3. Can you find a Blue Ocean?
Goal is to help you understand the essence
of Blue Ocean Strategy
Encourage you to go exploring
Leave with a tool kit to start the process
3
4. Blue Ocean Strategy
W. Chan Kim and Renee
Mauborgne
Studied 150 Companies in 50
industries over 100 year horizon
What worked and what didn’t?
And, how do I do it?
6. What did you see, feel and think?
Classical Music Pop Music
Traditional Setting Untraditional setting
Dress in classic form Colors, fashion
Conductor’s back Conductor’s Personality
Disengaged Face First
Focused on adults Totally engaged
Funeral Young and Old
Party
6
7. Must have a Real Strategy
A well-defined,
integrated, cohesive
approach
A clear, simple
story
What’s your
hook?
7
8. All Strategies Ask…
Which customers or
markets?
What distinguishes us?
What value proposition?
Why key processes give
us competitive advantage?
What are the human,
technological or
organizational enablers of
the strategy?
8
9. Classic Structured Strategic Thinking
Takes market structure
as a given.
Drives you to carve out a
position against the
competition in the
existing market space.
Reel in the
competition
9
10. So, How Do You Win?
Grabbing a
bigger share of
the market is a
zero-sum game—
One wins, the
other loses.
10
11. Blue Ocean Strategy
Reconstruct the market
Creating demand in market
space that does not exist
today
11
12. Why Should You?
Studied business launches in 150
companies
86% line extensions with 62% total revenues
39% of total profits
Red Ocean of Competition
14% invested in creating new market
space
38% total revenues but a startling
61% of total profits
Blue Ocean of New Market Space
12
13. Want to Swim?
OR
Blue Ocean of
Unmet Demand?
I need that !!!
Red Ocean of
Bloody Competition?
13
14. Blue Ocean Strategy
Add Value + Innovation
Make the Competition Irrelevant
Change the “Value-Cost”
Trade-off
Focus on the Nonuser
Align the Entire Organization
14
15. It is All About You!
All about the Strategic
Moves people made to
solve problems differently.
They saw solutions in
different ways. And then
made them happen.
15
18. Interesting industry to tackle
About 6,500 wine brands in US.
Ninety-six percent of those wine brands sold
less than 100,000 cases in 2002
Only 23 wine brands sold at least 2 million
cases each, accounting for 40 percent of a
growing market of 245 million cases.
First time they tried to tackle the market
(yellow tails’ )® predecessor, the Carramar
Estate Label, failed for the Cassella Wine
Company
18
19. What to do?
John Soutter and the Cassella
family, rethought the industry
established keys to the
promotion of wine as:
a unique beverage
for the informed wine drinker
worthy of special occasions
19
20. Wine Red Ocean Strategic Canvas
High
Premium Wines
Budget Wines
Low
Use enological
terminology Above- Vineyard
the-line Aging Wine Wine
Price and distinctions Prestige
marketing Quality Complexity Range
in wine and
communication Legacy
How to make fun and nontraditional wine that’s easy to
drink for everyone—particularly non-wine drinkers?
20
21. Went looking for a Blue Ocean
Reconstructured its
market strategy to
Turn non-drinkers
into frequent
enjoyers.
Only 15% of
Americans drank
wine-Red Ocean
85% drank other
things-Blue Ocean
waiting for them
21
22. The Four Actions Framework -- ERRC
Reduce
Which factors
should be reduced
well below the
industry’s standards
Eliminate Create
Which of the factors A New Which factors
that the industry Value should be created
takes for granted
Curve that the industry
should be has never offered?
eliminated?
Raise
Which factors should
be raised well
above the
industry’s standard?
22
23. For (yellow tail)®…
Eliminate Raise
Enological terminology and Price versus budget wines
distinctions Retail store involvement
Aging qualities
Above-the-line marketing
Reduce Create
Wine complexity Easy drinking
Wine range Ease of selection
Vineyard prestige Fun and adventure
23
24. Strategic Canvas (yellow tail)® wines
Strategy Canvas (yellow tail)
High
Premium Wines
(yellow tail)
Focus
Diversification
Tag Line
Budget Wines
Low
Use of Above-the-
Encological line Aging Vineyard Wine Wine Easy Ease of Fun and
Price Distinctions Marketing Quality Prestige Complexity Range Drinking Selection Adventure
24
25. Results
John Soutter expected to sell
25,000 cases in 2001, the first
year (yellow tail)® would hit the
market.
Cautious but lucky--the wine sold
9 times as much!
Bold branding
Good product
Very affordable price
Bottles with the fancy kangaroo
leapt off the shelf.
25
26. Execution helped
Retailers received the brightly colored
branded displays on time and were clearly
built into the entire process
26
27. Today, Dominates the American Market
« Dominating the overseas export market,
[yellow tail]® is the fastest growing imported
wine in US market history.
The Shiraz is currently ranked as the No.1
selling 750ml red wine in the USA.
The [yellow tail]® Merlot being the No. 1
selling Merlot in the USA.
Selling more than 300,000 bottles a day,
[yellow tail]® is now regarded as a global
phenomenon. »
27
29. Today new stories coming out
Shimano—Coasting
Bike for non-bikers
Wii—gaming for
non-game players
29
30. Pattern Here
Concept Targeted Alternatives
Nonusers
Andre Rieu Non-concert Rock, pop, jazz
goers/younger everything but
people classical music
Yellow Tail Non-wine drinkers Beer/hard liquor
Ford Non-car drivers Horses
Southwest Non-fliers Drove distances
Curves Women who did not Gold’s Gym or in-home
work out equipment
American Girl Girls but not the Video games/no time
dolls with mom
Cirque Du Soleil Adults—non-circus Theater, dance,
goers circuses for kids
Wii Non-gamers Lots of options
Shimano Coasting Non-bikers Lots of options
Bike
30
31. EAC/Integrated Power Solutions
A Battery Design and
Manufacturing
Company
“We were OEM’s–
Original Equipment
Manufacturer in the
battery creation
business”
31
32. Strategic Canvas Process
Beginning of the process they thought
what mattered to the customer was:
Vertically Integrated
Battery design experts
Global Manufacturer
Good Customer Service, responsive to
solving problems
Good supplier relationships
32
33. Not of much importance
Branding
Financial stability
Charger capabilities
33
34. Their Strategic Canvas
Summary Strategic Canvas
5-High tg/am
sb/jd tg/jd tg/am/jr tg/am/jr jr
3-Medium jr am am/jr sb/jd sb/jd sb
tg/ am/ jr/jd tg/jr/sb/jd tg/am/jr/sb jr
1- Low sb jd tg/am/jd tg/am/sb/jd
Battery Wholly Owned
Vertical Expertise/ Charger Global Customer Supplier Financial CM
Integration Experience Expertise Manufacturing Service Relationships Stability relationships Branding
34
35. How they saw their competitors
What they thought about their competition along the same
attributes that they thought were important to their own
customers.
35
36. Took them out to the field
Found a whole different set of issues for their
customers and nonusers among their customers
Speed to market
Innovative ideas about mobile power
solutions
Stay on top of the battery power
industry—what was happening that could
help them?
Teach them about rechargeable power.
Give them a competitive edge.
Longer, stronger, lighter power solutions.
36
37. For EAC…
Eliminate Raise
Focus on only disposable Integrated Power Solutions
batteries Speed
Acting like an order taker Competitive Advantage
Technical Advantage
Proactive leadership and
consultative services
Reduce Create
Concern with pricing Charger Capabilities
Concern with reactive Innovation
customer service Branding
Focus on Vertical Integration
37
38. Now they Visualized a Blue Ocean
Summary Strategic Canvas
5-High tg/am
Customer
Needs/Desires
sb/jd tg/jd tg/am/jr tg/am/jr jr
3-Medium jr am am/jr sb/jd sb/jd sb
tg/ am/ jr/jd tg/jr/sb/jd tg/am/jr/sb jr
1- Low sb jd tg/am/jd tg/am/sb/jd
Wholly needs
Owned help state of
Battery Global Supplier CM them be innovative needs the art
Vertical Expertise/ Charger Manufactur Customer Relationship Financial relationship speed to cutting (game Customer- technical information
Integration Experience Expertise ing Service s Stability s Branding market edge boy) centric talent n
Change the Focus, Differentiation and the Brand
•Tag line: Lighter, Longer Power Solutions
•What we do: Batteries and Chargers and Ideas and
Solutions
38
39. What are you investing in? Not investing in?
What is on the bottom of your canvas?
What do you and your industry invest in—
or use to?
What could be on your canvas but isn’t?
Marketing
Fun
Environmental benefits
Easy to use/to buy
Less complex
Innovation
39
40. What could be on the bottom of yours?
High
Premium Wines
Budget Wines
Low
Use enological
terminology Above- Vineyard
the-line Aging Wine Wine
Price and distinctions Prestige
marketing Quality Complexity Range
in wine and
communication Legacy
Would you look just like your competitors?
Do you have a focus or are you all over the canvas?
What are potential customers using instead of your industry?
40
41. Let’s think about your Strategic Canvas
Strategy Canvas -- Your Company
High
Low
PRICE
INDUSTRY ATTRIBUTES YOU ARE INVESTING IN
Would you look just like your competitors?
Do you have a focus or are you all over the canvas?
What are potential customers using instead of your industry?
41
42. Maybe you see yourself as the low price
distributor
High
Low
Full line Excellent Above the
Customer of Good sales line Online
Price Service products inventory people marketing strategy
Do you know what you are focused on and investing in?
Are these the things that you are investing in?
Are you investing in the things that matter to customers?
42
43. Maybe you are the premium distributor
High
Low
Full line Excellent Above the
Customer of Good sales line Online
Price Service products inventory people marketing strategy
Or are you the premium distributor?
Are you innovative and using the Internet ?
Are you investing in the things that matter to customers?
43
44. Maybe there are other things
High
Low
Make
Excellent Online them
Customer Full line of Good sales conversati Ease of Simple to more
Price Service products inventory people ons Innovation use buy profits
Maybe you are going out and listening to the end user?
Maybe there are things you can do to address their headaches?
Hit those levers to make it easier for them?
44
45. Let me share a story with you
A company who did this in your industry
Wanted to add value but in an innovative
way
Went out and listened to users and
nonusers, customers and noncustomers
Did a Blue Ocean Strategy without even
calling it that
45
47. Culture of Techline
Belief that adding value in an innovative way is
exactly what they should be investing in—
strategic canvas would be high in innovation
Went out exploring to listen to customers and
non-customers
Went back and found ways to re-think what
was being done, improve buyer’s utility:
Make it easier to get the job done
Make it better ROI—faster and simpler
Created demand in an entirely new market space
47
48. What did they do?
Looked across industries
Applied a Lego-model to electrical fittings
Thought about time in a new way
What use to take hours takes seconds
From a buyer’s use
More safely, more productively, more fun
48
49. What came out was very Blue Ocean
Snap Track was developed in response to
repeated requests for a complete industrial
cable tray system designed for the limited
width requirements of instrumentation data
cable.
Snap Track has been designed to provide
the ease of installation and the economy of
wire basket tray while retaining the stability
and inherently superior cable protection of
traditional raceway. Our philosophy is simple
– the purpose of a cable tray system is to
support and “Protect the Cable”.
49
51. Visual Awakening
Take your management team through a
Visual Awakening
• What does your industry invest in?
• What do you invest in?
• What could you invest in to create a Blue Ocean
and open up new market space?
Strategy Canvas -- Your Company
High
Low
Industry Attributes
51
52. Let’s Go Exploring…
Get out of the office
Go into the field
Take a camera
Take a video camera
Spend a day with a customer
Listen to nonusers—don’t ask
them
Take an anthropologist
53. Headaches? Go-Arounds?
What could you see that would add value
in an innovative way?
Six Levers to improve Buyer’s Utility
Make Buying Easier?
Use Simpler?
Reduce the Risks?
Make Them More Productive?
More Environmentally Friendly?
Make it Fun, and Adventure
53
54. Buyer Experience Cycle
The Six Stages of the Buyer Experience Cycle
1. 2. 3. 4. 5. 6.
Purchase Delivery Use Supplements Maintenance Disposal
Customer
Productivity
Simplicity
Convenience
Risk
Fun and
Image
Environmental
friendliness
54
55. Who am I looking for?
Nonusers
The first tier Your BOS Market
minimally buy an
industry’s offering out
of necessity.
The second tier First
refuse to use your Tier
industries offerings.
Second
The third tier never
Tier
thought of your
market’s offerings as
an option. Third
Tier
55
56. Where are they? Shift your Focus
Industry
Strategic group
Red Stuck
Ocean within
Buyer group
Scope of product or Blue
service offering Ocean Across
these
Functional-emotional
orientation of an
industry
Time
Kim & Mauborgne 2005
56
57. Once you are done, what next?
Draw your “To Be”
Canvas
Visualize some ideas
about new solutions
Get feedback on
alternative strategy Strategy Canvas -- Your Company
Use feedback to build the High
best “to be” future
strategy Low
Industry Attributes
57
58. Where do I find my Blue Ocean Opportunity?
Go Exploring
58
59. Time for to get out of the office
“ If you want to understand how a lion hunts,
don’t go to the zoo. Go to the Jungle.”
(Kevin Roberts, Saatchi & Saatchi)
59
60. Please, don’t ask them what they need
Henry Ford’s quote:
“If I had asked people
how I could improve
their transportation
they would have told
me to make their
horses go faster.”
60
61. What are you trying to do?
Blue Ocean Strategic Theory
Add Value + Innovation
Make the Competition Irrelevant
Change the “Value-Cost”
Trade-off
Focus on the Nonuser
Align the Entire Organization
61
62. Why Should I Find My Blue Ocean?
Because it could open up an entirely
new opportunity for you!
62
63. This copy of our presentation today was created to help you take these tools and
apply them to your own company. The goal is to discover your company’s own
Blue Ocean with new ideas, new market space, new customers and new demand.
Please let us know how your exploring goes. We like to help others with case
studies. Perhaps you will become a success story we can share as well.
Send us your story to: asimon@simonassociates.net
We would love to continue our discussions. Feel free to Skype us andrea.j.simon
or connect however you like.
Simon Associates Management Consultants
1905 Hunter Brook Road
Yorktown Heights, NY 10598
www.simonassociates.net
asimon@simonassociates.net
Phone 914-245-1641
Cell 914-261-1631
63