1 Marketing.org Blue Ocean Strategy. 2 Marketing.org Contents 1.Blue Ocean Vs. Red Ocean Strategy 2.Blue Ocean Strategy Tools 3.Strategy

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Blue Ocean StrategyBlue Ocean Strategy


ContentsContents

1.1. Blue Ocean Vs. Red Ocean StrategyBlue Ocean Vs. Red Ocean Strategy

2.2. Blue Ocean Strategy ToolsBlue Ocean Strategy Tools

3.3. Strategy Canvas and Four Action FrameworkStrategy Canvas and Four Action Framework

4.4. Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy

5.5. Formulating Blue Ocean StrategyFormulating Blue Ocean Strategy

6.6. Executing Blue Ocean StrategyExecuting Blue Ocean Strategy

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Blue Ocean Vs. Red Ocean Blue Ocean Vs. Red Ocean StrategyStrategy


Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy

• Create uncontested

market space

• Make the competition

irrelevant

• Create and capture

new demand

• Create uncontested

market space

• Make the competition

irrelevant

• Create and capture

new demand

• Compete in existing

market space

• Beat the competition

• Exploit existing

demand

• Compete in existing

market space

• Beat the competition

• Exploit existing

demand

Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy


Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy

• Break the value- cost

trade off

• Align the whole system

of a firm’s activities with

its strategic choice of

differentiation and low

cost

• Break the value- cost

trade off




differentiation and low

cost

• Make the value-cost

trade off




differentiation or low

cost

• Make the value-cost

trade off




differentiation or low

cost

Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy


Blue Ocean Strategy ToolsBlue Ocean Strategy Tools

Strategy Strategy

CanvasCanvas

• A diagnostic tooldiagnostic tool for building a

compelling blue ocean strategy

• It captures the current state of playcurrent state of play in

the known market space

• Allow 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


Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate


Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate

Which of the factors that the industry

takes for granted should be eliminated?eliminated?

Which factors should be reduced well reduced well

belowbelow the industry’s standard?

Which factors should be createdcreated that

the industry has never offered?

Which factors should be raised well raised well

aboveabove the industry’s standard?


Four Action FrameworkFour Action FrameworkThe Case of Cirque du Soleil (A Circus Company)The Case of Cirque du Soleil (A Circus Company)

• Theme• Refined environment• Multiple productions• Artistic music and dance

EliminateEliminate ReduceReduce

RaiseRaiseCreateCreate

• Star performers• Animal shows• Aisle concession sales• Multiple show arenas

• Fun and humor• Thrill and danger

• Unique venue


Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy

1. Reconstruct market

boundaries

2. Focus on the big picture,

not the numbers

3. Reach beyond existing

demand

4. Get the strategic

sequence right

5. Overcome key

organizational

hurdles

6. Build execution into

strategy

Formulation PrinciplesFormulation Principles Execution PrinciplesExecution Principles


Formulating Formulating Blue Ocean StrategyBlue Ocean Strategy


1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries

• Focus on rivals within

industry

• Focuses on competitive

position within strategic

group

• Focuses on better

serving the buyer group

Head-to-Head StrategyHead-to-Head Strategy Blue Ocean StrategyBlue Ocean Strategy

• Looks across alternative

industries

• Looks across strategic

group within industry

• Redefines the industry

buyer group


1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries

• Focuses on maximizing

the value of product or

service offerings within

the bounds of its

industry

• Focuses on adapting to

external trends as they

occur

Head-to-Head StrategyHead-to-Head Strategy Blue Ocean StrategyBlue Ocean Strategy

• Looks across to

complementary product

and service offerings

• Participates in shaping

external trends over time


2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers

Focus on the

Big PictureBig Picture, not

the Numbers

The Four Steps of

Visualizing Strategy

• Visual Awakening

• Visual Exploration

• Visual Strategy Fair

• Visual Communication



Visual Visual

AwakeningAwakening

• Compare your business with your

competitors’ by drawing your “as is”

strategy canvas

• See where your strategy needs to

change



Visual Visual

ExplorationExploration

• Go to the field to explore the six

paths to creating blue oceans

• Observe the distinctive advantages

of alternative products and services

• See which factors you should

eliminate, create, or change



Visual

Strategy

Fair

• Draw your “to be” strategy canvas

based on insights from field

observations

• Get feedback on alternative

strategy canvases from

customers, competitors’

customers, and noncustomers

• Use feedback to build the best “to

be” future strategy



Visual

Communication

• Distribute your before-and-after

strategic profiles on one page for

easy comparison

• Support only those projects and

operational moves that allow your

company to close the gap to

actualize the new strategy


3. 3. Reach Beyond Existing DemandReach Beyond Existing Demand

The Three The Three

Tier of Non-Tier of Non-

customerscustomers

• First tier: “Soon to be” non-“Soon to be” non-

customerscustomers who are the edge of

your market, waiting to jump ship

• Second tier: “Refusing” non-“Refusing” non-

customerscustomers who consciously

choose against your market

• Third tier: “Unexplored” non-“Unexplored” non-

customerscustomers who are in markets

distant from yours


4. 4. Get The Strategic Sequence RightGet The Strategic Sequence Right

The Sequence of Blue Ocean StrategyThe Sequence of Blue Ocean Strategy

Buyer utilityBuyer utility

Is there exceptional buyer

utility in your business idea?

PricePrice

Is your price easily

accessible to the mass of

buyers?

CostCost

Can you attain your cost

target to profit at your

strategic price?

AdoptionAdoption

What are the adoption

hurdles in actualizing your

business idea?

A commercially viable A commercially viable

blue ocean ideablue ocean idea


ExecutingExecutingBlue Ocean StrategyBlue Ocean Strategy


5. 5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles

Overcome Key Overcome Key

Organizational Organizational

HurdlesHurdles

Cognitive Cognitive

HurdleHurdle

MotivationalMotivational

HurdleHurdle

ResourceResource

HurdleHurdle

Political Political

HurdleHurdle



Cognitive Cognitive

Hurdle Hurdle

(status quo)(status quo)

ResourceResource

HurdleHurdle

• Ride the “Electric Sewer”

• Meet with Disgruntled Customers

• Redistribute resources to your hot

spots

• Redirect resources from your cold

spots

• Engage in horse trading



Motivational Motivational

HurdleHurdle

PoliticalPolitical

HurdleHurdle

• Zoom in on Kingpins (key influencers)

• Place kingpins on a fishbowl

• Atomize to get the organization to

change itself

• Secure a consigliere on your top

management team

• Leverage your angels and silence

your devils


5. Build Execution Into Strategy5. Build Execution Into Strategy

Fair Process of StrategyFair Process of Strategy

Strategy Formulation Process

Fair Process – Engagement, Explanation, Expectation clarityStrategy Formulation Process

Fair Process – Engagement, Explanation, Expectation clarity

Attitudes

Trust and Commitment – “I feel my opinion counts”Attitudes

Trust and Commitment – “I feel my opinion counts”

Behavior

Voluntary Cooperation – “I’ll go beyond the call of duty”Behavior

Voluntary Cooperation – “I’ll go beyond the call of duty”

Strategy Execution

Exceeds Expectation – self initiatedStrategy Execution

Exceeds Expectation – self initiated


Source of ReferenceSource of Reference

• W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy,

HBS Publication


End of MaterialEnd of Material

Documents

1 Marketing.org Blue Ocean Strategy. 2 Marketing.org Contents 1.Blue Ocean Vs. Red Ocean Strategy 2.Blue Ocean Strategy Tools 3.Strategy