POSITIONING&THE&FIRM

Blue(Ocean(Strategy(
TORSTEN&OLIVER&SALGE&|(Aachen

School&of&Business&and&Economics
TIME Research(Area(|&Innovation,(Strategy(and(Organization(Group((ISO)
TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

LEARNING OBJECTIVES
Outlining(the(objectives(of(this(video

! To(become(familiar(with(the(intuition(of(Blue(Ocean(Strategy(
(BACKGROUND)

! To(reflect(upon(the(tools(that(may(help(create(uncontested(markets(
(TOOLS)

! To(discuss(concrete(pathways(toward(value(innovation(
(PATHWAYS)

©(Torsten(Oliver(Salge 2
TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Background
Introducing(the(idea(of(blue(and(red(ocean(strategy

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 3

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Background
Moving(from(red(to(blue(ocean(strategy

Red&Ocean&Strategy Blue&Ocean&Strategy

! Accepting(the(rules(of(the(game ! Redefining(the(rules(of(the(game
! Compete(in(existing(market(space ! Create(uncontested(market(space
! Beat(the(competition ! Make(the(competition(irrelevant
! Exploit(existing(demand ! Create(and(capture(new(demand
! Make(valueRcost(tradeRoff ! Break(the(valueRcost(tradeRoff

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 4

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Background
Highlighting(the(profit(potential(of(blue(oceans

Percent&of&Business&Launches
Red(Ocean( Blue(Ocean(
Business(Launches
86% 14% Business(Launches

Percent&of&Firm&Revenues

Red(Ocean( Blue(Ocean(
Business(Launches
62% 38% Business(Launches

Percent&of&Firm&Profits
Red(Ocean( Blue(Ocean(
Business(Launches 39% 61% Business(Launches

N(=(108

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 5

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Background
Combining(value(increase(with(cost(reduction

Reduce&Costs

Value
Innovation

Increase&Buyer&Value

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 6

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Tools
Creating(uncontested(market(space:(The(FourRAction(Framework

Reduce
Which(factors(should(be(
reduced(well(below(the(
industry‘s(standard

Eliminate Create
Which(of(the(factors(that( A&new& Which(factors(should(be(
the(industry(takes(for( created(that(the(industry(
granted(should(be( value&curve has(never(offered?
eliminated?

Raise
Which(factors(should(be(
raised(well(above(
industry‘s(standard?

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 7

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Tools
Applying(value(curve(analysis(to(Ford’s(model(T((1/2)

“The global demand for

cars will not exceed 1
million – simply because
of the lack of available
chauffeurs.”

Gottlieb(Daimler,(1834R1900

15(million(units(sold(till(1927
©(Torsten(Oliver(Salge 8
TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Tools
Applying(value(curve(analysis(to(Ford’s(model(T((2/2)
high
Ford&Model&T

Standard&Cars

Horse&Carriage

low
AffordaY CustomiY Driving Availability Reliability Ease&of& Ease&of&
bility zation Performance Maintenance Use

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 9

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Pathways
Identifying(pathways(to(value(innovation

! Path&1:&Look&across&alternative&industries
e.g.(Ford(and(food(production(industry(or(Cirque(du(Soleil(and(musical(industry

! Path&2:&Look&across&strategic&groups&within&industries
e.g.(Curves((fitness(club(for(women)(and(traditional(health(clubs(and(home(exercise(videos

! Path&3:&Look&across&complementary&products&and&services
e.g.(Ikea(offering(complementary(services(such(as(baby(sitting,(children(playgrounds,(
restaurant,(van(hiring(etc.

! Path&4:&Look&across&buyer&groups
e.g.(Novo(Nordisk((pharmaceutical(company(specializing(in(
diabetes(care)(focusing(on(patients(rather(than(doctors,(hence(
offering(NovoPen and(NovoLet to(facilitate(insulin(injection(

©(Torsten(Oliver(Salge Source:(Kim(&(Mauborgne (2015) 10

TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

BLUE&OCEAN&STRATEGY&|(Pathways
Identifying(pathways(to(value(innovation

What&do&you&think:&Has&Tesla&the&potential&to
reinvent&the&car&industry&and&create&a&blue&ocean?

YOUR&VIEW

©(Torsten(Oliver(Salge 11
TIME Research(Area(|(Innovation,(Strategy(and(Organization(Group((ISO)

CONTACT&US&
Contact(details(and(disclaimer

School(of Business(and Economics Images(used:

TIME Research(Area ! Compass:(Pdpics.com,(23(March(2016.(Web.(
http://www.pdpics.com/preview/preview35/6833R
Innovation,(Strategy &(Organization Group((ISO)
compassRmap.jpg
! Tesla(Logo:(4(April(2016.(Web.(
Kackertstraße 7 http://www.teslamotors.com
! Blue(Ocean(Strategy:(amazon.com.(02(Feb(2016.(
52072(Aachen Web.(<(http://www.amazon.com/BlueROceanR
Germany StrategyRUncontestedRCompetition/dp/1591396190>
! Chan(Kim(&(Renée(Mauborgne:(thinkers50.(02(Feb(
2016.(Web.(<(http://thinkers50.com/interviews/wR
Phone:&+49(241(80(99197 chanRkimRreneeRmauborgneRinterview/>
! Ford(Logo:(Wikipedia.org,(2(May(2016.(Web.
Mail:&info.iso@time.rwthRaachen.de https://upload.wikimedia.org/wikipedia/commons/f/f7(
Web:&www.time.rwthRaachen.de/iso Ford_logo_1909.png
! Ford(Model(T:(theshedwarroad.com,(2(May(2016.(
! Insulin(Pens:(diaquick.de.(Web.(27(Aug(2015(
http://www.diaquick.de/Diaquickinfos/Verbesserung_
der_Lebensqu_321x3.htm

©(Torsten(Oliver(Salge 12
POSITIONING(THE(FIRM
Conclusion
TORSTEN(OLIVER(SALGE(|*Aachen

School(of(Business(and(Economics
TIME Research*Area*|(Innovation,*Strategy*and*Organization*Group*(ISO)
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

LEARNING OBJECTIVES
Outlining*the*objectives*of*this*video

! To*reflect*upon*the*nature*of*red*and*blue*ocean*strategies*
(SYNTHESIS)

! To*summarize*the*key*insights*of*this*session*
(SUMMARY)

©*Torsten*Oliver*Salge 2
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
Contrasting*blue*ocean*and*red*ocean*strategy

Attribute Red(Ocean(((((((((vs((((((((((Blue(Ocean(
Industry(Conception Exogenous Endogenous

Strategic(Logic Winning*battles Avoiding*battles

Strategic(Objective Compete*in*existing*industries Create*new*industries

Competitive(Focus Beat*the*competition Make*competition*irrelevant

Strategic(Focus Rivals*in*current*industry “Rivals”*in*other*industries

Market(Trends Adapt*to*external*trends Shape*external*trends

Demand(Patterns Exploit*existing*demand Create*new*demand

Buyer(Groups Better*serve*current*buyers Redefine*buyer*group

Generic(Strategies Make*valueVcost*tradeVoff Break*valueVcost*tradeVoff

Strategic(Implications Differentiation*OR*lowVcost Differentiation*AND*lowVcost

©*Torsten*Oliver*Salge Source:*Kim*&*Mauborgne (2015) 3

TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
Driving*industry*trends*rather*than*being*driven*by*them

Lightweight(Engineering Automated(Driving

Drive(Train(Electrification Car(Connectivity

©*Torsten*Oliver*Salge 4
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
Transforming*the*organization*…

"Tes.a is not ,ust an

automotive company it’s
an energy innovation
company" Tes.a Energy
is a critica. step in this
mission to enab.e zero
emission power
generation"”
- e.on mus-­ -

©*Torsten*Oliver*Salge Source:*Tesla*(2016) 5
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
…*to*develop*and*capture a*largely*uncontested*market*segment

UNOCCUPIED,(GROWING(
high MOST*ESTABLISHED*CAR* MARKET(SEGMENT
MODELS*WITH*
CONVENTIONAL*
ENGINES
PERFORMANCE
TO(PRICE(
RATIO
MOST*CURRENT*CAR*
MODELS*WITH*
low ALTERNATIVE
COMBUSTION*ENGINES

low ENVIRONMENTAL( high

FRIENDLINESS

©*Torsten*Oliver*Salge 6
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
Changing*the*rules*of*the*game*in*the*car*industry

Will(Tesla(be(able(to(change(the(rules(of(the(game(and(follow(Ford(and(
Chrysler(in(redefining(the(car(industry?

Ford(Model(T Chrysler(Minivan Tesla(Model(3(

+(Powerwall
1908 1984 2017

©*Torsten*Oliver*Salge 7
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Synthesis
Developing*a*unique*value*curve*and*setting*new*standards
high

Tesla(Model(3

Conventional(Cars

Most(Electric(Cars

low
Afforda` Environmental Driving Design Reach Fuelling(Grit( Fuel( Connec` Automated
bility Friendliness Performance Density Cost tivity Driving

©*Torsten*Oliver*Salge Source:*Kim*&*Mauborgne (2015) 8

TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONCLUSION(| Summary
Summarizing*key*insights*of*the*session

Red(Ocean(Strategy Blue(Ocean(Strategy
! Corporate(Strategy.( 2 ! Blue(Ocean(Strategy.(
5
Explore*the*tools*that* Understand*how*to*create*
help*to*decide*on*the* uncontested*market*
scope*of*the*business* space*and*make*
! Generic(Strategy(I.( 3
competition*irrelevant
Become*familiar*with**
cost*leadership*
strategies
! Generic(Strategy(II.( 4
Become*familiar*with*
differentiation*strategies************

6
Understand(how(to(best(position(and(scope(the(firm
©*Torsten*Oliver*Salge 9
TIME Research*Area*|*Innovation,*Strategy*and*Organization*Group*(ISO)

CONTACT(US(
Contact*details*and*disclaimer

School*of Business*and Economics Images*used:

TIME Research*Area ! Compass:*Pdpics.com,*23*March*2016.*Web.*
Innovation,*Strategy &*Organization Group*(ISO) http://www.pdpics.com/preview/preview35/6833V
compassVmap.jpg
! Tesla*Logo:*4*April*2016.*Web.*www.teslamotors.com
Kackertstraße 7 ! Tesla*Images:*2*May*2016.*Web.*teslamotors.com
! BMW*Connected*Drive*Services:*Company*website,*
52072*Aachen
26*April*2016.*
Germany ! Car*with*automated*driving:*Wikipedia.or.*26*April*
2016.*
<https://upload.wikimedia.org/wikipedia/commons/1/1
Phone:(+49*241*80*99197 6/Driver_free_car.jpg>
! Model*S*Chassis:*Oleg*Alexandrov,*26*April*2016,*
Mail:(info.iso@time.rwthVaachen.de
Web.*
Web:(www.time.rwthVaachen.de/iso <https://en.wikipedia.org/wiki/Tesla_Model_S#/media
/File:Tesla_Motors_Model_S_base.JPG>
! Ford*Logo:*Wikipedia.org,*2*May*2016.*Web.

https://upload.wikimedia.org/wikipedia/commons/f/f7/
Ford_logo_1909.png
! Chrysler*Logo:*Wikipedia.org,*2*May*2016.*Web.*
https://commons.wikimedia.org/wiki/File:Chrysler_Gr
oup_logo.svg
! Ford*Model*T:*theshedwarroad.com,*2*May*2016.*
WebV http://theshedwarroad.com/images/1926VfordV
modelVt/360/1926_Ford_model_T_frntV rt.png
! Chrysler*Minivan:*shebuyscars.com,*2*May*2016.*
Web.*http://shebuyscars.com/wpV
content/uploads/2013/12/DodgeVCaravanV1984.png
©*Torsten*Oliver*Salge 10