Awards
Bestseller
Best Book of 2005
Top Ten Business Books of 2005
#1 Strategy Book of 2005
Bestseller
Best Business Book 2005
#1 Bestselling Book
Prix des Dirigeants Commerciaux
Book Summary
- competitor-free markets that innovative companies can navigate
Red Ocean
- explored and crowded with competitors
Blue Ocean
- untapped market space
- opportunity for highly profitable growth
Cocktail Party Statements
- Aaron: True strategy is
- not about engaging in a bloody competition
- but creating a new customer in uncharted territory.
Cocktail Party Statements
- Karin: Be different.
Cocktail Party Statements
- Phil: Avoid conflict at all costs.
Cocktail Party Statements
- @leobessa: Unleash new market spaces through focus and divergence.
How Blue is your Ocean?
- Is your company facing
- heightened competition
- from domestic and international rivals?
- Do your sales representatives increasingly argue
- they need to offer deeper and deeper
- price discounts to make sales?
- Are you finding you
- need to advertise more
- to get noticed in the marketplace?
- Do you blame your slow growth on your market?
- Is it easier to
- get funding to match a strategic move made by your competitor
- or
- get internal funding to support a strategic move that allows you to break away from the competition?
- Is commoditization of offerings
- a frequent worry of your company?
How Blue is your Ocean?
- List your key competitive factors
- now list your competition’s.
- Are they largely the same?
- If you answered yes to a majority
- of these questions then your company is
- stuck in the red ocean.
Blue Ocean Strategy offers you
- a way to swim out of the red ocean
- theory
- tools
- frameworks to allow your company to break away from the competition
Creating Blue Oceans
Think About
- declining industry
- limited potential growth
- supplier power was strong
- buyer power was strong
Circus Industry - 1984
- declining industry
- limited potential growth
- supplier power was strong (star performers)
- buyer power was strong
Alternative Entertainment
- sports events
- Playstation
"We Reinvent the Circus"
Cirque du Soleil
- created uncontested new market space
- adults and corporate clients
Stop trying to beat the competion
Red Oceans
- industry bondaries are defined and accepted
- rules of the game are known
Blue Oceans
- untaped market space
- demand creation
- opportunity for highly profitable growth
Q: Dominant focus of strategy (over the past 25 years)?
A: red ocean strategies
The Continuing Creation of Blue Ocean
Look back 100 years
- How many of today's industries were then unkown?
- automobiles
- music recording
- aviation
- petrochemicals
- health care
Look back 30 years
- How many of today's industries were then unkown?
- mutual funds
- cell phones
- gas-fired eletricity plants
- biotechnology
- discount retail
- express package delivery
- minivans
- snowboards
- coffee bars
- home videos
Look forwards 20 years
- What do you see?
The language of strategy
- chief executive officers
- headquatters
- troops
- front lines
- confronting an opponent
- fighting over a given piece of land
- limited and constant
Unlike war...
- market universe has never been constant
The Impact of Creating Blue Oceans
Unit of Analysis
- basic observable entity
- used to study and explain the success or failure of businesses over time
- Q: Are there lasting "excellent" or "visionay" companies that continuosly outperform the market?
- The strategic move is the unit of analysis upon which the
- logic,
- tools,
- and methodologies
- of blue ocean strategy are derived.
Value Innovation
Value Innovation
- Don't use the competion as your benchmark
Value Innovation
- "If I’d asked people what they wanted, they would have said a faster horse." - Henry Ford
Value Innovation
- Utility
- Price
- Cost
Value Innovation (if it fails)
- Market Pioneers
- Technology innovators
Value-cost trade-off
- Greater Value @ Higher Cost
- Reasonable Value @ Lower Cost
Value Innovation
- Differentiation
- AND
- Low Cost
Value Innovation
- @ Cirque du Soleil
- Famous Clowns
- Lion Tamers
Value Innovation
- @ Cirque du Soleil
- Thrill of the Circus
- Intellectual Sophistication
- Artistic Richness of Theater
Key Factors
- @ Cirque du Soleil
- Tent
- Clowns
- Classic Acrobatics
Value innovation
- is more than innovation
- it's about strategy
Value innovation
- Leap in value
- for buyers
- AND
- for the company
6 Principles of Blue Ocean Strategy
Strategy formulation
- Reconstruct market boundaries
- Focus on the big picture, not the numbers
- Reach beyond existing demand
- Get the strategic sequence right
Strategy Execution Risks
- Overcome key organizational hurdles
- (tipping point leadership / hurdles)
- Build execution into strategy
- (fair process)
Analytical Tools and Frameworks
Let's look at one industry
U.S. wine industry
- $20 billion industry
- intensely competitive
- California
- France
- Italy
- Spain
- Chile
- Australia
- Argentina
Consolidation
- Top 8 (75%)
- 1600+ (25%)
Hardly Attractive*
- intense competition
- price pressure
- increasing bargaining power
- *in conventional thinking
Q:How do you break out of this bloody competion?
A:Make the competition irrelevant.
The Strategy Canvas
Purpose #1 of 2
- captures the current state of play
Key Factors
- Price
- Enological terminology/distinctions
- Above-the-line-marketing
- Aging quality
- Vineyard prestige and legacy
- Wine complexity
- Wine range
High Offering level means
- Offers buyers more
- invests more
Purpose #2 of 2
- Reorientates your strategic focus
- competitors to alternatives
- customers to noncustomers of the industry
The Four Actions Framework
Which of the factors that the industry takes for granted should be eliminated?
Which factors should be reduced well below the industry's standard?
Which factors should be raised well above the industry's standard?
Which factors should be created that the industry has never offered?
Eliminate-Reduce-Raise-Create
3 Characteristics of a Good Strategy
- Focus
- Divergence
- Compelling Tagline
Focus
- Every great strategy has focus
- the value curve should clearly show it
Divergence
- value curves always stand apart
Compelling Tagline
- Deliver a clear message
- advertise an offering truthfully
Southwest Airlines
What could be the Southwest Airlines tagline?
"The speed of a plane at the price of car - whenever you need it."
References
- Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne harvard business review
- http://www.blueoceanstrategy.com/
- http://www.strategizeblue.com/
Some Moves
