Blue Ocean
Strategy
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Contents
1. Blue Ocean Vs. Red Ocean Strategy
2. Blue Ocean Strategy Tools
3. Strategy Canvas and Four Action Framework
4. Six Principles of Blue Ocean Strategy
5. Formulating Blue Ocean Strategy
6. Executing Blue Ocean Strategy
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Blue Ocean Vs. Red Ocean
Strategy
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Blue Ocean vs. Red Ocean Strategy
Blue Ocean Strategy
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Create uncontested
Red Ocean Strategy
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market space
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Make the competition
Compete in existing
market space
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Beat the competition
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Exploit existing
irrelevant
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Create and capture
new demand
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demand
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Blue Ocean vs. Red Ocean Strategy
Blue Ocean Strategy
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Break the value- cost
Red Ocean Strategy
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trade off
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Align the whole system
Make the value-cost
trade off
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Align the whole system
of a firm’s activities with
of a firm’s activities with
its strategic choice of
its strategic choice of
differentiation and low
differentiation or low
cost
cost
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Blue Ocean Strategy Tools
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Strategy
Canvas
A diagnostic tool for building a
compelling blue ocean strategy
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It captures the current state of play in
the known market space
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Allow you to understand :
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where the competition is currently
investing
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the factors the industry currently
competes on in product, service and
delivery
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what customers receive from existing
competitive offerings on the market
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Four Action Framework
Eliminate
Raise
Reduce
Create
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Four Action Framework
Eliminate
Reduce
Which of the factors that the industry
takes for granted should be eliminated?
Which factors should be reduced well
below the industry’s standard?
Raise
Which factors should be raised well
above the industry’s standard?
Create
Which factors should be created that
the industry has never offered?
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Four Action Framework
The Case of Cirque du Soleil (A Circus Company)
Reduce
Eliminate
•
•
•
•
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
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•
Raise
Create
•
•
•
•
Theme
Refined environment
Multiple productions
Artistic music and dance
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Fun and humor
Thrill and danger
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Unique venue
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Six Principles of Blue Ocean Strategy
Formulation Principles
1. Reconstruct market
boundaries
2. Focus on the big picture,
not the numbers
3. Reach beyond existing
Execution Principles
5. Overcome key
organizational
hurdles
6. Build execution into
strategy
demand
4. Get the strategic
sequence right
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Formulating
Blue Ocean Strategy
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1. Reconstruct Market Boundaries
Blue Ocean Strategy
Head-to-Head Strategy
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Focus on rivals within
•
industry
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Focuses on competitive
industries
•
position within strategic
group
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Focuses on better
Looks across alternative
Looks across strategic
group within industry
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Redefines the industry
buyer group
serving the buyer group
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1. Reconstruct Market Boundaries
Blue Ocean Strategy
Head-to-Head Strategy
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Focuses on maximizing
Looks across to
the value of product or
complementary product
service offerings within
and service offerings
the bounds of its
industry
•
•
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Participates in shaping
external trends over time
Focuses on adapting to
external trends as they
occur
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2. Focus on the Big Picture, not the Numbers
Focus on the
The Four Steps of
Visualizing Strategy
Big Picture, not
the Numbers
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Visual Awakening
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Visual Exploration
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Visual Strategy Fair
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Visual Communication
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2. Focus on the Big Picture, not the Numbers
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Compare your business with your
competitors’ by drawing your “as is”
strategy canvas
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See where your strategy needs to
change
Visual
Awakening
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2. Focus on the Big Picture, not the Numbers
Visual
Exploration
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Go to the field to explore the six
paths to creating blue oceans
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Observe the distinctive advantages
of alternative products and services
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See which factors you should
eliminate, create, or change
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2. Focus on the Big Picture, not the Numbers
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Draw your “to be” strategy canvas
based on insights from field
observations
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Get feedback on alternative
strategy canvases from
customers, competitors’
customers, and noncustomers
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Use feedback to build the best “to
be” future strategy
Visual
Strategy
Fair
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2. Focus on the Big Picture, not the Numbers
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Distribute your before-and-after
strategic profiles on one page for
easy comparison
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Support only those projects and
operational moves that allow your
company to close the gap to
actualize the new strategy
Visual
Communication
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3. Reach Beyond Existing Demand
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First tier: “Soon to be” noncustomers who are the edge of
your market, waiting to jump ship
The Three
Tier of Non-
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Second tier: “Refusing” noncustomers who consciously
customers
choose against your market
•
Third tier: “Unexplored” noncustomers who are in markets
distant from yours
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4. Get The Strategic Sequence Right
The Sequence of Blue Ocean Strategy
Buyer utility
Is there exceptional buyer
utility in your business idea?
Price
Is your price easily
accessible to the mass of
buyers?
Adoption
What are the adoption
hurdles in actualizing your
business idea?
Cost
Can you attain your cost
target to profit at your
strategic price?
A commercially viable
blue ocean idea
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Executing
Blue Ocean Strategy
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5. Overcome Key Organizational Hurdles
Cognitive
Hurdle
Resource
Hurdle
Motivational
Hurdle
Political
Hurdle
Overcome Key
Organizational
Hurdles
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5. Overcome Key Organizational Hurdles
Cognitive
Hurdle
(status quo)
Resource
Hurdle
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Ride the “Electric Sewer”
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Meet with Disgruntled Customers
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Redistribute resources to your hot
spots
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Redirect resources from your cold
spots
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Engage in horse trading
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5. Overcome Key Organizational Hurdles
Motivational
Hurdle
Political
Hurdle
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Zoom in on Kingpins (key influencers)
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Place kingpins on a fishbowl
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Atomize to get the organization to
change itself
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Secure a consigliere on your top
management team
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Leverage your angels and silence
your devils
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5. Build Execution Into Strategy
Fair Process of Strategy
Strategy Formulation Process
Fair Process – Engagement, Explanation, Expectation clarity
Attitudes
Trust and Commitment – “I feel my opinion counts”
Behavior
Voluntary Cooperation – “I’ll go beyond the call of duty”
Strategy Execution
Exceeds Expectation – self initiated
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Source of Reference
•
W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy,
HBS Publication.
You can obtain this excellent book at this link: http://www.amazon.com/Blue-Ocean-Strategy-UncontestedCompetition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1
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