blue ocean strategy ...

value innovation and high growth ...

Conventional Logic Value Innovation Logic

Industry
assumptions
Industry’s conditions are given. Industry’s conditions can
Industry’s conditions can be shaped.
be shaped.

A company should build competitive Competition is not the benchmark.

Strategic focus advantages. The aim is to beat the A company should pursue a quantum leap
Competition. in value to dominate the market.

A company should retain and expand
its customer base through further segmentation
Customers
and customization. It should focus on
the differences in what customers value.
A value innovator targets the mass of buyers
and willingly lets some existing customers go.
It focuses on the key commonalities in what
customers value.

A company Amust
A company should leverage its existing assets
not be constrained by what
company must not be constrained by what
Assets and
Capabilities
and capabilities. it already has. It
it already must
has. ask,
It must ask,
we were starting anew?
What
What would we do ifwould we do if

we were starting anew?

An industry’s traditional boundaries determine A value innovator thinks in terms of the total
Product and the products and services a company offers. solution customers seek, even if it takes the
service offering The goal is to maximize the value of those company beyond its industry’s traditional
offerings. offerings.

Kim, W. C. and Mauborgne, R. (2004 (1997)) Value Innovation: the strategic logic of high-growth, Harvard Business Review, July–August.
 value innovation and high growth ...

Conventional Logic Value Innovation Logic

Industry
Industry’s conditions are given. Industry’s conditions can be shaped.
assumptions

A company should build competitive Competition is not the benchmark.

Strategic focus advantages. The aim is to beat the A company should pursue a quantum leap
Competition. in value to dominate the market.

A company should retain and expand
its customer base through further segmentation
Customers
and customization. It should focus on
the differences in what customers value.
A value innovator targets the mass of buyers
and willingly lets some existing customers go.
It focuses on the key commonalities in what
customers value.

A company should leverage its existing assets A company must not be constrained by what
Assets and
and capabilities. it already has. It must ask, What would we do if
Capabilities
we were starting anew?

An industry’s traditional boundaries determine A value innovator thinks in terms of the total
Product and the products and services a company offers. solution customers seek, even if it takes the
service offering The goal is to maximize the value of those company beyond its industry’s traditional
offerings. offerings.

Kim, W. C. and Mauborgne, R. (2004 (1997)) Value Innovation: the strategic logic of high-growth, Harvard Business Review, July–August.
 blue ocean strategy ...

Red Ocean Strategy Blue Ocean Strategy

New Value Industry

Compete in existing market space Create uncontested market space
Configurations assumptions

Business
Model
Canvas
Strategic focus Beat the competition make the competition irrelevant.
Make the competition irrelevant

Customer
Customers Exploit existing demand Create and capture new demand
Segments

Resources and Assets and

Make the value-cost trade-off Break the value-cost trade-off
Activities Capabilities

Align the whole system of a firm’s Align the whole system of the firm’s
Value Product and
activities with its strategic choice activities in pursuit of
Proposition service offering
of differentiation or low cost differentiation and low cost

Kim, W. C. and Mauborgne, R. (2004) Blue Ocean Strategy, Harvard Business Review, October.
 blue ocean strategy ...

Red Ocean Strategy Blue Ocean Strategy

New Value Industry

Compete in existing market space Create uncontested market space
Configurations assumptions

Business
Model Strategic focus Beat the competition Make the competition irrelevant
Canvas

Customer
Customers Exploit existing demand Create and capture new demand
Segments

Resources and Assets and

Make the value-cost trade-off Break the value-cost trade-off
Activities Capabilities

Align the whole system of a firm’s Align the whole system of the firm’s
Value Product and
activities with its strategic choice activities in pursuit of
Proposition service offering
of differentiation or low cost differentiation and low cost

Kim, W. C. and Mauborgne, R. (2004) Blue Ocean Strategy, Harvard Business Review, October.
 Lean Traditional

Business Model.
Strategy Hypothesis-driven
Business Model. Hypothesis-driven Business Plan. Implementation-driven

Customer Development. Product Management.

New-Product Process Get out of the office and test hypothesis. Prepare offering for market following a linear,
step-by-step plan.

Agile or Waterfall Development.

Agile Development.
Engineering Build the product iteratively, or fully specify
Build the product iteratively and incrementally.
the product before building it.

Customer and Agile Development Teams. Departments by Function.

Organization Hire for learning, nimbleness, and speed. Hire for experience and [proven] ability
to execute.

Metrics that Matter. Accounting.

Financial Reporting Customer acquisition cost, lifetime customer value, Income statement, balance sheet,
churn, viral-ness. cash-flow statement.

Executed. Execution.
Failure Fix by iterating on ideas and pivoting away Fix by firing executives, [or career progress
from ones that don’t work. is severely hindered].

Rapid. Measures [typically slower].

Speed
Operates on good-enough data. Operates on complete data.

[Compensation] [Stare ownership.] [Companywide practices.]

Blank, Steve. (2013) Why the Lean Start-Up Changes Everything, Harvard Business Review,May, pp. 3–9.
 Lean Traditional

Strategy Business Model. Hypothesis-driven. Business Plan. Implementation-driven.

Customer Development. Product Management.

New-Product Process Get out of the office and test hypothesis. Prepare offering for market following a linear,
step-by-step plan.

Agile or Waterfall Development.

Agile Development.
Engineering Build the product iteratively, or fully specify
Build the product iteratively and incrementally.
the product before building it.

Customer and Agile Development Teams. Departments by Function.

Organization Hire for learning, nimbleness, and speed. Hire for experience and [proven] ability
to execute.

Metrics that Matter. Accounting.

Financial Reporting Customer acquisition cost, lifetime customer value, Income statement, balance sheet,
churn, viral-ness. cash-flow statement.

Executed. Execution.
Failure Fix by iterating on ideas and pivoting away Fix by firing executives, [or career progress
from ones that don’t work. is severely hindered].

Rapid. Measures [typically slower].

Speed
Operates on good-enough data. Operates on complete data.

[Compensation] [Stare ownership.] [Companywide practices.]

Blank, Steve. (2013) Why the Lean Start-Up Changes Everything, Harvard Business Review,May, pp. 3–9.
how do you create
blue oceans?

blue oceans are created and discovered over time.

how do we create ...
 how do we create ...

http://www.google.com/intl/en/corporate/ux.html
 how do we create ...

http://www.crmcdonalds.com/publish/csr/home.html
 how do we create ...

http://www.nintendo.com/wii
 how do we create ...

http://www.apple.com/ipod/nike
how do we create ...
 vision is not only
a founding idea
but necessarily the
resolution to ensure
its realization
Jonathan Ive (2005)