Blue Ocean Strategy Framework v2 - Copy.pdf

Blue Ocean Strategy Summary

W.Chan Kim / Renee Mauborgne

Summarized by Kworker.com

www.kworker.com.

Confidential

2

What is Blue Ocean Strategy

Blue Ocean/. Blue Ocean Strategy.

Blue Ocean

All the industries not in existence today.

Blue Ocean

All the industries not in existence today.

Red Ocean

All the industries in existence today.

Red Ocean

All the industries in existence today.

z Compete in existing market place

z Beat the competition

z Exploit existing demand

z Make the value-cost trade-off

z Align the whole system of a firms activities with its strategic choice of differentiation or low cost

z Create uncontested market space

z Make the competition irrelevant

z Create and capture new demand

z Break the value-cost trade-off

z Align the whole system of a firms activities in pursuit of differentiation and low cost

Red Ocean Strategy Blue Ocean Strategy

www.kworker.com.

Confidential

3

Then Profit and Growth Consequences of Creating Blue Ocean

108 Blue Ocean 38%, Profit 61%.

39

62

86

61

38

14

0 20 40 60 80 100

Red OceanBlue Ocean

Business Launch

Revenue Impact

Profit Impact

www.kworker.com.

Confidential

4

Analytical Tools and Frameworks Strategy Canvas

Blue Ocean Strategy Canvas Frame. QB House Blue Club Blue Ocean

.Strategy Canvas of QB House

High

Price Reservation ExtraService

Range ofHair Treatment

Hygiene Time Savingon Waiting

Time Savingon Hair Cut

High performance

air wash

QB House

Average Japanese Barbershop

Low

www.kworker.com.

Confidential

5

Analytical Tools and Frameworks ERRC Grid

Frame Eliminate-Reduce-Raise-Create Frame. Yellow Tail Casella

Eliminate-Reduce-Raise-Create Grid [yellow tail]

Eliminate Raise

Reduce Create

z Enological terminology and distinctions

z Aging Qualitiesz Above-the-line marketing

z Wine complexityz Wine rangez Vineyard prestige

z Price versus budget winesz Retail store involvement

z Easy drinkz Ease of selectionz Fun and adventure

www.kworker.com.

Confidential

6

The Six Principles of Blue Ocean Strategy

Blue Ocean.

11 Reconstruct market boundariesReconstruct market boundaries

Blue Ocean CreationHead-to-Head Competition

z Looks across alternative industriesz Focuses on rivals within its strategy

z Focuses on competitive position within strategic group

z Looks across strategic groups within industry

StrategicGroup

z Focuses on better serving the buyer group

z Redefines the industry buyer groupBuyerGroup

z Focuses on maximizing the value of product and service offerings within the bounds of its industry

z Looks across to complementary product and service offerings

Scope ofProduct or Service

Offerings

z Focuses on improving price performance within the functional-emotional orientation

z Rethink the functional-emotional orientation of its industry

Functional-emotionalorientation

z Focuses on adapting to external trends as they occur

z Participates in shaping external trends over time

Time

Industry

www.kworker.com.

Confidential

7


Blue Ocean Strategy 6 Risk.

Formulating principles Risk Factors

11 Reconstruct market boundariesReconstruct market boundaries

22 Focus on the big picture, not the numbersFocus on the big picture, not the numbers

33 Reach beyond existing demandReach beyond existing demand

44 Get the strategic sequence rightGet the strategic sequence right

55 Overcome key organizational hurdlesOvercome key organizational hurdles

66 Build execution into strategyBuild execution into strategy

Execution principles

Search RiskSearch Risk

Planning RiskPlanning Risk

Scale RiskScale Risk

Business Model RiskBusiness Model Risk

Organizational RiskOrganizational Risk

Management RiskManagement Risk

www.kworker.com.

Confidential

8


Strategy Canvas Frame Blue Ocean Strategy.22 Focus on the big picture, not the numbersFocus on the big picture, not the numbers

z Compare your business with your competitors by drawing your as isstrategy canvas

z See where your strategy needs to change

z Go into the field to explore the six paths to creating blue oceans

z Observe the distinctive advantages of alternative products and services

z See which factors you should eliminate, create, or change

VisualAwakening

VisualAwakening

111Visual

ExplorationVisual

Exploration

222Visual

Strategy FairVisual

Strategy Fair

333

z Draw your to bestrategy canvas based on insights from field observations

z Get feedback on alternative strategy canvases from customers, competitorscustomers, and non customers

z Use feedback to build the best to be future strategy

VisualCommunication

VisualCommunication

333

z Distribute your before-and-after strategic profiles on one page for easy comparison

z Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy

Head-to-Head Competition

www.kworker.com.

Confidential

9


Insight. Blue Ocean.

33 Reach beyond existing demandReach beyond existing demand

Your Market

1st Tier

2nd Tier

3rd Tier

1st Tier Customer

2nd TierCustomer

3rd TierCustomer

z Soon-to-be noncustomers who are on the edge of your market, waiting to jump ship

z Refusing noncustomers who consciously choose against your market

z Un explored noncustomers who are in markets distant from yours

The Three Tires of Noncustomers

www.kworker.com.

Confidential

10



Blue Ocean Idea.

Buyer UtilityBuyer Utility

Is there exceptional buyer utilityin your business idea?

Is there exceptional buyer utilityin your business idea?

PricePrice

Is your price easily accessibleTo the mass of buyers?

Is your price easily accessibleTo the mass of buyers?

CostCost

Can you attain your cost targetTo profit at your strategic price?Can you attain your cost target

To profit at your strategic price?

AdoptionAdoption

What are the adoption hurdles in actualizing your business idea?

Are you addressing them up front?

What are the adoption hurdles in actualizing your business idea?

Are you addressing them up front?

Commercial ViableBlue Ocean Idea

The Sequence of Blue Ocean Strategy

www.kworker.com.

Confidential

11



6 Stages of the Buyer Experience Cycle 6 Utility Lever.

The Buyer Experience Cycle

PurchasePurchase DeliveryDelivery UseUse SupplementSupplement MaintenanceMaintenance DisposalDisposal

Customer Productivity

Simplicity

Convenience

Risk

Fun and Image

Environmental friendliness

UtilityLevers

www.kworker.com.

Confidential

12



Blue Ocean Idea 4. Frame.

Blue Ocean Idea (BOI) Index

UtilityUtility

PricePrice

CostCost

PhillipsCD-i

PhillipsCD-i

MotorollaIridium

MotorollaIridium

DoCoMoi-modeJapan

DoCoMoi-modeJapan

AdoptionAdoption

Is there exceptional utility? Are therecompelling reasons to buy your offering?

Is there exceptional utility? Are therecompelling reasons to buy your offering?

Is your price easily accessible to the massOf the buyers?

Is your price easily accessible to the massOf the buyers?

Does your cost structure meet the targetcost?

Does your cost structure meet the targetcost?

Have you addressed adoption hurdlesup front?

Have you addressed adoption hurdlesup front?

--

--

--

--

--

--

--

+/-+/-

++

++

++

++

www.kworker.com.

Confidential

13


Blue Ocean Idea.

The Four Organizational Hurdles to Strategy Execution

55 Overcome key organizational hurdlesOvercome key organizational hurdles

CognitiveHurdles

CognitiveHurdles

An organizationWedded to the

Status quo

An organizationWedded to the

Status quo

Motivational HurdlesMotivational Hurdles

Unmotivated StaffUnmotivated Staff

Political HurdlesPolitical Hurdles

Opposition from powerfulVested interests

Opposition from powerfulVested interests

Resource HurdlesResource Hurdles

Limited resourcesLimited resources

www.kworker.com.

Confidential

14


Blue Ocean Idea Fair Process. 66 Build execution into strategyBuild execution into strategy

Fair Process

EngagementExplanation

Expectation Clarity

Fair Process

EngagementExplanation

Expectation Clarity

Trust and Commitment

I feel my opinioncounts

Trust and Commitment

I feel my opinioncounts

VoluntaryCooperation

Ill go beyondthe call of duty

VoluntaryCooperation

Ill go beyondthe call of duty

Exceeds Expectation

Self-initiated

Exceeds Expectation

Self-initiated

Strategy Formulation

Process

Attitude

Behavior

StrategyExecution

How Fair Process Affects Peoples Attitude and Behavior

www.kworker.com.

Confidential

15


Blue Ocean.

1908The Model T

1908The Model T

1924General Motors

1924General Motors

Blue Ocean Creation History in US Automobile Industry

z 1893,

z 1908 Henry Ford Model T, Blue Ocean

z 1908 Ford 6%1921 60%

z Ford Horseless carriage

z 1924 GM Value Blue Ocean

z GM 20%50%

z Ford 50%20%

z Chrysler Big3

z 1970, 70 Oil Shock

z 1980Big3 $4Bil (4)1970sJapanese Cars

1970sJapanese Cars

Blue Ocean z Big 3

1984Chryslers Minivan

1984Chryslers Minivan

z Chrysler VanMinivan Blue Ocean

z SUV

z 1998 SUV750

www.kworker.com.

Confidential

16


Durwood 63 Multiplex 95 Megaplex Blue Ocean AMC

1905Nickelodeon

Theater

1905Nickelodeon

Theater

1963Multiplex

1963Multiplex

1995Megaplex

1995Megaplex

Blue Ocean Creation History in US Movie Theater

z 1893 Kinetoscope,

z 1905 Live

Blue Ocean

z 19072

z Kansas City Durwood 1963 Multiplex Risk,

z Durwood AMC 2 Chain

z 1980 Multiplex

Valuez 1995 AMC 24

Megaplex

z 95 01

1215

z AMC MegaplexMultiplex 8.8%

www.kworker.com.

Confidential

17


PPT (Power Point) File, [email protected] 6

PPT File. .

kworker. .

What is Blue Ocean StrategyThen Profit and Growth Consequences of Creating Blue OceanAnalytical Tools and Frameworks Strategy CanvasAnalytical Tools and Frameworks ERRC GridThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean Strategy

Documents

Blue Ocean Strategy Framework v2 - Copy.pdf