The Blue Ocean Strategy

by: Kim and Mauborgne

Presented by: Evan Uy

Outline

• Introduction• The Red Ocean• Blue Ocean Tools and Frameworks• Blue Ocean Principles– Formulation– Execution

Introduction

How to Create Uncontested Market Space and Make the Competition Irrelevant

Break out of the red ocean of bloody competition

The only way to beat the competition is to STOP TRYING to beat the competition

Creating Blue Oceans

Value Innovation - a LEAP in value - EQUAL EMPHASIS on value and innovation - Innovation with Utility, price and cost position - simultaneously seeking DIFFERENTIATION and LOW COST

RED vs BLUE Oceans

Red Ocean Blue Ocean

Compete in existing market Space

Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the value-cost trade-off

Break the value-cost trade-off

Differentiation OR low cost

Differentiation AND low cost

Blue OceanTools and Frameworks

The Strategy Canvass

• Captures Current State of Play in the Known Market Space

• Allows you to understand:–Where the competition is investing– The factors the industry competes on

in products, service and delivery–What customers receive from existing

competitive offering on the market

Sample Strategy Canvas: US Wine Industry

Four Actions Framework

New Value Curve

Reduce

Create

Raise

Eliminate

Which factors should be REDUCED WELL BELOW the industry’s standard?

Which factors should be CREATED that the industryHas never offered?

Which factors should be RAISED WELL ABOVE theIndustry’s standard?

Which of the factors That the industry takes For granted should Be ELIMINATED?

Sample Four Actions FM:

Sample Strategy Canvass:

-Focus-Divergence-Compelling Tagline

Blue Ocean PrinciplesFormulation

• Reconstruct Market Boundaries

• Focus on Big Picture, not the Numbers

• Reach Beyond Existing Demands

• Get the Strategic Sequence Right

Execution

• Overcome Key Organizational Hurdles

• Build Execution into Strategy

Formulating Blue Oceans1) Reconstruct Market Boundaries

• Look across ALTERNATIVE INDUSTRIES- NetJets

• Look across STRATEGIC GROUP within industry – German Car Diesel

• Redefine the industry BUYER GROUP– Pharmaceutical

• Look across COMPLEMENTARY PRODUCTS/SERVICE– Bookstore-Cafe

• Look across FUNCTIONAL or EMOTIONAL appeal to buyers – Self-cook

• Participate in EXTERNAL TRENDS over time – Healthy lifestyle

Formulating Blue Oceans2) Focus on Big Picture, not the Numbers

• Visual Awakening

• Visual Exploration

• Visual Strategic Fair

• Visual Communication

Formulating Blue Oceans3) Reach Beyond Existing Demand

How??

Target Non-customers!

Formulating Blue Oceans3) Reach Beyond Existing Demand

Unexplored

Refusing

Soon-to-be At the edge of your market

Consciously choose against your market

In distant markets from yours

current

Formulating Blue Oceans4) Get the Strategic Sequence Right

Executing Blue Ocean Strategy

Executing Blue Ocean Strategy

5) Overcome Key Organizational Hurdles

6) Build Execution Strategy

5) Overcome Key Organizational Hurdles

Let managers experienceHarsh realities First Hand!

- Put resources from Cold Spot to Hot Spots- Horse Trading

Zoom in on KingPins and put them in FishbowlAtomize to the org to change itself

-Leverage your Angels;Silence you Devil-secure a consigliore in top mgt

5) Overcome Key Organizational Hurdles

6) Build Execution Strategy – Fair Process

Entrepreneurs CREATE Blue Oceans

 Kim, W. Chan; Mauborgne, Renée. Blue Ocean Strategy: How to Create Uncontested Market Space and Make

Competition Irrelevant. Harvard Business Press.

The End