Blue Ocean Strategy Chapter 2 Analytical Tools Frameworks

Blue Ocean Strategy Chapter 2 Analytical Tools & Frameworks Team 6: Thor Fink Teddy Lathrop John Barron Parker Kyle Kunkel

Chapter Overview � The Strategy Canvas � Four � The Actions Framework Eliminate-Reduce-Raise-Create Grid � Characteristics of a Good Strategy

The Strategy Canvas � “Effective blue ocean strategy should be about risk minimization and not risk taking” � Strategy Canvas: a diagnostic and an action framework for building a compelling blue ocean strategy. � Captures current state of play in the known market space.

Shifting Strategy Canvas � Reorienting your strategy focus from competitors to alternatives � customers to noncustomers � Casella Wine discovered that the mass of American Adults saw wine as a turnoff � Casella Wine Creates [yellow tail] using FAF

Four Actions Framework 2. Reduce Which factors should be reduced well below the industry standard? 1. Eliminate Which factors that the industry takes for granted should be eliminated? A New Value Curve 3. Raise Which factors should be raised well above the industry standard? 4. Create Which factors should be created that the industry has not seen before?

Applying FAF to Strategy Canvas � Casella created a wine assessable to everyone � [yellow tail] became the number one imported wine in the United States. � By applying FAF to the strategy canvas, Casella was able to become the fastest growing wine brand in the US and Australia.

Focusing on Noncustomers � Casella focused on non wine drinkers, creating a less complicated taste, making it sweeter and easier to drink. � Made wines selection process easier by offering only two � [yellow tail] didn’t take years to develop an appreciation for traditional and premium wines, increasing its popularity in the US. � ◦ ◦ ◦ Created three new nonconventional factors in the US wine industry: Easy Drinking Easy to Select Fun and Adventure

Eliminate-Reduce-Create Grid � [yellow tails] Grid: Eliminate • Enological terminology and distinctions Raise • Price versus budget wines • Aging qualities • Above the line marketing Reduce • Wine complexity Create • Easy drinking • Wine range • Ease of selection • Vineyard prestige • Fun and adventure

Eliminate-Reduce-Create Grid � Cirque du Soleil Eliminate • Star performers Raise • Unique venue • Animal shows • Multiple show arenas Reduce Create • Fun and humor • Theme • Thrill and danger • Refined environment • Multiple productions • Artistic music and dance

3 Characteristics of a Good Strategy � Focus � Divergence � Compelling Tagline

Focus � By directing their attention to non wine drinkers, [yellow tail] was able to create a blue ocean by focusing on the noncustomers. � Southwest emphasizes three factors ◦ Friendly service ◦ Speed ◦ Frequent Point to Point departures

Divergence � Applying the four actions of eliminating, reducing, raising, and creating, they differentiate their profiles from the industry’s average. � Southwest pioneered point-to-point travel between midsized cities. � [yellow tail] limited selection and created a sweeter, easier to drink wine. � Cirque du Soleil introduced live music, storylines, removed animals, etc, in order to differentiate from other circus shows.

Compelling Tagline � Southwest “The speed of a plane at the price of a car-whenever you need it. ” � Cirque du Soleil first performance titled “We Reinvented the Circus. ”

Reading the Value Curves � Strategy � Value Canvas Curve Focus � Mixing Value Curve and Competitors signifies being caught in a red ocean.

Chapter 2 Recap � Shifting the strategic canvas requires that companies focus on noncustomers and what the industry doesn’t have. � Eliminate, Create, Reduce, and Raise what is already in your respective industry. Using the Four Actions Framework helps create blue oceans. � The Three Characteristics of a Good Strategy are focus, divergence, and a compelling tagline. � Being able to focus on a certain group or idea, differentiating yourself, and creating a unique tagline are all essential in creating blue oceans.

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