TOC and The Blue Ocean Shift: A Perfect Match · 2020. 8. 24. · Recap: Blue Ocean Strategy New...

© 2020 TOCICO. All Rights Reserved.

2020 TOCICO Virtual Conference

Presented by: Humberto R. BaptistaJune 2020

Reaching the Goal2020 TOCICO Virtual Conference

TOC and The Blue Ocean Shift: A Perfect Match



Content

• Evolution of Blue Ocean, Blue Ocean Shift and Viable Vision

• The Elements of Blue Ocean Shift• Limitations and shortcommings• TOC powered Blue Ocean Shift

Obs: between [ and ] are my observations



Blue Ocean Concept

There are many attempts at “Unified Theory” of successful business• Many quacks along the wayAmong the solid takes we´ll check here:• Blue Ocean and Viable Vision



History• 1999 – Satellite Program (SLP or

Self Learning Program) – Eli Goldratt– Session 8: Strategy and Tactics

• ~2002: Viable Vision – Eli Goldratt– “Total sales into net profits in 4 years or less”– Significantly add value to shareholders...

Grow

th

Stability

t

P



History• 2004: Blue Ocean Strategy - W.

Chan Kim and Renée Mauborgne– “Create Uncontested Market Space and Make

the Competition Irrelevant”

• 2017: Blue Ocean Shift - W. Chan Kim and Renée Mauborgne– “Proven Steps to Inspire Confidence and Seize

New Growth”



A brief Recap of VV and Blue OceanHow we’d got here?



Recap: Satellite Program• (renamed Self Learning

Program – SLP)• Reframed “The Goal”:• “Triple Goal”• Current definition

used in VV

Make More Money NAWAITF

Provide a secure and satisfying

environment to employees

NAWAITF

Provide satisfaction to the

market [place] NAWAITF



Recap: Satellite Program• Process of On Going Improvement Cloud

Putcompany on

a POOGI

Induce people toimprove

Convert local improvements intobottom line results

Do not lay off People

Lay off people in departments wich have

improved the most



Recap: Satellite Program• Concepts introduced (and explained), ex:

Decisive Competitive Edge (DCE)

Segment the market via

customer needs

Segment the market not your

resources

To adjust price is relatively easy

for competition

To change a rooted policy is difficult for

the competitionBuild

flexibility

Markets will continue to

oscillate

Provide a secure and satisfying environment to employees NAWAITF

Don’t take 100% of any market

segment…



Recap: VVFirst defined as a process to:• “Total sales into net profits in 4 years or less”Currently:• “The Company becomes an ever flourishing

company” (growth in the red (exponential) curve and stability on the green (logarithmic) curve)



Recap: VVOrganized in Levels:

Level Market Offer Action

1 Current Current Improve operations

2 Current New Improve operations & Sales/Marketing

3 New Current Improve Sales/Marketing (?)

4 New New Improve operations & Sales/Marketing

Too high risk (yet)

RISK



Recap: VVInitially based on 4 generic templates:1. Zycon / Reliable and Rapid Response (RRR)2. Projects (selling them)3. Consumer Goods (MTA)4. Pay Per Click



Recap: VV & S&TsThe difficulties in organizing and communicating such projects led to (by Oded Cohen´s suggestion) to the use of the Strategy and Tactics Trees (S&Ts) to document, communicate and track implementations

Build Capitalize Sustain



Recap: Blue Ocean Strategy

Red OceanWaters soaked with the

blood of competitors(competition hurts)

Blue OceanWaters where you sail alone (competition is

irrelevant)

x




Value

Cost

Value Innovation

Simultaneous pursuit of Differentiation and Low Cost

Blue Ocean

High Value Perception

High finantial efficiency

Invest in Differentiation

Control and cut costs




New Value Curve

1.Eliminatefactors

2. Reducefactors below

usual

3. Raisefactors well above usual

4. Createfactors never

offered

Four Actions Framework Strategy Canvas

Company

Factor1

Factor2

Factor3

Factor4

Factor5

Factor6

Competitors

Better

Worse1 2

3 4



Recap: VV + Blue Ocean Strategy

Company

Factor1 Factor2 Factor3 Factor4 Factor5 Factor6

Competitors

Better

Worse

The way to get a DCE: to satisfy one significant Market need to the point no significant competitor can [while keeping the other factors on current levels]



The Blue Ocean question

• How?• For many years the Concept was recieved with

teh question: “How can I do it?”• The VV Templates and mechanics are na

answer• And the Blue Ocean Shift is another.



Blue Ocean Shift & TOC

a brief description + TOC additions and parallels



Blue Ocean Shift• Key Components [pillars]:

Blue Ocean Perspective

Market-Creating Tools with GuidanceHumanness in the Process

A SuccessfulBlue Ocean Shift



Blue Ocean ShiftAtomization

Firsthand Discovery

Fair Process

Breaking Down “too big” challenges to enable action and confidence building

HmHumanness

1

12.011

People observe things to understand reality and conclude change is necessary

Recognize people’s Worth, builds trust and inspire voluntary cooperation

Ambitious Objective(CCPM?)

Gemba, CRT

Respect, Quasi-socratic



Blue Ocean Shift• Five step process:1. Get Started2. Understand Where You Are Now3. Imagine Where You Could Be4. Find How You Get There5. Make your Move

~What to Change

What to Change To

~ How to Cause the Change

Almost each step involves going to the rest of the company and showing the results and logic of the step



BOS-1: Get Started

• Right Place to Start– Pioneer-Migrator-Settler map

• Right Blue Ocean Team

Assumption: it is something that will start as part of the

company and then grow. Compare with VV



BOS-1: Get Started

• Pioneer-Migrator-Settler map– Per product /

offering

PioneerValue Innovation

MigratorValue Improvement

SettlerValue Imitation

1

2

3

5

4

6

Area = revenue

Great view. Care must be taken with “Value”: it is only in the eyes

of the Customer.TOC: which limitation is alleviated/eliminated?



BOS-2: Understand Where You Are Now

• Get clear about the current state of play– Strategy Canvas (as seen before)

• See and easily agree on the need for the shiftNot only the BOS team, but the rest of the company as well is involved in raising objections (negative radar).This is to ensure level 2/3 (direction

of the solution & components) buy-in



BOS-2: Understand Where You Are Now

Pioneer-Migrator-Settler

MapStrategy Canvas

Details

Both look at the value of offerings, the second one breaking it down (per offering) in its constituents

Also both can display current or future realities.

The canvas also demands a “Tagline”, one-liner?



BOS-3: Imagine Where You Could Be

• Discover the pains points of buyers imposed by the industry– Buyer Utility Map

• Discovering an Ocean of Noncustomers– The Three Tiers of Noncustomers



BOS-3: Imagine Where You Could Be• Buyer Utility Map

Lever \ Stage Purchase Delivery Use Supplements Maintenance Disposal

Customer Productivity X X

Simplicity

Convenience O O

Risk Reduction X

Fun & Image X

Environmental Friendliness X

“X” marks blocks [UDEs]

to value“O” marks

where industry currently focus



BOS-3: Imagine Where You Could Be

• Buyer Utility Map

Forces the deepening of the Customer’s point of view

Each cell is evaluated with:1. What is the biggest

block to customer in this cell?

2. What are the key reasons for this block?

Focus on the largest (Obstacle or UDE)

Try and grasp the cause and effect behind it.

While at the same time retaining the big picture



BOS-3: Imagine Where You Could Be• The Three Tiers of Noncustomers

Third Tier

Second Tier

First Tier

[Tier Zero]

• Unexplored noncustomers

• Refusing noncustomers

• Soon to be [quasi] noncustomers

• Current market/IndustryYou



BOS-3: Imagine Where You Could Be• The Three Tiers of Noncustomers

• Unexplored noncustomers

• Refusing noncustomers

• Soon to be [quasi] noncustomers

• Current market/Industry

Cloud: oscillating between customer and not

Cloud: stuck in the noncustomer side for known reasons

Cloud: what cloud can our offer evaporate for our customers?

If we draw the cloud of each, the dynamics becomes explicit.



BOS-4: Find How You Get There

• Reconstructing Market Boundaries –Systematically– Six Paths Framework

• Developing Alternative Blue Ocean Opportunities– Four Actions Framework (as seen before)



BOS-4: Find How You Get There• Six Paths Framework: Look across…

New Value-Cost

Frontier

... alternative industries1

... strategic groups in your industry2

... the chain of buyers and redefine the buyer group3... complementary products

and service offerings 4

Rethink functional-emotional orientation of your industry 5

Participate in shaping external trends over time 6



BOS-4: Find How You Get ThereNew

Value-Cost Frontier

Blue Ocean

High Value Perception

High finantial efficiency

Invest in Differentiation

Control and cut costs

Six Paths Framework

Flying Pig injection



BOS-4: Find How You Get There

New Value Curve

Eliminatefactors

Reducefactors below

usual

Raise factors well above

usual

Create factors never offered

Four Actions Framework

No systematic connection with existing resources/structures in the

company (maybe leading to segment the resources…)

Also the exploitation of existing capabilities is not explored:

Can we raise/create factors by changing how we utilize current

assets?



BOS-5: Make your Move• Selecting Your Blue Ocean Move and

Conducting Rapid Market Tests– Blue Ocean fair, Rapid Testing, Refining

• Finalizing the move– Business model & Win-Win for Company &

Customers• Launch and roll out the move



BOS-5: Make your Move• Selecting Your Blue

Ocean Move and Conducting Rapid Market Tests

• Finalizing the move• Launch and roll out

the move

Selection is not connected with time and resources, Hopefully the execution can rise up to the

challenge, but it is a risk.

Prototyping and learning

How to approach the roll out? Focus? And CCPM? Any deep-rooted assumptions/policies are still in the

way?



TOC & BOSSynergy in action



What can be done together?• BOS tries to focus (mostly pareto based), but with TOC

we can focus much more (constraint based)• BOS does not have logical tools for understanding and

communication. TP?• The lessons of segmenting the market but not oneself

can enhance significantly the success/risk ratio• BOS stresses the Humanness of the process while the

standard VV S&Ts do not.



What can be done together?TOC DCE-BCS framework:

Decisive Competitive Edge (DCE)Satisfy one significant need in a way no

significant competitor can…

BuildLogistical,

etc. capabilities

to deliver the DCE

CapitalizeMarketing and Sales

adapted to extract value

from DCE

SustainHow to grow

profitably and

maintaining the DCE

BOS stresses the “satisfy”, but not the “no competitor” part. The type of cloud it tries to evaporate may or not deter competitors

BOS: No explicit

support, suggestions on how the team may

do it.

BOS: More emphasis

on Marketing.

Little to nothing on

sales.

BOS: Nothing on this part…



What can be done together?• TOC Brings to BOS– DCE concept: how to build and secure it– Build: logistical solutions– Capitalize: TOC Marketing and Sales, SPE, etc.– Sustain: Load control, Buffer Management,

Logistical POOGI, Financial Compass (and SLP 8)



Possibilities Ahead



Some possibilities

• BOS S&T anyone?• Humanness applied (see work of James

Powell, ViaGo, etc.)• Turbo implementations• New DCEs process from BOS



About Humberto• Defender of the Humane• Husband and father changing the world one

person at a time• Scientist seeking to apply science to

people’s endeavors• Hunter of hidden assumptions• Teacher, student and colleague• Strong believer of values over tools• Practicing atheist and skeptic

[email protected]

http://vectis-solutions.com

TOC and The Blue Ocean Shift: A Perfect Match · 2020. 8. 24. · Recap: Blue Ocean Strategy New...

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