Visi Pramudia

http://visipramudia.wordpress.com/

BLUE OCEAN STRATEGY

Authors: W. Chan Kim Renee Mauborgne

How to Create Uncontested Market Space and

Make the Competition Irrelevant

Visi Pramudia

http://visipramudia.wordpress.com/

I. THE STRATEGY

Visi Pramudia

http://visipramudia.wordpress.com/

New Market Space

RED OCEAN
Represent all the industries in existence today known market space
BLUE OCEAN
Denote all the industries not in existence today unknown market
space
Circus Industry
Traditional Circus:
Target Market : Children
Dependent to : Star performance,
animal shows
High fun & humor
High Thrills & dangers

High Cost, Low Price

Cirque du Soleil:
Target Market : Adults
Not Dependent to Star
performance & animal shows
Reduce fun & humor
Reduce Thrills & dangers
Unique Venue
Theme & Theater
Low Cost, High Price

Visi Pramudia

http://visipramudia.wordpress.com/

The Cornerstone of Blue Ocean Strategy

Value innovation is created in the region where a companys actions favorably

affect both its cost structure and its value proportion to buyers
Cost savings are made by eliminating and reducing the factors an industry
competes on
Buyer values is lifted by raising & creating elements the industry has never
offered
Over time, costs are reduced further as scale economies kick in due to the high
sales volumes that superior value generates

The Simultaneous Pursuit of Differentiation and Low Cost

Visi Pramudia

Red Ocean vs Blue Ocean

http://visipramudia.wordpress.com/

Visi Pramudia

http://visipramudia.wordpress.com/

The Six Principles of Blue Ocean Strategy

Visi Pramudia

Four Actions Framework

http://visipramudia.wordpress.com/

Visi Pramudia

http://visipramudia.wordpress.com/

The Case of Cirque du Soleil

Eliminate
Star Performers
Animal Shows
Aisle concession sales
Multiple show arenas

Raise
Unique venue

Reduce
Fun and humor
Thrill and danger

Create
Theme
Refined environment
Multiple productions
Artistic music and dance

The Strategy Canvas of Cirque du Soleil

High

Ringling Bros

Smaller Reg Circuses

e
wa
tc
h
M
in
g
ul
tip
en
le
vi
p
ro
Ar
du
t is
ct
t ic
io
m
ns
us
ic
&
da
nc
e

Th
em

Re
fin
ed

ho
w
s
co
nc
M
es
ul
sio
tip
ns
le
sh
ow
ar
en
as
Fu
na
&
hu
m
or
Th
r il
l&
da
ng
er
Un
iq
ue
ve
nu
e
sle

al
s

Ai

rm

an
ce
An
im

St
ar

Pe
r fo

Pr
ice

Low

Cirque du Soleil

Visi Pramudia

http://visipramudia.wordpress.com/

II. FORMULATING BLUE

OCEAN STRATEGY

Visi Pramudia

http://visipramudia.wordpress.com/

Six Path to Blue Ocean Strategy

Visi Pramudia

http://visipramudia.wordpress.com/
Net Jets Case Study
1: 16 Ownership Aircraft

The Strategy Canvas of NetJets

Price

Need for
customers to
manage
aircraft

Deadhead
costs

Private Jet

Speed of travel Ease of travel

time

Commercial Airlines

Flexibility &
reability

NetJets

in-flight service

Visi Pramudia

http://visipramudia.wordpress.com/
Curves Case Study
Collective Exercise method

Traditional Health Club

W
om
an
ly
Home Exercise

os
ph
er
e
at
m

fu
n

Co
nv
en
ie
nc
e

ng

n
M
ot
iv
&

Di
s

cip
l in
e

No
nt
hr
ea
te
ni

at
io

ct
or
s
In
st
ru

en
itie
W
s
or
ko
ut
eq
ui
pm
en
t
W
or
ko
ut
t im
e

Am

Pr
ice

The Strategy Canvas of Curves

Curves

Visi Pramudia

http://visipramudia.wordpress.com/

Novo Nordisk Case Study

Insulin Producer

Diabetes Care Company

By producing NovoPen

Focus on Doctors

Direct to Patients

Visi Pramudia

http://visipramudia.wordpress.com/

NABI Case Study

Fiberglass BUS
The Strategy Canvas of NABI

Initial Price

Corrotion

Maintanance
Cost

Fuel
Consumpsion

Ordinary Transit Bus

Environment
Friendly
NABI

Aesthetic
design

Customer
friendly

Visi Pramudia

http://visipramudia.wordpress.com/

QB House Case Study

Speedy Barbershop
The Strategy Canvas of QB

Price

Reservation
Desk

Extra
Services

Range of
Hair
treatments

Hygiene

Ave. Jap Barbershop

Time
Savings on
waiting

QB House

Time
savings on
haircut

"air wash"
system

Visi Pramudia

http://visipramudia.wordpress.com/

From the value a market delivers today to

the value it might deliver tomorrow
CISCO Growing demand for high speed
data exchange focus on high speed data
technology
CNN the rising tide of globalization the
first real time 24hours global network

Visi Pramudia

http://visipramudia.wordpress.com/

III. VISUALIZING STRATEGY

Visi Pramudia

http://visipramudia.wordpress.com/

Four Steps of Visualizing Strategy

Visual Awakening

Compare your
business with your
competitors by
drawing your as is
strategy canvas.
See where your
strategy needs to
change

Visual
Exploration

Visual
Strategy Fair

Visual
Communication

Distribute your before Draw your to be

Go into the field to
and-after strategic
strategy canvas based
explore the six paths
profiles on one page
on insights from field
to creating blue
for easy comparison
observations
oceans
Support only those
Observe the distinctive Get feedback on
projects and
alternative strategy
advantages of
operational moves that
canvases from
alternative products or
allow your company to
customers,
services
close the gaps to
competitors
See which factors you
actualize the new
customers, and
should eliminate,
strategy
noncustomers
create or change
Use feedback to build
the best to be future
strategy

Visi Pramudia

http://visipramudia.wordpress.com/

The Three Tiers of Noncustomers

Third
Tier
Second
Tier
First
Tier
Your
Market

First Tier: Soon-to-be noncustomers who are on the edge of your

market, waiting to jump ship
Second Tier: Refusing noncustomers who consciously choose
against your market
Third Tier: Unexplored noncustomers who are in markets distant
from yours

Visi Pramudia

http://visipramudia.wordpress.com/

The Sequence of Blue Ocean Strategy

Buyer Utility
Is there exceptional buyer utility in your
business idea?

No - Rethink

Yes
Price
Is your price easily accessible to the mass
of buyers?

No - Rethink

Yes
Cost
Can you attain your cost target to profit at
your strategic price?

No - Rethink

Yes
Adoption
What are the adoption hurdles in actualizing
your business idea? Are you addressing
them up front?
Yes
A Commercially Viable Blue
Ocean Idea

No - Rethink

Visi Pramudia

http://visipramudia.wordpress.com/

IV. EXECUTING BLUE

OCEAN STRATEGY

Visi Pramudia

http://visipramudia.wordpress.com/

The Four Organizational Hurdles to Strategy

Execution
Cognitive Hurdle
An Organization
wedded to the status
quo
Political Hurdle

Resource Hurdle

Opposition from
powerful vested
interests

Limited Resource

Motivational Hurdle
Unmotivated staff

Visi Pramudia

http://visipramudia.wordpress.com/

Break through the Cognitive Hurdle face to face with worst operational
problem

Ride the Electric Sewer

Meet the Disgruntled Customers
Jump the Resource Hurdle Strategic shift with fewer resources
Low resources input but
Redistribute Resources to the Hot Spots
high potential gains
Redirect Resources from the Cold Spots
Trading your units excess resources in one area
Engage in Horse Trading

for another units excess resources to fill remaining

resources gap

Jump the Motivational Hurdle Motivate employees fast & low cost
Influencer in Organization
Zoom in on Kingpins
Transparency, inclusion & fair process
Place Kingpins in a Fishbowl
Atomize to Get the Organization to Change itself
Framing the strategic challenge,
actionable to all levels

Visi Pramudia

http://visipramudia.wordpress.com/

Knock Over the Political Hurdle overcome political forces

Who the most to gain from

Leveraging Angles
the strategic shift
Silencing Devils
Getting a consigliore on the top management team
Who knows in advance all the land mines who
will fight you, who will support you

Visi Pramudia

http://visipramudia.wordpress.com/

V. CONCLUSION: Blue
Ocean Sustainability

Visi Pramudia

http://visipramudia.wordpress.com/

Imitation Barriers to Blue Ocean Strategy

Value innovation does not make sense to a companys conventional
logic
Blue ocean strategy may conflict with other companies brand image
Natural monopoly: The market often cannot support a second player
Patents or legal permits block imitation
High volume leads to rapid cost advantage for the value innovator,
discouraging followers from entering the market
Network externalities discourage imitation
Imitation often requires significant political, operational and cultural
changes
Companies that value-innovate earn brand buzz and a loyal
customer following that tend to avoid imitators

Visi Pramudia

http://visipramudia.wordpress.com/

The END - THANKS