Focus on the Big Picture,

Not the Numbers

Presenter:

AMBER FATIMA

Chapter 4 B l u e O c e a n S t ra t e g y

The “Typical” Strategic plan

By doing things this way,

managers spend the majority of

the time filling in boxes

A very long document made up of mishmash

data

from different people of lengthy

description

of current industry

conditions and competitive situations

followed by a discussion of

how to increase market shares,

capture new segments, or cut

costs.Then an outline of goals and budgets with graphs

and spreadsheets

Develop a clear picture

of how to break from

the competition

No ‘muddle’—easy to

understand and communicate for

effective execution

Focus on the big picture,

not the numbers

• Lessens chance that strategy will be a red ocean move

• No documents, only a canvas

• Consistent in unlocking employee creativity to blue ocean strategy

Think Outside the Box

Focus on the BIG Picture

Drawing a strategy

canvas does 3 things:

Shows strategic profile of an industry by clearly depict the factors (and possible future factors) that affect competition

among industry players

Shows strategic profile of current and potential competitors and which factors

they invest in strategically

Shows company’s value curve depicting how it invests in the factors of competition and how

it might invest in the future

Had been struggling for a long time with an ill-defined

and poorly communicated

strategy

Deeply Divided : Began the strategy

process by bringing together

upper management from

Europe, N. American, Asia,

and Australia

corporate culture =“Nuts in the field,

brains in the center”

Example: EFS : European Financial ServicesBefore Implementing a Blue Ocean Strategy

The Four Steps of Visualizing Strategy

1. Visual Awakening

2. Visual Exploration

3. Visual Strategy Fair

4. Visual Communication

Step 1: Visual Awakening

Compare your business with

your competitors’ by

drawing your “as is” strategy

canvas.

See where your strategy needs

to change.

Common MistakesDiscussing strategy before resolving differences

Executives are reluctant to accept change

EFS Strategy Canvas (offline) TEAM -1

Price

Risk m

anage

ment consu

ltancy

Corporate dealers

Flexible paym

ent term

sSp

eed

Relationsh

ip manag

ement

Ease

of use

Responsiv

eness

Knowledge

EFS and its Nonbank Competitors

Banks

Offerings

Competitive Factors

High

Low

EFS Strategy Canvas (online) TEAM -2

Price

Electr

onic data

inter

chan

ge

Real-ti

me rate

s

Customer

support

Web sit

e attrac

tiveness

Speed

Ease o

f use

Accurac

y

Security

EFS Online

ClearSkies

Other Online Competitors

Offerings

Competitive Factors

High

Low

Step 2: Visual Exploration

Send team hands on approach.

• How people use or don’t use products or services.

Managers cannot outsource the face to

face interaction.

• Often rely on reports from people who are not directly impacted.

• “ A company should never outsource its eyes. There is not substitute for seeing for yourself.”

Step 2: Visual ExplorationEFS Collecting Data

EFS sent managers into the field to

explore the paths to create a blue ocean.

Interviewed people involved with

corporate foreign exchange.

Involved people and companies who

could benefit from using their services.

Looked at subordinate products

and services that their customers

used.

Step 2: Visual ExplorationEFS Evaluations from Fieldwork

• Speedy confirmation of transactions was item that customers valued most.

• What they thought was important turned out not to be what the customer thought was important.

• Because of these findings, EFS was able to reformulate new strategies.

• Redid the value curves and formulated new compelling taglines that fit their business model.

Managers research showed that conclusions were inaccurate.

Step 2: Visual ExplorationEFS

For each visual strategy team had to write compelling

tagline.

Led to competition between the two

teams and process was more enjoyable in

developing blue ocean strategies

Hands on approach with fieldwork is

important for managers.

“When you keep your hands on the objects in view, it gives you a far better idea about

the object than if seen otherwise.”

Washington University psychologists

Great strategic insight come from

seeing what is beyond the

boundaries and borders

Following the visual strategy fair, the teams were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced earlier.

They realized that 1/3 of what they had thought were key competitive factors were, in fact, marginal to customers. Another 1/3 either were not well articulated or had been overlooked in the visual awakening phase. It then

became clear that the executives needed to reassess things such as EFS’s separation of its online & traditional business.

After all 12 strategies were presented, each judge was given 5 sticky notes and told to put them next to his/her favorite, then explain why they did not choose certain curves.

Attendees included…

senior corporate executives noncustomers

customers of competitors

demanding EFS customers

(6 by the online group/6 by the offline group)

Both teams presented their strategy canvases at a visual strategy fair.

Step 3: Visual Strategy Fair

Price

Relationship M

anagement

Account E

xecutives

Corporate

Dealers

Ease of u

se

Secu

rity

Accuracy

Speed

Market

Commentary

Confirmation

Track

ing

EFS : Before and After EFS After Strategy Tagline

The Federal Express of corporate foreign exchange :•Easy , reliable ,fast and track able

Offerings

Competitive Factors

High

Low

EFS After Strategy

EFS and Other Traditional Competitors Before Strategy

The new value curve exhibited the criteria of a successful

strategy, and it displayed more focus than the previous

strategy

Figure summarize EFS’s 4 actions (Eliminate-Reduce-Raise-Create Grid) to create

value innovation, which is the cornerstone of blue ocean

strategy.

EliminateRelationship Management

RaiseEase of useSecurityAccuracySpeedMarket commentary

ReduceAccount ExecutivesCorporate Dealers

CreateConfirmationTracking

Step 3: Visual Strategy FairEFS Value Curve

EFS received a level of

feedback they never

expected.

1/3 of what they thought were key

factors were in fact marginal to customers

They learned that they needed to reevaluate long-held

assumptions.

Step 3: Visual Strategy FairWhat EFS Learned

They were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced

earlier.

They were in a position to draw a

future distinct strategy.

They were able to shift focus from

account executives to integration with

online services.

They could offer payment tracking similar to FedEx and UPS do for

parcels

“The FedEx of corporate foreign exchange: easy,

reliable, fast, and trackable.”

Step 3: Visual Strategy FairHow EFS Changed

Step 4: Visual Communication

This last step is important because you are to communicate the future strategy in a way for all

employees to understand.When communicating the future strategy, you need to “dumb it down”.

All employees, in all departments, need to understand.

Use only one page for easy comprehension.

Make sure everyone understands.

Support only plans in the direction of the new strategy.

Step 4: Visual CommunicationOne-Page Picture

History has shown it to be very helpful to put the firm’s new and old strategic profiles on

one page.

This makes it easier for all employees to see where their company has been, and where it

needs to go.

Used the one-page picture to demonstrate to all employees

Employees could see clearly where the company was and where it needed to focus to

have a promising future.

Senior managers held meetings discussing the picture and what needed to be eliminated and

raised to pursue a blue ocean.

Visualizing strategy can help managers predict and plan the company’s future growth

Pioneers:• Offer unprecedented value• Mass following of customers• Blue ocean strategists: most powerful sources of profitable growth

Settlers : “Me-too businesses”• Conform to basic shape of the industry• Confined to Red Oceans with low growth trajectory

Migrators• Give customers more for less, don’t alter basic shape• Offer improved value but not innovative value• Fall between red and blue oceans• Reasonable growth expected, but not exploiting potential growth

Using the Pioneer-Migrator-Settler(PMS)MAP

Using PMSA useful exercise for corporate management

profitable growth is to plot the company’s current and planned portfolios on PMS map

If current and planned portfolios consist mainly of settlers then:• (red ocean) and needs to push for value

innovation

If current and planned portfolios consist mainly of migrators then:• Reasonable growth can be expected but they

are not exploiting its potential fro growth

The more an industry is populated by settlers, the greater is the opportunity to value-innovate

and create a blue ocean of new market space

Pioneers

Migrators

Settlers

Today Tomorrow

Traditional strategic planning can be ridiculous waste of time due to:• Being documentation driven• Number crunching• Excessive bargaining• inflexibility

However, managers have an appetite for change

Overcoming the limitations of Strategic Planning

THANK YOU