3RD JANUARY 2007
ANALYTICAL TOOLS AND FRAMEWORKS
THREE CHARACTERISTICS OF A GOOD STRATEGY – COMPLEMENTARY QUALITIES(1) FOCUS
(2) DIVERGENCE(3) COMPELLING TAGLINE
THREE CHARACTERISTICS OF A GOOD STRATEGY – COMPLEMENTARY QUALITIES(1) FOCUS
(2) DIVERGENCE(3) COMPELLING TAGLINE
1. FOCUS The company does not diffuse its efforts across all key areas of competition. The company’sstrategic profile or value curves should clearly show it.
2. DIVERGENCE The shape of its value curve diverges from the other players, a result of notbenchmarking competitors but instead looking across alternatives. By applying the Eliminate-Reduce-Raise-Create actions, the company should differentiate its profile from the industry’s average profile.
3. TAGLINE The tagline for the strategic profile is clear. Not only does it deliver a clear message butalso advertise an offering truthfully or else customers will lose trust and interest.
1. FOCUS The company does not diffuse its efforts across all key areas of competition. The company’sstrategic profile or value curves should clearly show it.
2. DIVERGENCE The shape of its value curve diverges from the other players, a result of notbenchmarking competitors but instead looking across alternatives. By applying the Eliminate-Reduce-Raise-Create actions, the company should differentiate its profile from the industry’s average profile.
3. TAGLINE The tagline for the strategic profile is clear. Not only does it deliver a clear message butalso advertise an offering truthfully or else customers will lose trust and interest.
HIGH
LOW
PRICE MEALS LOUNGES SEATINGCLASS
CHOIICES
HUBCONNECTIVITY
FRIENDLYSERVICE
SPEED FREQUENTPOINT TO
POINTDEPARTURE
SouthwestAirline
AverageAirline
CarTransport • Focused Strategic
Profile or ValueCurves
• Differentiate(Eliminate-Reduce-Raise-Create)Strategic Profiles
• Compelling Tagline –“The Speed of a planeat the Price of a Car –Whenever You needit”
© DKD Page 1225 December 2006 – 3RD JANUARY 2007
ANALYTICAL TOOLS AND FRAMEWORKS
READING THE VALUE CURVES1. The strategy canvas enables companies to see the future in the present.2. Embedded in the value curves of an industry is wealth of strategic knowledge on the current status and
future of a business.
READING THE VALUE CURVES1. The strategy canvas enables companies to see the future in the present.2. Embedded in the value curves of an industry is wealth of strategic knowledge on the current status and
future of a business.
1. The 1st question the value curve answers is whether a business deserves to be a winner.2. It’s on the right track when the value curve meets the three criteria – focus, divergence, and a compelling tagline.3. The three criteria serves as a litmus test of the commercial viability of the blue ocean ideas.
1. The 1st question the value curve answers is whether a business deserves to be a winner.2. It’s on the right track when the value curve meets the three criteria – focus, divergence, and a compelling tagline.3. The three criteria serves as a litmus test of the commercial viability of the blue ocean ideas.
A Company caught in the RedOcean
When the Value Curves
converges with its competitors.
Over-delivery without Payback
Company’s Vale Curves shown todeliver high levels across all
factors
Does the market share and profitabilityreflect the investments?
To value-innovate, the company mustdecide which factors to eliminate andreduce – not only those to raise and
create – to construct a divergent ValueCurve.
A company’s explicit or implicit strategytends to be trying to outdo its competition
on the basis of cost or quality. Thissignals slow growth!
An incoherent strategy
Value Curve with no rhyme orreason
Strategy likely based upon independentsub-strategies – a reflection of an
organization with divisional or functionalsilos.
Strategic Contradictions
Offering a high level of competingfactor whilst ignoring others that
support that factor.
An Internally Driven Company
Are Competing Factors stated interms buyers can understand and
value?
The kind of language used in the strategycanvas gives insight as to whether a
company’s strategic vision is built on an“outside-in” perspective – driven by the
demand side OR an “inside-out”perspective that is operationally driven.
Strategic inconsistencies can also befound between the level of the offering
and the price.
Intersection between the analytic techniques and the sixprinciples of formulating and executing blue oceans that
allow companies to break from the competition andunlock uncontested market space.
Six Principles4 Formulation + 2 Execution
Strategy CanvasEliminate-Reduce-Raise-Create Grid+ +
© DKD Page 1325 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 1
RECONSTRUCT MARKET BOUNDARIES
ATTENUATES SEARCH RISKS
© DKD Page 1425 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
1. RECONSTRUCT MARKET BOUNDARIES1. RECONSTRUCT MARKET BOUNDARIES
• The 1st Principle of Blue Ocean Strategy is to reconstruct market boundaries tobreak from the competition and create Blue Oceans.
• Six basic approaches to remaking market boundaries – THE SIX PATHSFRAMEWORK.
• These paths have general applicability across industry sectors – based upon lookingat familiar data from a new perspective.
• The 1st Principle of Blue Ocean Strategy is to reconstruct market boundaries tobreak from the competition and create Blue Oceans.
• Six basic approaches to remaking market boundaries – THE SIX PATHSFRAMEWORK.
• These paths have general applicability across industry sectors – based upon lookingat familiar data from a new perspective.
• These paths challenge he six fundamental assumptions underlying manycompanies’ strategies. Specifically, companies tend to do the followings:
• Define their industry similarly and focus on being the best within it.• Look at their industries through the lens of generally accepted strategic groups and
strive to stand out in the strategic group they play in.• Focus on the same buyer group, be it the purchaser, the user, or the influencer.• Define the scope of the products and services offered by their industry similarly.• Accept their industry's functional or emotional orientation.• Focus on the same point in time – and often on current competitive threats in
formulating strategy.
• These paths challenge he six fundamental assumptions underlying manycompanies’ strategies. Specifically, companies tend to do the followings:
• Define their industry similarly and focus on being the best within it.• Look at their industries through the lens of generally accepted strategic groups and
strive to stand out in the strategic group they play in.• Focus on the same buyer group, be it the purchaser, the user, or the influencer.• Define the scope of the products and services offered by their industry similarly.• Accept their industry's functional or emotional orientation.• Focus on the same point in time – and often on current competitive threats in
formulating strategy.
• Need to look across alternative industries, across strategic groups, across buyergroups, across complementary product and service offerings, across the functional-emotional orientation of an industry, and even across time.
• Need to look across alternative industries, across strategic groups, across buyergroups, across complementary product and service offerings, across the functional-emotional orientation of an industry, and even across time.
© DKD Page 1525 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
1. RECONSTRUCT MARKET BOUNDARIES1. RECONSTRUCT MARKET BOUNDARIES
Path 1:Look AcrossAlternative Industries
A company competes not only with the otherfirms in its own industry but also with companiesin other industries that produce alternativeproducts or services.
• Substitutes – Products or services that have different form but offerthe same functionality or core utility.
• Alternatives – Products or services that have different functions andforms but the same purpose.
Path 2:Look AcrossStrategic Groupswithin Industries
Refers to a group of companies within anindustry that pursue similar strategy.In most industries, the fundamental strategicdifferences among industry players are capturedby a small number of strategic groups.
• Most companies focus on improving their competitive position withina strategic group.
• Understand which factors determine customers’ decisions to tradeup or down from one group to the other.
Path 3:Look Across theChain of Buyers
Competitors converge around common definitionof who the target buyer is. In reality there is achain of “Buyers” who are directly or indirectlyinvolved in the buying decision.
• Purchasers – who pay for the product or service may differ from theactual “users”, and in some cases there are important “influencers”as well.
Path 4:Look AcrossComplementaryProduct & ServiceOfferings
Few products are used in a vacuum. In mostcases, other products and services affect theirvalue. In most industries, rivals converge withinthe bounds of their industry’s product and serviceofferings.
• Untapped value is often hidden in complementary products andservices. The key is to define the total solution buyers seek.
• What happens before, during and after a product is used.
Path 5:Look AcrossFunctional orEmotional Appeal toBuyers
Competition in an industry tends to converge notonly on an accepted notion of the scope of itsproducts and services BUT also on one or twopossible bases of appeal – Rational orEmotional.
• Emotionally-oriented industries offer many extras that add pricewithout enhancing functionality.
• Functionally-oriented industries can often infuse commodityproducts with new life by adding a dose of emotion to stimulate newdemand.
Path 8:Look Across Time
All industries are subject to external trends thataffect their business over time. Most companiesadapt incrementally and passively and paceactions to keep up with the development of thetrends.
• Key insights arise from business insights into how the trend willchange value to customers and impact the company's businessmodel.
• Three principles- Decisive to the business, Must be Irreversible andHave Clear Trajectory.
© DKD Page 1625 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
1. RECONSTRUCT MARKET BOUNDARIES – CONCEIVING NEW MARKET SPACE1. RECONSTRUCT MARKET BOUNDARIES – CONCEIVING NEW MARKET SPACE
INDUSTRYINDUSTRY Focus on rivals within the industryFocus on rivals within the industry Looks across alternate industriesLooks across alternate industries
STRATEGICGROUP
STRATEGICGROUP
Focuses on competitive positionwithin strategic group
Focuses on competitive positionwithin strategic group
Looks across strategic groups within theindustry
Looks across strategic groups within theindustry
BUYER GROUPBUYER GROUP Focuses on better serving the buyergroup
Focuses on better serving the buyergroup Redefines the industry buyer groupRedefines the industry buyer group
SCOPE OFPRODUCT OR
SERVCIES
SCOPE OFPRODUCT OR
SERVCIES
Focuses on maximizing the value ofproduct and service offerings withinthe bounds of its industry
Focuses on maximizing the value ofproduct and service offerings withinthe bounds of its industry
Looks across to complementary productand service offerings
Looks across to complementary productand service offerings
FUNCTIONAL-EMOTIONAL
ORIENTATION
FUNCTIONAL-EMOTIONAL
ORIENTATION
Focuses on improving priceperformance within the functional-emotional orientation of its industry
Focuses on improving priceperformance within the functional-emotional orientation of its industry
Rethinks the functional-emotionalorientation of its industry
Rethinks the functional-emotionalorientation of its industry
TIMETIME Focuses on adapting to externaltrends as they occur
Focuses on adapting to externaltrends as they occur
Participates in shaping external trends overtime
Participates in shaping external trends overtime
From Head-to-Head Competition to Blue Ocean CreationFrom Head-to-Head Competition to Blue Ocean Creation
By thinking across conventional boundaries of competition, you can see how to make convention-altering, strategicmoves that construct established market boundaries and create Blue Oceans.
By thinking across conventional boundaries of competition, you can see how to make convention-altering, strategicmoves that construct established market boundaries and create Blue Oceans.
Head-to-Head Competition Blue Ocean Creation
© DKD Page 1725 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 2
FOCUS ON THE BIG PICTURE, NOT THENUMBERS
ATTENUATES PLANNING RISKS
© DKD Page 1825 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
Lengthy description of current industry conditions and thecompetitive situation
Lengthy description of current industry conditions and thecompetitive situation
Discussion of how to increase market share, capture new segments,or cut costs
Discussion of how to increase market share, capture new segments,or cut costs
Outline of numerous Goals and Initiatives (KPI, BPR)Outline of numerous Goals and Initiatives (KPI, BPR)
A full budget including graphs and spreadsheetsA full budget including graphs and spreadsheets
Culminates with the preparation of a large document culled from amishmash of data provided by various parts of the organization who
often have conflicting agendas and poor communication
Culminates with the preparation of a large document culled from amishmash of data provided by various parts of the organization who
often have conflicting agendas and poor communication
Spend majority of strategic thinking filling in boxes and runningnumbers instead of developing a clear picture of how to break from
the competition
Spend majority of strategic thinking filling in boxes and runningnumbers instead of developing a clear picture of how to break from
the competition
A TYPICAL STRATEGY PLAN
Most strategic plans don’t contain strategy at all but rather asmorgasbord of tactics that individually makes sense but collectivelydon’t add up to to a unified, clear direction that sets a company apart
– let alone makes the competition irrelevant.
Most strategic plans don’t contain strategy at all but rather asmorgasbord of tactics that individually makes sense but collectivelydon’t add up to to a unified, clear direction that sets a company apart
– let alone makes the competition irrelevant.
Draw a strategy Canvas – Overall Dynamics of the IndustryVisualizes the Company’s current Strategic Position – Helps Chart
future strategy
Draw a strategy Canvas – Overall Dynamics of the IndustryVisualizes the Company’s current Strategic Position – Helps Chart
future strategy
4 STEPS OF VISUALIZING STRATEGY4 STEPS OF VISUALIZING STRATEGY
VISUALAWAKENING
VISUALAWAKENING
VISUALEXPLORATION
VISUALEXPLORATION
VISUALSTRATEGY
FAIR
VISUALSTRATEGY
FAIR
VISUALCOMMUNI-
CATION
VISUALCOMMUNI-
CATION
BLUE OCEAN STRATEGY PLAN
GO AFTER CUSTOMERS & NON-CUSTOMERSGO AFTER CUSTOMERS & NON-CUSTOMERS
Revenue, Profitability, Market Share, and CustomersSatisfaction
MEASURES ON COMPANY’S CURRENT POSITION
Revenue, Profitability, Market Share, and CustomersSatisfaction
MEASURES ON COMPANY’S CURRENT POSITION
Balance between Profitable Growth and Cash-Flow at a givenpoint in time.
Balance between Profitable Growth and Cash-Flow at a givenpoint in time.
1st: Shows the strategic profile of an industry depicting clearly thefactors that affect competition among industry players.2nd: Shows the strategic profile of of current and potentialcompetitors, identifying which factors they invest in strategically.Finally: Shows the company’s strategic profile or value curvedepicting how it invests in the factors of competition.
Happens with “Highly Determined Leader” OR “In a Crisis”
1st: Shows the strategic profile of an industry depicting clearly thefactors that affect competition among industry players.2nd: Shows the strategic profile of of current and potentialcompetitors, identifying which factors they invest in strategically.Finally: Shows the company’s strategic profile or value curvedepicting how it invests in the factors of competition.
Happens with “Highly Determined Leader” OR “In a Crisis”
© DKD Page 1925 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
4 STEPS OF VISUALIZING STRATEGY4 STEPS OF VISUALIZING STRATEGY
VISUALAWAKENING
VISUALAWAKENING
VISUALEXPLORATION
VISUALEXPLORATION
VISUALSTRATEGY
FAIR
VISUALSTRATEGY
FAIR
VISUALCOMMUNI-CATION
VISUALCOMMUNI-CATION
• Compare your business withyour competitors by drawingyour “as is” strategy canvas.
• Set where your strategyneeds to change
• Compare your business withyour competitors by drawingyour “as is” strategy canvas.
• Set where your strategyneeds to change
• Go into the field to explorethe six paths to creatingblue oceans.
• Observe the distinctiveadvantages of alternativeproducts and services.
• See which factors youshould eliminate, create,or change.
• Go into the field to explorethe six paths to creatingblue oceans.
• Observe the distinctiveadvantages of alternativeproducts and services.
• See which factors youshould eliminate, create,or change.
• Draw your “to be” strategycanvas based on insightsfrom field observations..
• Get feedback onalternative strategycanvases from customers,competitors’ customers,and non-customers.
• Use feedback to build thebest “to be” futurestrategy.
• Draw your “to be” strategycanvas based on insightsfrom field observations..
• Get feedback onalternative strategycanvases from customers,competitors’ customers,and non-customers.
• Use feedback to build thebest “to be” futurestrategy.
• Distribute your before-and-after strategic profileson one page for easycomparison.
• Support only thoseprojects and operationalmoves that allow yourcompany to close thegaps to actualize the newstrategy.
• Distribute your before-and-after strategic profileson one page for easycomparison.
• Support only thoseprojects and operationalmoves that allow yourcompany to close thegaps to actualize the newstrategy.
Resolve differences about thecurrent state of play
Accept the need for change
Resolve differences about thecurrent state of play
Accept the need for change
A company should neveroutsource its eyes.
Great strategic insights is theproduct of getting into the filedand challenging the boundaries
of competition
A company should neveroutsource its eyes.
Great strategic insights is theproduct of getting into the filedand challenging the boundaries
of competition
Present strategy canvases at aVisual Strategy Fair
Present strategy canvases at aVisual Strategy Fair
One page picture showing newand old strategic profiles so thatevery employee could see wherethe company stood and where it
had to focus its efforts to create acompelling future
One page picture showing newand old strategic profiles so thatevery employee could see wherethe company stood and where it
had to focus its efforts to create acompelling future
© DKD Page 2025 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS2. FOCUS ON THE BIG PICTURE, NOT THE NUMBERS
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
Align your strategic planning process to focus on the BIG PICTURE and apply these ideas in drawing the Company’s StrategyCanvas to arrive a Blue Ocean Strategy
VISUALIZING STRATEGY AT THE CORPORATE LEVELVISUALIZING STRATEGY AT THE CORPORATE LEVEL
• When business units present their strategy canvases to one another, they deepen their understanding of the otherbusinesses in the corporate portfolio.
• Example: Samsung Electronics has institutionalized the use of the strategy canvas in its key business creation decisions byestablishing the Value Innovation Program (VIP) Centre in 1998.
• When business units present their strategy canvases to one another, they deepen their understanding of the otherbusinesses in the corporate portfolio.
• Example: Samsung Electronics has institutionalized the use of the strategy canvas in its key business creation decisions byestablishing the Value Innovation Program (VIP) Centre in 1998.
USING THE PIONEER-MIGRATOR-SETTLER (PMS) MAPUSING THE PIONEER-MIGRATOR-SETTLER (PMS) MAP
• A Company’s Pioneers are the businesses that offer unprecedented value.• Settlers are businesses whose value curves conform to the basic shape of the industry’s.• The potential of Migrators lies somewhere in between. Such businesses extend the industry’s curve by giving customers
more for less, but they don’t alter its basic shape. These businesses offer improved value, but not innovative value.
• A Company’s Pioneers are the businesses that offer unprecedented value.• Settlers are businesses whose value curves conform to the basic shape of the industry’s.• The potential of Migrators lies somewhere in between. Such businesses extend the industry’s curve by giving customers
more for less, but they don’t alter its basic shape. These businesses offer improved value, but not innovative value.
OVERCOMING THE LIMITATIONS• Strategic Planning should be more about Collective Wisdom building than top-down or bottom-up planning.• It should be more conversational than solely documentation driven, should be more about building the big picture than about
number crunching exercises.• It should have a creative component instead of being strictly analysis-driven, more motivational, invoking willing commitment,
than bargain driven, producing negotiated commitment.
OVERCOMING THE LIMITATIONS• Strategic Planning should be more about Collective Wisdom building than top-down or bottom-up planning.• It should be more conversational than solely documentation driven, should be more about building the big picture than about
number crunching exercises.• It should have a creative component instead of being strictly analysis-driven, more motivational, invoking willing commitment,
than bargain driven, producing negotiated commitment.
Aristotle pointed out – “The Soul never thinks without an image”Aristotle pointed out – “The Soul never thinks without an image”
© DKD Page 2125 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 3
REACH BEYOND EXISTING DEMAND
ATTENUATES SCALE RISKS
© DKD Page 2225 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
3. REACH BEYOND EXISTING DEMAND3. REACH BEYOND EXISTING DEMAND
Companies should challenge two conventional strategy practices:1. Focusing on existing customers 2. The drive for finer segmentation to accommodate buyer differences.
Instead of concentrating on customers, need to look at non-customers.Instead of focusing on customer differences, need to build on powerful commonalities in what buyers value.
Companies should challenge two conventional strategy practices:1. Focusing on existing customers 2. The drive for finer segmentation to accommodate buyer differences.
Instead of concentrating on customers, need to look at non-customers.Instead of focusing on customer differences, need to build on powerful commonalities in what buyers value.
THE THREE TIERS OF NON-CUSTOMERSTHE THREE TIERS OF NON-CUSTOMERS
FirstTier
YourMarket
2ndTier
ThirdTier
First Tier: “soon-to-be”non-customers whoare on the edge of yourmarket
Second Tier:“Refusing” non-customers whoconsciously chooseagainst your market
Third Tier:“Unexplored” non-customers who are inmarkets distant fromyours.
First Tier: “soon-to-be”non-customers whoare on the edge of yourmarket
Second Tier:“Refusing” non-customers whoconsciously chooseagainst your market
Third Tier:“Unexplored” non-customers who are inmarkets distant fromyours.
• Focus on the Tier that represents thebiggest catchments.
• But, explore whether there areoverlapping commonalities acrossall three tiers of non-customers.
• The natural strategic orientation istoward retaining existing customersand seeking further segmentationopportunities. This is especially truein the face of competitive pressures.
• However, we should reach beyondexisting demand to non-customers.
• If no such opportunities arise, moveon to further exploit differencesamong exist.
• Focus on the Tier that represents thebiggest catchments.
• But, explore whether there areoverlapping commonalities acrossall three tiers of non-customers.
• The natural strategic orientation istoward retaining existing customersand seeking further segmentationopportunities. This is especially truein the face of competitive pressures.
• However, we should reach beyondexisting demand to non-customers.
• If no such opportunities arise, moveon to further exploit differencesamong exist.
© DKD Page 2325 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 4
GET THE STRATEGIC SEQUENCE RIGHTATTENUATES BUSINESS MODEL RISKS
© DKD Page 2425 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.
ADDRESSING THE REVENUE SIDE OF A COMPANY’S BUSINESS MODEL
1. The starting point is buyer utility – Does your offering unlock exceptional utility?Is there a compelling reason for the mass of people to buy it?
2. Remember a company does not want to rely solely on price to create demand. Isyour offering priced to attract the mass of target buyers so that they have acompelling ability to pay for your offering?
ADDRESSING THE PROFIT SIDE
3. Can you produce your offering at the target cost and still earn a healthy profitmargin? You should not let costs drive prices, nor should you scale down utilitybecause high costs block yor ability to profit at the strategic price.
IT IS THE COMBINATION OF EXCEPTIORNAL UTILITY, STRATEGICPRICING & TARGET COSTING THAT ALLOWS COMPANIES TO ACHIEVEVALUE INNOVATION.
ADDRESSING THE ADOPTION HURDLES
4. What are the adoption hurdles in rolling out your idea? Have you addressedthese up front?
ADDRESSING THE REVENUE SIDE OF A COMPANY’S BUSINESS MODEL
1. The starting point is buyer utility – Does your offering unlock exceptional utility?Is there a compelling reason for the mass of people to buy it?
2. Remember a company does not want to rely solely on price to create demand. Isyour offering priced to attract the mass of target buyers so that they have acompelling ability to pay for your offering?
ADDRESSING THE PROFIT SIDE
3. Can you produce your offering at the target cost and still earn a healthy profitmargin? You should not let costs drive prices, nor should you scale down utilitybecause high costs block yor ability to profit at the strategic price.
IT IS THE COMBINATION OF EXCEPTIORNAL UTILITY, STRATEGICPRICING & TARGET COSTING THAT ALLOWS COMPANIES TO ACHIEVEVALUE INNOVATION.
ADDRESSING THE ADOPTION HURDLES
4. What are the adoption hurdles in rolling out your idea? Have you addressedthese up front?
Buyer UtilityBuyer UtilityIs there exceptionalbuyer utility in your
business idea?
Is there exceptionalbuyer utility in your
business idea?
PricePriceIs your price easily
accessible to the massof buyers?
Is your price easilyaccessible to the mass
of buyers?
CostCostCan you attain your
cost target to profit atyour strategic price?
Can you attain yourcost target to profit atyour strategic price?
AdoptionAdoption
What are the adoptionhurdles in actualizing
your business idea? Areyou addressing them
up-front?
What are the adoptionhurdles in actualizing
your business idea? Areyou addressing them
up-front?
A commerciallyviable blueocean idea
A commerciallyviable blueocean idea
Yes
Yes
Yes
Yes
No-Rethink
No-Rethink
No-Rethink
No-Rethink
SE
QU
EN
CE
OF
BL
UE
OC
EA
NS
TR
AT
EG
Y
© DKD Page 2525 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
Testing for Exceptional UtilityUnless the technology makes buyers’ lives dramatically simpler, more convenient, more productive, less risky, or more fun and
fashionable, it will not attract the masses no matter how many awards it win.
Testing for Exceptional UtilityUnless the technology makes buyers’ lives dramatically simpler, more convenient, more productive, less risky, or more fun and
fashionable, it will not attract the masses no matter how many awards it win.
THE SIX STAGES OF BUYER EXPERIENCE
TH
ES
IXU
TIL
ITY
LE
VE
RS
EnvironmentalFriendliness
Fun andImage
Risk
Convenience
Simplicity
CustomerProductivity
How longdoes it take
to find?
How longdoes it take
to find?
How rapidlycan youmake a
purchase?
How rapidlycan youmake a
purchase?
Is the placeaccessible?
Is the placeaccessible?
How secureis the
transaction?
How secureis the
transaction?
Is the placeattractive &
fun?
Is the placeattractive &
fun?
Is purchasemade in a
friendlymanner?
Is purchasemade in a
friendlymanner?
How longdoes it taketo to deliverthe product?
How longdoes it taketo to deliverthe product?
How difficultto unpack
and install?
How difficultto unpack
and install?
Do buyershave to
arrange?
Do buyershave to
arrange?
How costlyand difficult?
How costlyand difficult?
Wouldcustomer be
anxious?
Wouldcustomer be
anxious?
Is thepackaging
userfriendly?
Is thepackaging
userfriendly?
Does theproductrequire
training?
Does theproductrequire
training?
Does itrequireexpert
assistance?
Does itrequireexpert
assistance?
Effectiveness of features& functions?
Effectiveness of features& functions?
Will ThingsGo wrong?
Ease ofWarranty?
Will ThingsGo wrong?
Ease ofWarranty?
Deliver moreoptions than
userrequire?
Deliver moreoptions than
userrequire?
Availabilityof user
manual?
Availabilityof user
manual?
Need otherproduct to
make itwork?
Need otherproduct to
make itwork?
How easy toobtain?
How easy toobtain?
How muchtime do they
take?
How muchtime do they
take?
How costlyare they?
How costlyare they?
How muchpain do they
cause?
How muchpain do they
cause?
Will itenhanceusability?
Will itenhanceusability?
Requireexternal
maintenance?
Requireexternal
maintenance?
How easy tomaintain &upgrade?
How easy tomaintain &upgrade?
How costlyto maintain?
How costlyto maintain?
Will there berepeat work?
Will there berepeat work?
Friendly andtransparent?
Friendly andtransparent?
Availabilityof manuals?
Availabilityof manuals?
Does use ofproductwasteitems?
Does use ofproductwasteitems?
How easy todispose?
How easy todispose?
How costlyto dispose?
How costlyto dispose?
Legal &Environment
al issues?
Legal &Environment
al issues?
Will itenhance
CSR?
Will itenhance
CSR?
Does it meetstandards?
Does it meetstandards?
1PURCHASE
2DELIVERY
3USE
4SUPPLEMENTS
5MAINTENANCE
6DISPOSAL • Outlines all the levers
companies can pull todeliver exceptional utility tobuyers as well as thevarious experiences buyerscan have with a product orservice.
• This map allows managersto identify the full range ofutility spaces that a productor service can potentially fill.
• To test for exceptionalutility, companies shouldcheck whether their offeringhas removed the greatestblocks to utility across theentire buyer experiencecycle for customers andnon-customers.
• Outlines all the leverscompanies can pull todeliver exceptional utility tobuyers as well as thevarious experiences buyerscan have with a product orservice.
• This map allows managersto identify the full range ofutility spaces that a productor service can potentially fill.
• To test for exceptionalutility, companies shouldcheck whether their offeringhas removed the greatestblocks to utility across theentire buyer experiencecycle for customers andnon-customers.
© DKD Page 2625 December 2006 – 3RD JANUARY 2007
High Degree of legal andresource protectionDifficult to imitate
High Degree of legal andresource protectionDifficult to imitate
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
From Exceptional Utility to Strategic PricingTo secure strong revenue stream for your offering, you must set the right strategic price to ensure that not only will buyers
would want to buy your offering, but they would also have the compelling ability to pay for it.It is also increasingly important to know from the start what price will quickly capture the mass of target buyers.
From Exceptional Utility to Strategic PricingTo secure strong revenue stream for your offering, you must set the right strategic price to ensure that not only will buyers
would want to buy your offering, but they would also have the compelling ability to pay for it.It is also increasingly important to know from the start what price will quickly capture the mass of target buyers.
• As the nature of goods becomes moreknowledge intensive, companies bearmuch more of their costs in productdevelopment than in manufacturing.
• To a buyer, the value of a product orservice may be closely tied to the totalnumber of people using it.
• The rise of knowledge-intensive productsalso creates the potential for free riding.The cost and risk of developing aninnovative idea are borne by the initiator,not the follower.
• The strategic price you set for youroffering must not only attract buyers inlarge numbers, but also help to retainthem.
• Companies would be wise to pursuemid-to-lower-boundary strategic pricingfrom the start if the following apply:
• Blue ocean offering has high fixedcosts and marginal variable costs.
• Their attractiveness depend heavilyon network externalities.
• Their cost structure benefits fromsteep economies of scale and scope.
• As the nature of goods becomes moreknowledge intensive, companies bearmuch more of their costs in productdevelopment than in manufacturing.
• To a buyer, the value of a product orservice may be closely tied to the totalnumber of people using it.
• The rise of knowledge-intensive productsalso creates the potential for free riding.The cost and risk of developing aninnovative idea are borne by the initiator,not the follower.
• The strategic price you set for youroffering must not only attract buyers inlarge numbers, but also help to retainthem.
• Companies would be wise to pursuemid-to-lower-boundary strategic pricingfrom the start if the following apply:
• Blue ocean offering has high fixedcosts and marginal variable costs.
• Their attractiveness depend heavilyon network externalities.
• Their cost structure benefits fromsteep economies of scale and scope.
THE PRICE CORRIDOR OF THE MASSFinding the right price for an irresistible offer – which may not necessarily be the lower price.
SameForm
Different FormSame Function
Different FormAnd Function,
Same Objectives
PRICE CORRIDOROF THE MASS
Size of circle is proportional to numberof buyers that product/service attracts
STEP 1: Identify the pricecorridor of the Mass
Upper level pricing
Lower level pricing
Mid-level pricing
STEP 2: Specify pricelevel within the corridor
Three alternative product/service types
The price bandwidth that captures the largestgroups of target buyers is the price corridor of
the mass.
The price bandwidth that captures the largestgroups of target buyers is the price corridor of
the mass.
Some Degree of legal andresource protection
Some Degree of legal andresource protection
Low Degree of legal andresource protection
Easy to imitate
Low Degree of legal andresource protection
Easy to imitate
Determine how high a price they can afford toset within the corridor without inviting
competition form imitation products or services.
Determine how high a price they can afford toset within the corridor without inviting
competition form imitation products or services.
© DKD Page 2725 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
From Strategic Pricing to Target CostingTo maximize profit potential of a blue ocean idea, a company should start with the strategic price and then deduct its desired
profit margin from the price to arrive at a target cost.
From Strategic Pricing to Target CostingTo maximize profit potential of a blue ocean idea, a company should start with the strategic price and then deduct its desired
profit margin from the price to arrive at a target cost.
• Target costing is driven by strategic pricing, and it is usually aggressive.
• Part of the challenge of meeting the target cost is addressed in building astrategic profile that has not only divergence but also focus, which makes acompany strip out costs.
• Sometimes these reductions are sufficient to hit the cost target, but oftenthey are not.
• Target costing is driven by strategic pricing, and it is usually aggressive.
• Part of the challenge of meeting the target cost is addressed in building astrategic profile that has not only divergence but also focus, which makes acompany strip out costs.
• Sometimes these reductions are sufficient to hit the cost target, but oftenthey are not.
PROFIT MODEL OFA BLUE OCEAN STRATEGY
The Strategic PriceThe Strategic Price
The Strategic PriceThe Strategic Price
The Target PriceThe Target Price
Streamlining andCost innovation
Streamlining andCost innovation Partnership
Partnership
Pricing InnovationPricing Innovation
To hit the cost target, companies have three principle leversTo hit the cost target, companies have three principle levers
Streamliningoperations andintroducing costinnovations frommanufacturing to
distribution
Change the pricemodel of the industry– pricing innovation
PartneringForm Development,
manufacturing todistribution
What is a pricing innovation in one industry, is often a standard pricing inanother industry
© DKD Page 2825 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
From Utility, Price, and Cost to AdoptionEven an unbeatable business model may not be enough to guarantee the commercial success of blue ocean idea. It threatens
the status quo, provoke fear and resistance from the company’s main stakeholders: its employees, its business partners& the general public.
THE COMPANY MUST EDUCTAE THE FEARFUL
From Utility, Price, and Cost to AdoptionEven an unbeatable business model may not be enough to guarantee the commercial success of blue ocean idea. It threatens
the status quo, provoke fear and resistance from the company’s main stakeholders: its employees, its business partners& the general public.
THE COMPANY MUST EDUCTAE THE FEARFUL
EMPLOYEESEMPLOYEES THE GENERAL PUBLICTHE GENERAL PUBLICBUSINESS PARTNERSBUSINESS PARTNERS
• Failure to adequately address the concernsof employees about the impact of a newbusiness idea on their livelihoods can beexpensive.
• The company must make a concertedeffort to c to employees that they areaware of the threats posed by theexecution of the idea before going publicwith the idea.
• Companies should work with employees tofind ways of defusing the threats so thateveryone in the company wins, despiteshifts in people’s roles, responsibilities andrewards.
• Failure to adequately address the concernsof employees about the impact of a newbusiness idea on their livelihoods can beexpensive.
• The company must make a concertedeffort to c to employees that they areaware of the threats posed by theexecution of the idea before going publicwith the idea.
• Companies should work with employees tofind ways of defusing the threats so thateveryone in the company wins, despiteshifts in people’s roles, responsibilities andrewards.
• Opposition from the public may arise if thenew business idea is very new andinnovative, particularly if it threatensestablished social or political norms.
• Opposition from the public may arise if thenew business idea is very new andinnovative, particularly if it threatensestablished social or political norms.
• Potentially more damaging would bebusiness partners’ resistance who feartheir revenue streams or market positionsare threatened by a new business idea.
• Potentially more damaging would bebusiness partners’ resistance who feartheir revenue streams or market positionsare threatened by a new business idea.
COMPANIES NEED TO EXPLAIN THE MERITS, SET CLEAR EXPECTATIONS FOR ITS RAMIFICATIONS, ANDDESCRIBE HOW THE COMPANY WILL ADDRESS THEM.
COMPANIES NEED TO EXPLAIN THE MERITS, SET CLEAR EXPECTATIONS FOR ITS RAMIFICATIONS, ANDDESCRIBE HOW THE COMPANY WILL ADDRESS THEM.
© DKD Page 2925 December 2006 – 3RD JANUARY 2007
FORMULATING BLUE OCEAN STRATEGY
4. GET THE STRATEGIC SEQUENCE RIGHT4. GET THE STRATEGIC SEQUENCE RIGHT
Blue Ocean Idea (BOI) IndexProvides a simple and robust test of the blue ocean strategy system.
Blue Ocean Idea (BOI) IndexProvides a simple and robust test of the blue ocean strategy system.
+: There is value innovation- : No value innovation
+: There is value innovation- : No value innovation
UTILITY
PRICE
COST
ADOPTION
Is there exceptional utility?Are there compelling reason to buy your
offering?
Is your price easily accessible to themass of buyers?
Does your cost structure meet thetarget cost?
Have you addressed adoption hurdlesupfront?
+
-
-
-
-
+
+
+
-
-
-
+
YOUNEAREST
COMPETITORINDUSTRY
© DKD Page 3025 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 5
OVERCOME KEY ORGANIZATIONALHURDLES
ATTENUATES ORGANIZATIONAL RISKS
© DKD Page 3125 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
Challenge of ExecutionCompanies often have a tough time translating thought into action particularly for blue ocean strategy where it hinges on shift
from convergence to divergence in value curves at lower costs. This raises the execution bar.
Challenge of ExecutionCompanies often have a tough time translating thought into action particularly for blue ocean strategy where it hinges on shift
from convergence to divergence in value curves at lower costs. This raises the execution bar.
COGNITIVE
LIMITED RESOURCES
MOTIVATION
POLITICS
Waking up employees to the need for a strategic shift.Red Oceans may not be the paths to future profitable growth, but they feel comfortable to people and
may have even served an organization well until now, so why rock the boat?
The greater the shift in strategy, the greater it is assumed are the resources needed toexecute it! But resources are being cut and not raised!
How do you motivate key players to move fast and tenaciously to carry-out a breakfrom the status quo?
Example, “In our Organization, you get shot down before you stand up”
FOUR EXECUTION HURDLES
TO ACHIEVE THIS EFFECTIVELYCompanies must abandon perceived wisdom on effecting change.
Utilize “TIPPING POINT LEADERSHIP” – which allows you to overcome the four hurdles fast and at low cost while winningemployees’ backing in executing from the status quo.
TO ACHIEVE THIS EFFECTIVELYCompanies must abandon perceived wisdom on effecting change.
Utilize “TIPPING POINT LEADERSHIP” – which allows you to overcome the four hurdles fast and at low cost while winningemployees’ backing in executing from the status quo.
© DKD Page 3225 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
TIPPING POINT LEADERSHIPBuilds on the rarely exploited corporate reality that in every organization, there are people, acts, and activities that exercise
disproportionate influence on performance.It is about conserving resources and cutting time by focusing on identifying and then leveraging the factors of disproportionate
influence in an organization.
TIPPING POINT LEADERSHIPBuilds on the rarely exploited corporate reality that in every organization, there are people, acts, and activities that exercise
disproportionate influence on performance.It is about conserving resources and cutting time by focusing on identifying and then leveraging the factors of disproportionate
influence in an organization.
Q1: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON BREAKING THE STATUS QUO?.Q1: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON BREAKING THE STATUS QUO?.
Q2: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON GETTING THE MAXIMUM BANG OUT OFEACH BUCK OF RESOURCES??.
Q2: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON GETTING THE MAXIMUM BANG OUT OFEACH BUCK OF RESOURCES??.
Q3: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON MOTIVATING KEY PLAYERS TOAGRESSIVELY MOVE FORWARD ITH CHANGE?
Q3: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON MOTIVATING KEY PLAYERS TOAGRESSIVELY MOVE FORWARD ITH CHANGE?
Q4: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON KNOECKING DOWN POLITICALROADBLOCKS THAT OFTEN TRIP UP EVE THE BEST STRATEGIES?
Q4: WHAT FACTORS OR ACTS EXERCISE A DISPROPORTIONATELY POSITIVE INFLUENCE ON KNOECKING DOWN POLITICALROADBLOCKS THAT OFTEN TRIP UP EVE THE BEST STRATEGIES?
FOUR ORGANIZATIONAL HURDLES TO STATEGY EXECUTION
COGNITIVE HURDLEAn organization wedded to
the status quo
COGNITIVE HURDLEAn organization wedded to
the status quo
MOTIVATIONAL HURDLEUnmotivated staff
MOTIVATIONAL HURDLEUnmotivated staff
RESOURCES HURDLELimited resources
RESOURCES HURDLELimited resources
POLITICAL HURDLEOpposition from powerful
vested interests
POLITICAL HURDLEOpposition from powerful
vested interests
© DKD Page 3325 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
Positive Stimuli reinforces Behavior, Negative Stimuli changeAttitudes and Behavior.
• The hardest battle is simply to make people aware of the theneed for strategic shift and to agree on its causes.
• Messages communicated through numbers seldom stick withpeople. The case for change feels abstract and removed fromthe sphere of the line managers.
• Instead, making people see and experience harsh realityfirsthand would make them remember and hence would respondmost effectively i.e. “seeing is believing”.
• Builds on insight to inspire a fast change in mindset that isinternally driven of people’s own accord.
Positive Stimuli reinforces Behavior, Negative Stimuli changeAttitudes and Behavior.
• The hardest battle is simply to make people aware of the theneed for strategic shift and to agree on its causes.
• Messages communicated through numbers seldom stick withpeople. The case for change feels abstract and removed fromthe sphere of the line managers.
• Instead, making people see and experience harsh realityfirsthand would make them remember and hence would respondmost effectively i.e. “seeing is believing”.
• Builds on insight to inspire a fast change in mindset that isinternally driven of people’s own accord.
FOUR ORGANIZATIONAL HURDLES TOSTATEGY EXECUTION
COGNITIVEHURDLE
An organizationwedded to the
status quo
COGNITIVEHURDLE
An organizationwedded to the
status quo
MOTIVATIONALHURDLE
Unmotivated staff
MOTIVATIONALHURDLE
Unmotivated staff
RESOURCESHURDLE
Limited resources
RESOURCESHURDLE
Limited resources
POLITICALHURDLE
Opposition frompowerful vested
interests
POLITICALHURDLE
Opposition frompowerful vested
interests
1. BREAK THROUGH THE COGNITIVEHURDLE
MAKE PEOPLE EXPERIENCE THE NEEDFOR CHANGE!
EXPERIENCE THE NEED FOR CHANGEEXPERIENCE THE NEED FOR CHANGE
PIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORSPIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORS
1“RAPID WAKE
UP CALL”
1“RAPID WAKE
UP CALL”
2“MEET WITH
DISGRUNTLEDCUSTOMERS”
2“MEET WITH
DISGRUNTLEDCUSTOMERS”
• Employees must come face-to-face with the worstoperational problems – POOR PERFORMANCE ISSHOCKING & INESCAPBLE but ACTIONABLE!
• Showing the worst to superiors can also shift their mindsetfast!
• Employees must come face-to-face with the worstoperational problems – POOR PERFORMANCE ISSHOCKING & INESCAPBLE but ACTIONABLE!
• Showing the worst to superiors can also shift their mindsetfast!
•Listen to our most disgruntled customers firsthand – don’trely on market surveys.•Do you ever wonder why sales don’t match your confidencein your product? Do you outsource your eyes and send outmarket research questionnaires?
•Listen to our most disgruntled customers firsthand – don’trely on market surveys.•Do you ever wonder why sales don’t match your confidencein your product? Do you outsource your eyes and send outmarket research questionnaires?
© DKD Page 3425 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
Concentrate on multiplying the value of the resources.
• Organizations rapidly gain insight into freeing up low-returnresources and redirecting them to high-impact areas.
• Whereas the actions of eliminating and resolving and reducing,cut the costs for the organization, raising certain elements orcreating required added investments.
• However, the overall investment of resources remained more orless constant!
Concentrate on multiplying the value of the resources.
• Organizations rapidly gain insight into freeing up low-returnresources and redirecting them to high-impact areas.
• Whereas the actions of eliminating and resolving and reducing,cut the costs for the organization, raising certain elements orcreating required added investments.
• However, the overall investment of resources remained more orless constant!
FOUR ORGANIZATIONAL HURDLES TOSTATEGY EXECUTION
COGNITIVEHURDLE
An organizationwedded to the
status quo
COGNITIVEHURDLE
An organizationwedded to the
status quo
MOTIVATIONALHURDLE
Unmotivated staff
MOTIVATIONALHURDLE
Unmotivated staff
RESOURCESHURDLE
Limited resources
RESOURCESHURDLE
Limited resources
POLITICALHURDLE
Opposition frompowerful vested
interests
POLITICALHURDLE
Opposition frompowerful vested
interests
2. JUMP THE RESOURCE HURDLE
ACQUIRING RESOURCES IS OFTEN ALONG, POLITICALLY CHARGED
PROCESS!
MULTIPLY THE VALUE OF AVAILABLE RESOURCESMULTIPLY THE VALUE OF AVAILABLE RESOURCES
PIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORSPIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORS
1LEVERAGE
“HOT SPOTS”
1LEVERAGE
“HOT SPOTS”
2OPTIMIZE
“COLDSPOTS”
2OPTIMIZE
“COLDSPOTS”
• Activities that have low resource input but high performancegains.
• Activities that have low resource input but high performancegains.
•Activities that have high resource input but low performanceimpact.
•Activities that have high resource input but low performanceimpact.
3“HORSE
TRADING”
3“HORSE
TRADING”•Involve trading your unit’s excess resources in an area andredirecting them to high-impact areas.
•Involve trading your unit’s excess resources in an area andredirecting them to high-impact areas.
© DKD Page 3525 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
FOUR ORGANIZATIONAL HURDLES TOSTATEGY EXECUTION
COGNITIVEHURDLE
An organizationwedded to the
status quo
COGNITIVEHURDLE
An organizationwedded to the
status quo
MOTIVATIONALHURDLE
Unmotivated staff
MOTIVATIONALHURDLE
Unmotivated staff
RESOURCESHURDLE
Limited resources
RESOURCESHURDLE
Limited resources
POLITICALHURDLE
Opposition frompowerful vested
interests
POLITICALHURDLE
Opposition frompowerful vested
interests
3. JUMP THE MOTIVATIONAL HURDLE
EMPLOYEES AT EVERY LEVEL MUSTMOVE EN MASSE!
PIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORSPIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORS
Instead of diffusing change efforts widely, instead seek massiveconcentration.
• You must alert employees to the need for a strategic shift andidentify how it can be achieved with limited resources.
• People must not only recognize what needs to be done, but theymust also act on that insight in a sustained and meaningful way.
Instead of diffusing change efforts widely, instead seek massiveconcentration.
• You must alert employees to the need for a strategic shift andidentify how it can be achieved with limited resources.
• People must not only recognize what needs to be done, but theymust also act on that insight in a sustained and meaningful way.
MOTIVATE MASS OF EMPLOYEES FAST & AT LOW COSTMOTIVATE MASS OF EMPLOYEES FAST & AT LOW COST
1LEVERAGE“KINGPINS”
1LEVERAGE“KINGPINS”
2PLACE
“KINGPINS” inA
“FISHBOWL”
2PLACE
“KINGPINS” inA
“FISHBOWL”
• Concentrate your efforts on “kingpins”, the key influencers inthe organization.
• These are natural leaders who are well-respected andpersuasive and have the ability to unlock or block access tokey resources.
• Concentrate your efforts on “kingpins”, the key influencers inthe organization.
• These are natural leaders who are well-respected andpersuasive and have the ability to unlock or block access tokey resources.
•Motivating “kingpins” in a sustained and meaningful wayrequires transparency, inclusion and fair process.•Through this an intense performance culture would becreated in short period of time.•:Fishbowl” management offers an opportunity for highachievers to gain recognition.
•Motivating “kingpins” in a sustained and meaningful wayrequires transparency, inclusion and fair process.•Through this an intense performance culture would becreated in short period of time.•:Fishbowl” management offers an opportunity for highachievers to gain recognition.
3“ATOMIZE” TO
GET THEORGANIZATION TO CHANGE
ITSELF
3“ATOMIZE” TO
GET THEORGANIZATION TO CHANGE
ITSELF
•Unless people believe that the strategic challenge isattainable, the change is not likely to succeed. Hence“atomization” i.e. the framing of the strategic challenge iscrucial.•To make the challenge attainable, break it up into “bite-sizedatoms” that employees at every level could relate to.
•Unless people believe that the strategic challenge isattainable, the change is not likely to succeed. Hence“atomization” i.e. the framing of the strategic challenge iscrucial.•To make the challenge attainable, break it up into “bite-sizedatoms” that employees at every level could relate to.
© DKD Page 3625 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
FOUR ORGANIZATIONAL HURDLES TOSTATEGY EXECUTION
COGNITIVEHURDLE
An organizationwedded to the
status quo
COGNITIVEHURDLE
An organizationwedded to the
status quo
MOTIVATIONALHURDLE
Unmotivated staff
MOTIVATIONALHURDLE
Unmotivated staff
RESOURCESHURDLE
Limited resources
RESOURCESHURDLE
Limited resources
POLITICALHURDLE
Opposition frompowerful vested
interests
POLITICALHURDLE
Opposition frompowerful vested
interests
4. KNOCK OVER THE POLITICALHURDLE
MOVE QUICKLY! BUILD A BROADERCOALITION WITH YOUR ANGELS.
PIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORSPIVOTAL LEVER: DISPROPORTIONATE INFLUENCE FACTORS
Identify your detractors and supporters! Forget the middle andstrive to create a win-win outcome for both.
• Even the best and brightest are regularly eaten alive by politics,intrigue and plotting. There exist powerful vested interests thatwill resist the impending changes.
• The more likely change becomes, the more fiercely and vocallythese negative influencers – both internal & external – will fight toprotect their positions, and their resistance can seriously damageand even derail the strategy execution process.
Identify your detractors and supporters! Forget the middle andstrive to create a win-win outcome for both.
• Even the best and brightest are regularly eaten alive by politics,intrigue and plotting. There exist powerful vested interests thatwill resist the impending changes.
• The more likely change becomes, the more fiercely and vocallythese negative influencers – both internal & external – will fight toprotect their positions, and their resistance can seriously damageand even derail the strategy execution process.
DON’T FIGHT ALONE! GET THE HIGHER & WIDER VOICETO FIGHT WITH YOU!
DON’T FIGHT ALONE! GET THE HIGHER & WIDER VOICETO FIGHT WITH YOU!
1SECURE A
CONSIGLIERE
1SECURE A
CONSIGLIERE
2LEVERAGE
YOURANGELS
2LEVERAGE
YOURANGELS
• Most leaders concentrate on building a top managementteam having strong functional skills such as marketing,operations, and finance.
• Tipping point leaders have the insight to include a“consigliere” – a respected senior insider who are politicallyadept and who knows the land mines in implementation,including who will fight you and who will support you.
• Most leaders concentrate on building a top managementteam having strong functional skills such as marketing,operations, and finance.
• Tipping point leaders have the insight to include a“consigliere” – a respected senior insider who are politicallyadept and who knows the land mines in implementation,including who will fight you and who will support you.
•Who are my “angels”? Who will algn with me? Who will winthe most by the strategic shift?
•Who are my “angels”? Who will algn with me? Who will winthe most by the strategic shift?
3SILENCE
YOUR DEVILS
3SILENCE
YOUR DEVILS•Who are my devils? Who will fight me? Who will lose themost by the future blue ocean strategy?
•Who are my devils? Who will fight me? Who will lose themost by the future blue ocean strategy?
© DKD Page 3725 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
5. OVERCOME KEY ORGANIZATIONAL HURDLES5. OVERCOME KEY ORGANIZATIONAL HURDLES
CHALLENGING CONVENTIONAL WISDOMCHALLENGING CONVENTIONAL WISDOM
• It is never easy to execute a strategic shift, and doing it fast with limited resources is even more difficult.
• By consciously addressing the hurdles to strategy execution and focusing on factors of disproportionateinfluence, you can knock them over to actualize a strategic shift.
• Not every challenge requires a proportionate action. Focus on acts of disproportionate influences.
• This is a critical leadership component for making blue ocean strategy happen.
• It aligns employees’ actions with the new strategy.
• It is never easy to execute a strategic shift, and doing it fast with limited resources is even more difficult.
• By consciously addressing the hurdles to strategy execution and focusing on factors of disproportionateinfluence, you can knock them over to actualize a strategic shift.
• Not every challenge requires a proportionate action. Focus on acts of disproportionate influences.
• This is a critical leadership component for making blue ocean strategy happen.
• It aligns employees’ actions with the new strategy.
Theory of organization change rests on transformingthe mass. So change efforts are focused on movingthe mass, requiring steep resources and long time-
frame.
CONVENTIONAL WISDOM
Mass ofEmployees
Company
To change the mass, focus on the extremes –people, acts, and activities that exercise a
disproportionate influence on performance toachieve a strategic shift at a low cost.
TIPPING-POINT LEADERSHIP
EXTREMES EXTREMES
Company
© DKD Page 3825 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
PRINCIPLE 6
BUILD EXECUTION INTO STRATEGYATTENUATES MANAGEMENT RISKS
© DKD Page 3925 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
6. BUILD EXECUTION INTO STRATEGY6. BUILD EXECUTION INTO STRATEGY
BUILD PEOPLE’S TRUST & COMMITMENT DEEP IN THE RANKS AND INSPIRE THEIR VOLUNTARY COOPERATIONBUILD PEOPLE’S TRUST & COMMITMENT DEEP IN THE RANKS AND INSPIRE THEIR VOLUNTARY COOPERATION
Allows companies to minimize the management risk, risk of distrust, and even sabotage.
• Companies must reach beyond carrots and sticks. They must reach to fair process in the making and executing of strategy.• Fair process is a key variable that distinguishes successful blue ocean strategic moves from those that failed.
Allows companies to minimize the management risk, risk of distrust, and even sabotage.
• Companies must reach beyond carrots and sticks. They must reach to fair process in the making and executing of strategy.• Fair process is a key variable that distinguishes successful blue ocean strategic moves from those that failed.
POOR PROCESS CAN RUIN STRATEGY EXECUTIONPOOR PROCESS CAN RUIN STRATEGY EXECUTION
THE POWER OF FAIR PROCESSHow fair process affects people’s attitudes and behavior
Strategy FormulationProcess
Strategy FormulationProcess
Fair ProcessEngagement, Explanation, Expectation Clarity
Fair ProcessEngagement, Explanation, Expectation Clarity
AttitudesAttitudes Trust and Commitment“I feel my opinion counts”
Trust and Commitment“I feel my opinion counts”
BehaviorBehavior Voluntary Cooperation“I’ll go beyond the call of duty”
Voluntary Cooperation“I’ll go beyond the call of duty”
Strategy ExecutionStrategy Execution Exceeds ExpectationsSelf-initiated
Exceeds ExpectationsSelf-initiated
THE THREE PRINCIPLESOF FAIR PROCESS
Three mutually reinforcingelements that defines fairprocess: Engagement,Explanation andExpectation Clarity.
THE THREE PRINCIPLESOF FAIR PROCESS
Three mutually reinforcingelements that defines fairprocess: Engagement,Explanation andExpectation Clarity.
People at the front-line care aboutthe proper process as those at
the Top
People at the front-line care aboutthe proper process as those at
the Top
© DKD Page 4025 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
6. BUILD EXECUTION INTO STRATEGY6. BUILD EXECUTION INTO STRATEGY
WHY DOES FAIR PROCESS MATTER?WHY DOES FAIR PROCESS MATTER?
Why does the observance or violation of fair process in strategy making have the power tomake or break a strategy’s execution?
• It all comes down to intellectual and emotional recognition.• EMOTIONALLY, individuals seek recognition of their value as Human Beings, who are
treated with full respect and dignity and appreciated for their individual worth regardless ofhierarchical level.
• INTELLECTUALY, individuals seek recognition that their ideas are sought after and giventhoughtful reflection, and that others think enough of their intelligence to explain theirthinking to them.
Why does the observance or violation of fair process in strategy making have the power tomake or break a strategy’s execution?
• It all comes down to intellectual and emotional recognition.• EMOTIONALLY, individuals seek recognition of their value as Human Beings, who are
treated with full respect and dignity and appreciated for their individual worth regardless ofhierarchical level.
• INTELLECTUALY, individuals seek recognition that their ideas are sought after and giventhoughtful reflection, and that others think enough of their intelligence to explain theirthinking to them.
INTELLECTUAL & EMOTIONAL RECOGNITION THEORYINTELLECTUAL & EMOTIONAL RECOGNITION THEORY
Frederick Herzbergs’s Theory on Motivation
• Recognition was found to inspire strong intrinsic motivation, causing people to go beyondthe call of duty and engage in voluntary cooperation.
• Trust and cherish the individual as well as a deep-seated confidence in the individual’sknowledge, talents and expertise.
Frederick Herzbergs’s Theory on Motivation
• Recognition was found to inspire strong intrinsic motivation, causing people to go beyondthe call of duty and engage in voluntary cooperation.
• Trust and cherish the individual as well as a deep-seated confidence in the individual’sknowledge, talents and expertise.
© DKD Page 4125 December 2006 – 3RD JANUARY 2007
EXECUTING BLUE OCEAN STRATEGY
6. BUILD EXECUTION INTO STRATEGY6. BUILD EXECUTION INTO STRATEGY
EXECUTION CONSEQUENCES OF THE PRESENCE AND ABSENCE OF FAIR PROCESS IN STRATEGY MAKINGEXECUTION CONSEQUENCES OF THE PRESENCE AND ABSENCE OF FAIR PROCESS IN STRATEGY MAKING
FAIR PROCESS & BLUE OCEAN STRATEGYFAIR PROCESS & BLUE OCEAN STRATEGY
• Commitment, trust, and voluntary cooperation are not merely attitudes or behaviors. They areINTANGIBLE CAPITAL.
• When people have trust, they have heightened confidence in one another’s intentions and actions.• When people have commitment, they are even willing to override personal self-interest in the interests of
the company.• Commitment, trust, and voluntary cooperation allows companies to stand apart in the speed, quality, and
consistency of their execution and to implement strategic shifts fast at a low cost.
• Commitment, trust, and voluntary cooperation are not merely attitudes or behaviors. They areINTANGIBLE CAPITAL.
• When people have trust, they have heightened confidence in one another’s intentions and actions.• When people have commitment, they are even willing to override personal self-interest in the interests of
the company.• Commitment, trust, and voluntary cooperation allows companies to stand apart in the speed, quality, and
consistency of their execution and to implement strategic shifts fast at a low cost.
FAIRPROCESS
FAIRPROCESS
VIOLATION OF FAIRPROCESS
VIOLATION OF FAIRPROCESS
Intellectual &Emotional
Recognition
Intellectual &Emotional
Recognition
Intellectual &EmotionalIndignation
Intellectual &EmotionalIndignation
Trust andCommitment
Trust andCommitment
Distrust andResentment
Distrust andResentment
VoluntaryCooperation in
Strategy Execution
VoluntaryCooperation in
Strategy Execution
Refusal to ExecuteStrategy
Refusal to ExecuteStrategy
© DKD Page 4225 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
CONCLUSION
SUSTAINABILITY & RENEWAL
© DKD Page 4325 December 2006 – 3RD JANUARY 2007
CONCLUSION – THE SUSTAINABILITY AND RENEWAL OFBLUE OCEAN STRATEGY
CREATING BLUE OCEANS IS NOT A STATIC ACHIEVEMENT BUT A DYNAMICPROCESS
CREATING BLUE OCEANS IS NOT A STATIC ACHIEVEMENT BUT A DYNAMICPROCESS
BARRIERS TO IMITATION – A Blue Ocean Strategy brings with it considerable barriers to imitation.Some of these are operational and others are cognitive.
A Blue Ocean strategy will go without credible challenges for TEN to FIFTEEN years.
BARRIERS TO IMITATION – A Blue Ocean Strategy brings with it considerable barriers to imitation.Some of these are operational and others are cognitive.
A Blue Ocean strategy will go without credible challenges for TEN to FIFTEEN years.
• A Value-Innovation move does not make sense based on conventional strategic logic.• A Value-Innovation move does not make sense based on conventional strategic logic.
• Brand image conflict prevents companies from imitating as this would signal an invalidation ofcurrent business models.
• Brand image conflict prevents companies from imitating as this would signal an invalidation ofcurrent business models.
• Natural Monopoly blocks imitation when the size of the market cannot support another player.• Natural Monopoly blocks imitation when the size of the market cannot support another player.
• Patents of Legal Permits.• Patents of Legal Permits.
• The high volume generated by a value innovation leads to rapid cost advantages.• The high volume generated by a value innovation leads to rapid cost advantages.
• Network externalities also block companies from easily and credibly imitating.• Network externalities also block companies from easily and credibly imitating.
• Imitation often requires companies to make substantial changes to their existing businesspractices.
• Imitation often requires companies to make substantial changes to their existing businesspractices.
• When a company offers a leap in value, it rapidly earns brand buzz and a loyal following in themarket place.
• When a company offers a leap in value, it rapidly earns brand buzz and a loyal following in themarket place.
CNNCNN
THE BODYSHOP
THE BODYSHOP
KINEPOLISKINEPOLIS
VIAGRAVIAGRA
Wal-MartWal-Mart
E-BayE-Bay
SouthwestAirlines
SouthwestAirlines
Intuit’sQUICKEN
Intuit’sQUICKEN
Blue Ocean Strategy – A Systems approach that requires getting the strategic elements right &aligning them in an integral system to deliver value innovation.
Blue Ocean Strategy – A Systems approach that requires getting the strategic elements right &aligning them in an integral system to deliver value innovation.
© DKD Page 4425 December 2006 – 3RD JANUARY 2007
CONCLUSION – THE SUSTAINABILITY AND RENEWAL OFBLUE OCEAN STRATEGY
WHEN TO VALUE-INNOVATE AGAINWHEN TO VALUE-INNOVATE AGAIN
To avoid the trap of competing, you need to monitor value curves on the strategy canvas.Monitoring Value Curves signals when to value-innovate and when not to.
When your Vale Curve begins to converge with the competitors, you need to reach out for anotherBlue Ocean.
To avoid the trap of competing, you need to monitor value curves on the strategy canvas.Monitoring Value Curves signals when to value-innovate and when not to.
When your Vale Curve begins to converge with the competitors, you need to reach out for anotherBlue Ocean.
• Do not pursue another blueocean when your current offeringis still profitable.
• Do not pursue another blueocean when your current offeringis still profitable.
• If your company’s value curvestill has focus, divergence, and acompelling tagline.
• If your company’s value curvestill has focus, divergence, and acompelling tagline.
• Dominate the blue ocean of yourimitators for as long as possible.
• Dominate the blue ocean of yourimitators for as long as possible.
• THERE IS STILL A HUGE PROFIT STREAM• THERE IS STILL A HUGE PROFIT STREAM
• SHOULD FOCUS ON LENGTHENING, WIDENING &DDEPENING YOUR RENT STREAM THOUGHOPERATIONAL IMPROVEMENTS & GEOGRAPHICALEXPANSIONTO ACHIEVE MAXIMUM ECONOMIES OFSCALE & MARKET COVERAGE.
• SHOULD FOCUS ON LENGTHENING, WIDENING &DDEPENING YOUR RENT STREAM THOUGHOPERATIONAL IMPROVEMENTS & GEOGRAPHICALEXPANSIONTO ACHIEVE MAXIMUM ECONOMIES OFSCALE & MARKET COVERAGE.
• YOU SHOULD SWIM AS FAR AS POSSIBLE IN THE BLUEOCEAN, MAKING YOURSELF A MOVINNG TARGET,DISTANCING YOURSELF FROM THE EARLY IMITATORS& DISCOURAGING THEM IN THE PROCESS.
• YOU SHOULD SWIM AS FAR AS POSSIBLE IN THE BLUEOCEAN, MAKING YOURSELF A MOVINNG TARGET,DISTANCING YOURSELF FROM THE EARLY IMITATORS& DISCOURAGING THEM IN THE PROCESS.
Because Blue Oceans have always co-existed with Red Oceans, practical realities demand thatcompanies succeed in BOTH OCEANS and MASTER the STRATEGIES for BOTH.
Because Blue Oceans have always co-existed with Red Oceans, practical realities demand thatcompanies succeed in BOTH OCEANS and MASTER the STRATEGIES for BOTH.
© DKD Page 4525 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
CONCLUSION
MARKET DYNAMICS
© DKD Page 4625 December 2006 – 3RD JANUARY 2007
MARKET DYNAMICS OF VALUE-INNOVATIONP
RIC
E
QUANTITYQ1
P1
P2
Q2
D1
D2
y
x
a b
cd
e
h
f
g
LRAC1
LRAC2
DEMAND
Long-run Average Cost Curve
Capture the mass of target buyers from the outset andexpand the size of the market by offering radicallysuperior value at price points accessible to them.
Capture the mass of target buyers from the outset andexpand the size of the market by offering radicallysuperior value at price points accessible to them.
1. Value innovation radically increases theappeal of a product, shifting the demandcurve from D1 to D2.
2. The price is set strategically, shifted fromP1 to P2 to capture the mass buyers in theexpanded market.
3. This increases the quantity sold from Q1to Q2 and builds strong brand recognition,for unprecedented value.
5. The company engages in target costing tosimultaneously reduce the long-runaverage cost curve from LRAC1 toLRAC2 to expand its ability to profit and todiscourage free riding and imitation.Buyers receive a leap in value, shifting theconsumer surplus from axb to eyf.
6. The company earns a leap in profit andgrowth, shifting the profit zone from abcdto efgh.
7. The rapid brand recognition built by thecompany as a result of the unprecedentedvalue offered in the marketplace,combined with the simultaneous drive tolower costs, makes the competitionnearly irrelevant, and makes it hard tocatch up, as economies of scale,learning and increasing returns kick in.
1. Value innovation radically increases theappeal of a product, shifting the demandcurve from D1 to D2.
2. The price is set strategically, shifted fromP1 to P2 to capture the mass buyers in theexpanded market.
3. This increases the quantity sold from Q1to Q2 and builds strong brand recognition,for unprecedented value.
5. The company engages in target costing tosimultaneously reduce the long-runaverage cost curve from LRAC1 toLRAC2 to expand its ability to profit and todiscourage free riding and imitation.Buyers receive a leap in value, shifting theconsumer surplus from axb to eyf.
6. The company earns a leap in profit andgrowth, shifting the profit zone from abcdto efgh.
7. The rapid brand recognition built by thecompany as a result of the unprecedentedvalue offered in the marketplace,combined with the simultaneous drive tolower costs, makes the competitionnearly irrelevant, and makes it hard tocatch up, as economies of scale,learning and increasing returns kick in.
THE EMERGENCE OF A WIN-WIN MARKET DYNAMICSTHE EMERGENCE OF A WIN-WIN MARKET DYNAMICS
© DKD Page 4725 December 2006 – 3RD JANUARY 2007
BLUE OCEAN STRATEGY
APLLICATION
STRATEGY CANVAS
© DKD Page 4825 December 2006 – 3RD JANUARY 2007
AUTOMOTIVE INDUSTRY STRATEGY CANVAS
1.
Alli
an
ces
&C
on
solid
atio
n
2.
Glo
balM
ark
et
3.
Safe
ty&
Em
issio
nR
egu
latio
ns
4.
Te
chno
logy
and
Inno
vatio
ns
5.
Le
velof
Inve
stm
en
t
6.
Re
turn
of
Inve
stm
en
t
7.
Ma
rgin
Le
vels
8.
Pla
tfo
rmE
ngin
ee
rin
g
9.
Mo
du
lar
En
gin
ee
rin
g
10
.1
stT
ier
Sup
plie
rs&
Vendo
rs
11
.Le
velof
Ou
t-sou
rcin
g
12
.N
um
be
ro
fM
od
els
13
.P
rod
uctL
ife-C
ycle
s
14
.In
tegra
ted
Lo
gis
tics
15
.In
tegra
ted
Fin
an
cin
g
16
.M
ark
et
/C
usto
me
rO
rie
nta
tion
(CS
I)
17
.D
om
estic
Ma
rke
tP
rote
ctio
n
HIGH
LOW
MID
PROTON
INDUSTRY(Worldwide)
M’SIANCOMPETITOR
18
.B
ran
d&
Em
otio
n
© DKD Page 4925 December 2006 – 3RD JANUARY 2007
PROTON STRATEGY CANVAS
Providing Customer-Oriented Products and Ancillary Services that areSatisfied through the Integration of Friendly Purchase and Ownership
Experience
Providing Customer-Oriented Products and Ancillary Services that areSatisfied through the Integration of Friendly Purchase and Ownership
Experience
HIGH(100)
LOW(0)
CL
AR
ITY
OF
VIS
ION
&S
TR
AT
EG
Y
CL
AR
ITY
OF
MIS
SIO
NO
BJE
CT
IVE
S
PR
OF
IT-
OR
IEN
TA
TIO
N
CU
ST
OM
ER
-O
RIE
NT
AT
ION
TE
AM
WO
RK
(CR
OS
S-
FU
NC
TIO
NA
LT
EA
MS
)
SE
NS
EO
FU
RG
EN
CY
TR
AN
SP
AR
EN
CY
CL
AR
ITY
OF
CO
MM
UN
ICA
TIO
N&
EN
GA
GE
ME
NT
1 2 3 4 5 6 7 8 9 10
CO
ST
OR
IEN
TA
TIO
N
11 12 13
TIM
EO
RIE
NT
AT
ION
DE
CIS
ION
MA
KIN
G&
EX
EC
UT
ION
HU
MA
NC
AP
ITA
LD
EV
EL
OP
ME
NT
AU
TH
OR
ITY
14
TE
CH
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AL
&E
NG
INE
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DE
VE
LO
PM
EN
T
15
MA
NU
FA
CU
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GC
AP
AB
ILIT
Y
16
INT
ER
NA
LE
QU
ITY
17
NA
TIO
NA
LC
AR
AV
ER
AG
E
CURRENT
TO-BE
© DKD Page 5025 December 2006 – 3RD JANUARY 2007
PROTON PRODUCT STRATEGY CANVAS(VALUE-CURVES)
Providing Value / Customer-Oriented ProductsProviding Value / Customer-Oriented Products
ELIMINATE RAISE
1. NATIONAL CAR “ASSOCIATION”
1. CLARITY OF VISION & STRATEGY2. CLARITY OF MISSION OBJECTIVES3. PROFIT ORIENTATION4. SENSE OF URGENCY5. COMMUNICATION CLARITY & ENGAGEMENT6. COST ORIENTATION7. TIME ORIENTATION8. DECISION MAKING & EXECUTION9. HUMAN CAPITAL DEVELOPMENT10. TECHNICAL & ENGINEERING DEVELOPMENT11. MANUFACTURING CAPABILITY
REDUCE CREATE
1. CUSTOMER ORIENTATION (VALUE TO CUSTOMER)2. TEAMWORK (CROSS-FUNCTIONAL TEAMS) –
Business Growth, Purchasing, Manufacturing &Logistics, Research & Development, Sales &Marketing, General Administration Services, Finance,Product Phase-out and Organization & Value-Added.
3. TRANSPARENCY4. AUTHORITY5. INTERNAL EQUITY
© DKD Page 5125 December 2006 – 3RD JANUARY 2007
PROTON PRODUCT STRATEGY CANVAS(VALUE-CURVES)
Providing Value / Customer-Oriented ProductsProviding Value / Customer-Oriented Products
PR
ICE
QU
AL
ITY
SA
FE
TY
FE
AT
UR
ES
(CR
AS
H–
NC
AP
)
EN
VIR
ON
ME
NT &
EM
ISS
ION
RE
LIA
BIL
ITY
&W
AR
RA
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CG
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EN
T(C
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FL
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VA
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EF
OR
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Y
1 2 3 4 5 6 7 8 9 10 11 12
HIGH(100)
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ET
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ER
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E
© DKD Page 5225 December 2006 – 3RD JANUARY 2007
PROTON PRODUCT STRATEGY CANVAS(VALUE-CURVES)
Providing Value / Customer-Oriented ProductsProviding Value / Customer-Oriented Products
ELIMINATE RAISE
1. CUSTOMIZATION2. NATIONAL CAR IDENTITY
1. QUALITY2. SAFETY FEATURES3. ENVIRONMENT4. PERFORMANCE & FUN5. RELIABILITY (TGW & TCGW)6. MAINTAINABILITY7. MARGIN
REDUCE CREATE
1. VALUE FOR MONEY2. PRICE (COST)
1. MORE MODEL RANGE (SpecificallyLow-Cost MPV / Mini-Van)
2. CONTINUOUS IMPROVEMENT (CC,FL, FMC)
3. ERGONOMICS4. VALUE TO CUSTOMER
© DKD Page 5325 December 2006 – 3RD JANUARY 2007
1.
Manufa
ctu
ring
Cost
2.
Inve
nto
ryC
ycle
3.
Ord
er
toD
eliv
ery
4.
Manufa
ctu
ring
Pro
cess
&P
roductQ
ualit
y5.
Effective
Utiliz
ation
of
Resourc
es
6.
Vendor
Supply
Capabili
ty
7.
Continuous
Impro
vem
ent
8.
Org
aniz
ation
Response
9.
3In
tegra
ted
Pla
nts
10.
2A
mort
ized
Pla
nts
11.
Phys
ical
Pro
toty
pin
gF
acili
ties
13.
Outs
ourc
ing
(Vendor)
Part
ners
hip
s)
HIG
HL
OW
MID
14.
Sta
ndard
ization
Leve
l
12.
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ducts
/Com
po
nentR
elia
bili
ty
15.
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tics
MANUFACTURING STRATEGY CANVAS(VALUE-CURVES)
Providing Manufacturing Services Satisfying Customers through EffectiveManagement of Resources Ensuring Sustainable Growth
Providing Manufacturing Services Satisfying Customers through EffectiveManagement of Resources Ensuring Sustainable Growth
© DKD Page 5425 December 2006 – 3RD JANUARY 2007
PROTON PRODUCT STRATEGY CANVAS(VALUE-CURVES)
Providing Value / Customer-Oriented ProductsProviding Value / Customer-Oriented Products
ELIMINATE RAISE
1. MFG PROCESS & PRODUCT QUALITY2. EFFECTIVE UTILIZATION OF RESOURCES3. VENDOR SUPPLY CAPABILITY4. CONTINUOUS IMPROVEMENT5. ORGANIZATIONAL RESPONSE6. 3 INTEGRATED PLANTS7. 2 AMORTIZED PLANTS8. PHYSICAL PROTOTYPING FACILITIES9. PRODUCT & COMPONENTS RELIABILITY
REDUCE CREATE
1. MFG COST2. INVENTORY CYCLE3. ORDER TO DELIVERY
1. OUTSOURCING (VENDOR PARTNERSHIPS)2. STANDARDIZATION LEVELS3. INTEGRATED LOGISTICS
© DKD Page 5525 December 2006 – 3RD JANUARY 2007
MANUFACTURING ENGINEERING STRATEGY CANVAS
Providing Manufacturing Engineering Services Satisfying Customers throughEffective Integration of Processes and Facilities
Providing Manufacturing Engineering Services Satisfying Customers throughEffective Integration of Processes and Facilities
HIGH(100)
LOW(0)
INV
ES
TM
EN
TL
EV
EL
TE
CH
NIC
AL
&E
NG
INE
ER
ING
ST
AN
DA
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S
PR
OC
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OG
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N
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CT
OR
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IER
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RT
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RS
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IVE
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ILIZ
AT
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TS
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)
OR
DE
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IVE
RY
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IBIL
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ME
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13
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ION
AV
ER
AG
E
© DKD Page 5625 December 2006 – 3RD JANUARY 2007
PROTON PRODUCT STRATEGY CANVAS(VALUE-CURVES)
Providing Value / Customer-Oriented ProductsProviding Value / Customer-Oriented Products
ELIMINATE RAISE
1. PROCESS TECHNOLOGY INNOVATION2. EFFECTIVE UTILIZATION OF RESOURCES3. FLEXIBILITY LEVELS4. PROJECT MANAGEMENT & CONTROL5. ORGANIZATIONAL RESPONSE6. OEM EXPERIENCE7. PLC APPLICATION8. ONE-STOP SOLUTION
REDUCE CREATE
1. INVESTMENT LEVELS2. ORDER TO DELIVERY TIME3. COST OF OWNERSHIP
1. TECHNICAL & ENGINEERING STANDARDS2. CONTRACTOOR & SUPPLIER
PARTNERSHIPS
© DKD Page 575th JANUARY 2007
PROTON’S 2006 SITUATION VS. NISSAN’S1999 SITUATION
1.
Cla
rity
of
Vis
ion
&S
tra
tegy
2.
Cla
rity
of
Mis
sio
nO
bje
ctive
s
3.
Le
velof
Deb
t(P
rofit
Orie
nta
tion
)
4.
Cu
sto
me
rO
rien
tation
5.
Sen
seof
Urg
en
cy
6.
Com
pa
rtm
en
taliz
ation
(La
ck
of
Cro
ss
Fu
nctio
na
lT
ea
ms)
7.
Co
st
Orien
tation
8.
Com
mun
ica
tion
Tra
nsp
are
ncy
&E
nga
gem
en
t9
.D
ecis
ion
Ma
kin
g&
Exe
cu
tion
Eff
icie
ncy
10
.S
upp
lier
“Ke
ire
tsu
”(N
um
be
rof
Supp
liers
)
11
.C
apa
city
Utiliz
atio
n
12
.N
um
be
ro
fP
latf
orm
s
13
.N
um
be
ro
fP
rodu
ct
Life
-C
ycle
s
14
.M
anufa
ctu
rin
gS
yste
mC
apa
bili
ty
15
.P
ers
onne
lM
otiva
tion
16
.R
&D
and
Te
chn
olo
gy
Inno
vatio
n
17
.S
ale
s,
Ma
rke
ting
&D
istr
ibu
tion
Eff
icie
ncy
18
.R
ea
chof
Glo
ba
lM
ark
ets
HIG
HL
OW
MID
19
.S
tra
tegic
Alli
an
ce
NISSAN - 1997
SOURCE: SHIFTInside Nissan’s Historic Revival
Carlos Ghosn – Jan 2005
PROTON - 2006
© DKD Page 585th JANUARY 2007
PROTON’S FUTURE REVIVAL IF IT WERETO EMULATE NISSAN’S HISTORIC REVIVAL
1.
Cla
rity
of
Vis
ion
&S
tra
tegy
2.
Cla
rity
of
Mis
sio
nO
bje
ctive
s
3.
Le
velof
Deb
t(P
rofit
Orie
nta
tion
)
4.
Cu
sto
me
rO
rien
tation
5.
Sen
seof
Urg
en
cy
6.
Com
pa
rtm
en
taliz
ation
(La
ck
of
Cro
ss
Fu
nctio
na
lT
ea
ms)
7.
Co
st
Orien
tation
8.
Com
mun
ica
tion
Tra
nsp
are
ncy
&E
nga
gem
en
t9
.D
ecis
ion
Ma
kin
g&
Exe
cu
tion
Eff
icie
ncy
10
.S
upp
lier
“Ke
ire
tsu
”(N
um
be
rof
Supp
liers
)
11
.C
apa
city
Utiliz
atio
n
12
.N
um
be
ro
fP
latf
orm
s
13
.N
um
be
ro
fP
rodu
ct
Life
-C
ycle
s
14
.M
anufa
ctu
rin
gS
yste
mC
apa
bili
ty
15
.P
ers
onne
lM
otiva
tion
16
.R
&D
and
Te
chn
olo
gy
Inno
vatio
n
17
.S
ale
s,
Ma
rke
ting
&D
istr
ibu
tion
Eff
icie
ncy
18
.R
ea
chof
Glo
ba
lM
ark
ets
HIG
HL
OW
MID
19
.S
tra
tegic
Alli
an
ce
NISSAN - 2004
PROTON - 2006
PRIORIY FOCUSAREAS FOR ACTION
© DKD Page 595th JANUARY 2007
PROTON REVIVAL STRATEGY CANVAS(VALUE-CURVES)
3. Level of Debt (Profit Orientation)
6. Compartmentalization (Lack of CrossFunctional Teams)
10. Supplier “Keiretsu” (Number ofSuppliers)
12. Number of Platforms
1. Clarity of Vision & Strategy
2. Clarity of Mission Objectives
4. Customer Orientation
5. Sense of Urgency
7. Cost Orientation
9. Decision Making & Execution Efficiency
11. Capacity Utilization
14. Manufacturing System Capability
15. Personnel Motivation
16. R&D and Technology Innovation
17. Sales, Marketing & Distribution Efficiency
8. Communication Transparency &Engagement
13. Number of Product Life-Cycles
18. Reach of Global Markets
19. Strategic Alliance
ELIMINATE RAISE
REDUCE CREATE
© DKD Page 605th JANUARY 2007
PROTON’S FUTURE REVIVAL IF IT WERETO EMULATE NISSAN’S HISTORIC REVIVAL
1.
Le
velof
Deb
t(P
rofit
Orie
nta
tion
)2
.C
om
pa
rtm
en
taliz
ation
(La
ck
of
Cro
ss
Fu
nctio
na
lT
ea
ms)
3.
Supp
lier
“Ke
ire
tsu
”(N
um
be
rof
Supp
liers
)
4.
Num
be
ro
fP
latf
orm
5.
Cla
rity
of
Vis
ion
and
Str
ate
gy
6.
Cla
rity
of
Mis
sio
nO
bje
ctive
s
7.
Cu
sto
me
rO
rien
tation
8.
Sen
seof
Urg
en
cy
En
ga
gem
en
t
9.
Co
st
Orien
tation
10
.D
ecis
ion
Ma
kin
gand
Exe
cu
tion
Eff
icie
ncy
11
.C
apa
city
Utiliz
atio
n
12
.M
anufa
ctu
rin
gS
yste
mC
apa
bili
ty
13
.P
ers
onne
lM
otiva
tion
14
.R
&D
&T
ech
nolo
gy
Inno
vatio
n
15
.S
ale
s,
Ma
rke
ting
&D
istr
ibu
tion
Eff
icie
ncy
16
.C
om
mun
ica
tion
Tra
nsp
are
ncy
&E
nga
gem
en
t17
.N
um
be
ro
fP
rodu
ct
Life
-Cyc
les
18
.R
ea
chof
Glo
ba
lM
ark
ets
HIG
HL
OW
MID
19
.S
tra
tegic
Alli
an
ce
PRIORIY FOCUSAREAS FOR ACTION
ELIMINATE
REDUCE
RAISE
CREATE
“TO-BE”