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 ction Fra!ework ". Si# $rinci%les o& Blue Ocean Strategy '. For!ulating Blue Ocean Strategy (. )#ecuting 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 Red Ocean Strategy

Create uncontested market space Make the competition irrelevant Create and capture new demand

Compete in existing market space Beat the competition Exploit existing demand

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Blue Ocean vs. Red Ocean Strategy

Blue Ocean Strategy Red Ocean Strategy

Break the value cost trade off !lign the whole system of a firm"s activities with its strategic choice of differentiation and low cost

Make the value cost trade off !lign the whole system of a firm"s activities with its strategic choice of differentiation or low cost

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Blue Ocean Strategy Tools

Strategy Canvas

! diagnostic tool for building a compelling blue ocean strategy It captures the current state o& %lay in the known market space !llow you to understand #
where the competition is currently investing the factors the industry currently competes on in product, service and delivery what customers receive from existing competitive offerings on the market

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Four ction Fra!ework

)li!inate

Raise

Reduce

Create

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Four ction Fra!ework

)li!inate Reduce
$hich of the factors that the industry takes for granted should be eli!inated. $hich factors should be reduced well /elow the industry"s standard% $hich factors should be raised well a/ove the industry"s standard% $hich factors should be created that the industry has never offered%
-

Raise

Create
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Four ction Fra!ework T1e Case o& Cir2ue du Soleil * Circus Co!%any+ )li!inate
(tar performers !nimal shows !isle concession sales Multiple show arenas

Reduce
)un and humor &hrill and danger

Create
&heme 'efined environment Multiple productions !rtistic music and dance

Raise
*ni+ue venue

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Si# $rinci%les o& Blue Ocean Strategy

For!ulation $rinci%les ,- 'econstruct market boundaries .- )ocus on the big picture, not the numbers /- 'each beyond existing demand 0- 1et the strategic se+uence right )#ecution $rinci%les ,- 2vercome key organi3ational hurdles .- Build execution into strategy

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For!ulating Blue Ocean Strategy

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1. Reconstruct Market Boundaries

4ead5to54ead Strategy Blue Ocean Strategy

)ocus on rivals within industry )ocuses on competitive position within strategic group

4ooks across alternative industries 4ooks across strategic group within industry 'edefines the industry buyer group

)ocuses on better serving the buyer group

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1. Reconstruct Market Boundaries

4ead5to54ead Strategy Blue Ocean Strategy

)ocuses on maximi3ing the value of product or service offerings within the bounds of its industry

4ooks across to complementary product and service offerings

5articipates in shaping external trends over time

)ocuses on adapting to external trends as they occur

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2. Focus on t1e Big $icture6 not t1e 7u!/ers

)ocus on the Big $icture, not the 6umbers &he )our (teps of 7isuali3ing (trategy

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7isual !wakening 7isual Exploration 7isual (trategy )air 7isual Communication

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2. Focus on t1e Big $icture6 not t1e 7u!/ers

Visual wakening

Compare your business with your competitors" by drawing your 8as is9 strategy canvas (ee where your strategy needs to change

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2. Focus on t1e Big $icture6 not t1e 7u!/ers

Visual )#%loration

1o to the field to explore the six paths to creating blue oceans 2bserve the distinctive advantages of alternative products and services (ee which factors you should eliminate, create, or change

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2. Focus on t1e Big $icture6 not t1e 7u!/ers

Visual Strategy Fair

:raw your 8to be9 strategy canvas based on insights from field observations 1et feedback on alternative strategy canvases from customers, competitors" customers, and noncustomers *se feedback to build the best 8to be9 future strategy

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2. Focus on t1e Big $icture6 not t1e 7u!/ers

Visual Co!!unication

:istribute your before and after strategic profiles on one page for easy comparison (upport only those pro;ects and operational moves that allow your company to close the gap to actuali3e the new strategy

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3. Reac1 Beyond )#isting 8e!and

)irst tier# 9Soon to /e: non5 custo!ers who are the edge of your market, waiting to ;ump ship (econd tier# 9Re&using: non5 custo!ers who consciously choose against your market &hird tier# 9;ne#%lored: non5 custo!ers who are in markets distant from yours
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T1e T1ree Tier o& 7on5 custo!ers

". <et T1e Strategic Se2uence Rig1t

T1e Se2uence o& Blue Ocean Strategy
Buyer utility Is there exceptional buyer utility in your business idea% $rice Is your price easily accessible to the mass of buyers% Cost Can you attain your cost target to profit at your strategic price%

do%tion $hat are the adoption hurdles in actuali3ing your business idea%

co!!ercially via/le /lue ocean idea www.study Marketing.org

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)#ecuting Blue Ocean Strategy

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'. Overco!e =ey Organi>ational 4urdles

Overco!e =ey Organi>ational 4urdles

Cognitive 4urdle

Resource 4urdle

Motivational 4urdle

$olitical 4urdle

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'. Overco!e =ey Organi>ational 4urdles

Cognitive 4urdle *status 2uo+ 'ide the 8Electric (ewer9 Meet with :isgruntled Customers

Resource 4urdle
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'edistribute resources to your hot spots 'edirect resources from your cold spots Engage in horse trading
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'. Overco!e =ey Organi>ational 4urdles

Motivational 4urdle <oom in on =ingpins >key influencers? 5lace kingpins on a fishbowl !tomi3e to get the organi3ation to change itself

$olitical 4urdle

(ecure a consigliere on your top management team 4everage your angels and silence your devils

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'. Build )#ecution ?nto Strategy

Fair $rocess o& Strategy (trategy )ormulation 5rocess )air 5rocess @ Engagement, Explanation, Expectation clarity !ttitudes &rust and Commitment @ 8I feel my opinion counts9 Behavior 7oluntary Cooperation @ 8I"ll go beyond the call of duty9 (trategy Execution Exceeds Expectation @ self initiated
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Source o& Re&erence

$- Chan =im and 'enAe Mauborgne, Blue Ocean Strategy, BB( 5ublication

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)nd o& Material

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