value creation and

blue ocean strategy in the WAM

Value Innovation

Blue Oceans vs Red Oceans

Building Your Value Factors & Four Actions Framework

TAKE OUTS

•BRAIN GYM

•THE CONCEPT OF VALUE INNOVATION

•UNDERSTANDING BLUE OCEAN STRATEGY

•FOUR ACTIONS FRAMEWORK

•BUILDING YOUR VALUE FACTORS

BODY HACK

Thinking Partnership

• Tell someone about a recent purchase you have been extremely happy with and one which you think added a lot of value to you. Why? What was the value it added?

Value is Multiple

VALUE INNOVATION

PERCEIVED VALUE

PRICE

COST

Moving away from Strategy as the territory of War

Red and Blue Ocean Strategy

Red Ocean Strategy

Compete in existing market spaceBeat the competitionExploit existing demandMake the Value/Cost trade-offAlign the whole system of a company’s activities with its strategic choice of quality differentiation or low cost

Blue Ocean StrategyCreate uncontested market spaceMake competition irrelevantCreate & capture new demandBreak the Value/Cost trade-offAlign the whole system of a company’s activities with its strategic choice of quality differentiation and low cost

Value Innovation for [Yellowtail]

0

1

2

3

4

5

Price

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Premium Wines Budget Wines Yellow Tail

“The most powerful family owned wine brand in Australia”

Intangible Business (2009)

“Fifth most powerful wine brand in the world”

Food Week (2008)

Value Innovation For Cirque De Soleil

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Price

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HIGH

LOW

Ringling Bros. and Barnum Bailey Value Curve

Cirque De Soleil Value CurveSmaller

Regional Circuses

Strategy Canvas• Plot value factors against level of value offered

Level of

value

Value factors

high

low

e.g. pric

e

Four Actions Framework

ELIMINATE RAISE

REDUCE CREATE

(Kim & Mauborgne, 2005)

Four Actions Framework

Cost Structure ReductionELIMINATE

What costs a lot and does not seem to add much more value?

REDUCEWhere can you decrease emphasis?

Buyer ValueRAISE

Which current value offering should you increase, or add to? What can you increase that does not cost much, but raises the

perceived value of what you sell considerably?

CREATEWhat would your customer really appreciate that is not being offered in your industry at the moment? Is there any other

value “factor” you could add or create which would make you stand out from everybody else who does what you do?

Value Innovation

• Are you seeing the whole picture? Ladder of Inference

• Value Factors – What are you assuming to be true which is not necessarily so?

VALUE INNOVATION

How do you build VALUE?

Perceived Benefit – Cost = Value Innovation

Value Innovation

BUYER VALUE

COSTS

VALUE INNOVATION

Six Paths FrameworkTo reconstruct market boundaries, look

across:-1. Alternatives: Ch/air/bag, Art, Second

hand stores, online etc2. Strategic groups – what does the

premium market offer which would cost little to add

3. Chain of buyers incl. strategic network

4. Complementary products & services – coffee shop, meal coupons

5. Functional or emotional appeal to buyers

6. Time (Kim & Mauborgne, 2005)

INSIGHT USE UNCLEARINSIGHT USE