Blue Ocean Strategy Overview Team 4 Brent Hare
Blue Ocean Strategy Overview Team 4: Brent Hare Ty Parasiliti Josh Fernino Vincent Ukwu Lance Hollister Chris Kerschen Victor Hemmati
Chapter 1 Value Innovation � “The Cornerstone of the Blue Ocean Strategy” � Blue Oceans ◦ Make the competition irrelevant ◦ Create and captures new demand � Red Oceans ◦ Compete in existing market space ◦ Beat the competition
Chapter 1 Value Innovation � Cirque Du Soleil � Is it circus, theater, ballet, or a Broadway show? � Creates value while at the same time it is very innovative
Chapter 2 � Strategy Canvas ◦ Captures the current conditions of competitors in an industry � 4 Actions Framework ◦ Helps companies break away from the traditional value curve and create a new one � Eliminate/Reduce/Raise/Create Grid ◦ Helps companies to act on the 4 questions presented in the framework to create the new value curve
Chapter 2 � 3 Characteristics of a good strategy ◦ Focus : A company’s value curve should show that its efforts are not scattered across all key factors of competition ◦ Divergence : Blue ocean value curves always stand apart from competitors ◦ Compelling Tagline : Must deliver a clear message to customers that compels them to use the product � Understanding Value Curves
Chapter 3 � Six Paths Framework: � Path 1: Look Across � Path 2: Look Across Industries � Path 3: Look Across � Path 4: Look Across Service Offerings � Path 5: Look Across Appeal to Buyers � Path 6: Look Across Alternative Industries Strategic Groups Within the Chain of Buyers Complementary Product and Functional or Emotional Time
Chapter 3 Path 1: Look Across Alternative Industries � Alternatives VS. Substitutes ◦ Substitutes: products in different forms that have the same functionality ◦ Alternatives: products with different functions that serve the same purpose
Chapter 3 Path 2: Look Across Strategic Groups Within Industries � Companies in a particular industry that pursue a similar strategy � Based on two dimensions ◦ Price ◦ Performance Key to creating blue oceans is to break out of this narrow tunnel vision
Chapter 3 Path 3: Look Across the Chain of Buyers � There is a chain of “buyers” who are directly or indirectly involved in the buying decision ◦ Purchasers: pay for the product or service ◦ Users: people who use the product or service ◦ Influencers: influence a decision one way or the other � These groups may overlap, but often differ
Chapter 3 Path 4: Look Across Complementary Product and Service Offerings � The key is to define the total solution buyers seek when they choose a product or service. � Way to do this is by thinking about what happens before, during, and after your product is used. � e. g. Babysitting and parking, operating and application software, airline ground transportation
Chapter 3 Path 5: Look Across Functional or Emotional Appeal to Buyers � Path 5 looks at the competition in an industry not just in the scope of its products and services but also on two possible bases of appeal. � Functional Appeal ◦ Some industries compete based on price and function largely on calculations of utility, their appeal is rational. � Emotional Appeal ◦ Other industries compete largely on feelings: their appeal is emotional, more personal.
Chapter 3 Path 6: Look Across Time • • All industries are subject to external trends that affect their businesses over time Rapid rise of the internet Global movement toward protecting the environment These trends can help create blue ocean opportunities
Chapter 4 Focusing on the Big Picture � BOS develops alternative approach of drawing strategic canvas � Find new opportunities and break away from existing red oceans � Focus on the big picture and not just numbers and operational procedures
Chapter 4 Strategy Canvas � Four steps of visualizing strategy: ◦ Visual Awakening �Compare with competitor’s businesses by creating an “as is” strategy canvas �Discuss what changes should be made ◦ Visual Exploration �Decide where to implement six paths of Blue Oceans �Decide what factors to keep, eliminate, or modify
Chapter 4 Strategy Canvas Cont. � Visual Strategy Fair � Visual Communication ◦ Get feedback on alternative strategy canvases from customers, competitor’s customers, and noncustomers ◦ Use feedback to build the best “to be” future strategy ◦ Compare before and after strategic profiles ◦ Support only those projects that allow your company to close the gaps to actualize the new strategy
Chapter 4 Pioneer-Migrator-Settler (PMS) Map � Identifies strengths and weaknesses � Pioneers: Blue Ocean Businesses � Migrators: Improved value, but not innovative value � Settlers: Stuck in red ocean and do not contribute to future growth � Ultimately helps visualize, plan, and predict a company’s future growth and profit
Chapter 5 Maximizing the Blue Ocean � To maximize the size of their Blue Ocean companies need to reverse course and consider: ◦ Looking to Non-Customers ◦ Building powerful commonalities on what customers buy � Doing this will allow companies to reach beyond existing demand to unlock a new mass of customers
Chapter 6 From Exceptional Utility to Strategic Pricing • To secure a strong revenue stream for your offering, you have to set the right strategic price. • Many companies may take the reverse course and test the product in different situations before deciding to lower their prices. • It is crucial to know how the company will set its pricing strategy from the start.
Chapter 7 Tipping point leadership & conventional wisdom • Conventional wisdom asserts that the greater the change, the greater the resources and time you will need to bring about results. � Transforming the extremes will transform the masses. � Leveraging tipping point leadership. � Focus on acts of disproportionate influence. � Align employees’ actions with the new strategy.
Chapter 8 Fair process and blue ocean strategy � Commitment, trust, and voluntary cooperation are not merely attitudes or behaviors; they are intangible capital � Trust brings heightened confidence in one another’s intentions and actions � Commitment enables people to override personal self-interest in the interest of the company
Chapter 8 Fair process and blue ocean strategy � Commitment, trust, and voluntary cooperation allow companies to stand apart in the speed, quality, and consistency of their execution and to implement strategic shifts fast at low cost � The question raised by management is how to create trust, voluntary cooperation, and commitment deep within the organization
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