2. Blue Ocean Strategy is a
powerful concept to work
on the value proposition
and explore new market
segments
3. “Blue Ocean Strategy: How to create uncontested market space and make the competition
irrelevant”
W. Chan Kim, Renée Mauborgne (2005), http://www.youtube.com/watch?v=HJH0g-EPGDs
4. Traditional logic
Focus on beating the
competition, winning market
share, capturing consumers
and outselling the competition
5. The worst error in strategy
is competing with rivals on
the same dimensions
Source: professor Michael E. Porter
7. The strategy canvas captures
the current state of
competition in an industry and
the company’s value curve
8. Vertical axis: the offering level that buyers receive
across all these key competing factors
Horizontal axis: the range of factors de
industry competes in
9. Playstation, Xbox
Wii
Reduce
Raise Create
Eliminate
High
Value
curve
Low
12. The three Tiers of noncustomers
“Unexplored”
noncustomers
Third (They have not been targeted or
Tier thought of as potential customers
by any player in the industry)
Second
Tier
“Refusing” noncustomers
First (They either do not use or
Tier cannot afford to use the current
markett offerings because they
find them unacceptable of
beyond their means)
“Soon-to-be” noncustomers
(They minimally use the current market
offerings to get by as they search for
something better)
Source: “Blue Ocean Strategy”
13. The six paths to shift the
strategic focus from
customers to alternatives
14. Six boundaries, six paths
Conventional Logic BOS Logic
Industry Rivals within your industry Look across alternative industries
Strategic group
Better serving your strategic Look across strategic groups in
group your industry
Better serving industry’s buyer Looking across the chain of
Buyer group
group buyers
Scope of product and Maximizing value of product or Look across complementary
service offering service product and service offerings
Functional-emotional Positioning within functional- Look across functional or
orientation emotional orientation of industry emotional appeal to buyers
Adapting to external trends as Look across time
Time
they occur
Source: “Blue Ocean Strategy”
15. What is the chain of buyers in
What are the strategic groups your industry? Which buyer
What are the alternative on your industry? Why do group does your industry
industries to yours? Why do customers trade up for the typically focus on? If you shifted
customers trade across them? higher group, and why do they the buyer group of your industry,
trade down for the lower one? how could you unlock new
value?
Does your industry compete on
What is the context in which What trends have a high
functionality of emotional
your product or service is used? probability of impacting your
appeal? If you compete on
What happens before, during, industry, are irreversible, and
emotional appeal, what
and after? Can you identify the are evolving in a clear
elements can you strip out to
pain points? How can you trajectory? How will these trends
make it functional? If you
eliminate these pain points impact your industry? Given
compete on functionality, what
through a complementary this, how can you open up
elements can be added to make
product or service offering? unprecedented customer utility?
it emotional?
Source: “Blue Ocean Strategy”
16. The Eliminate – Raise –
Reduce – Create grid is the
key to breaking the trade-
off between differentiation
and low cost
17. Which factors should be
reduced well below the
industry’s standard?
Which of factors that the Which factors should be
industry takes for granted created that the industry
should be eliminated? has never offered?
Which factors should be
raised well above the
industry’s standard?
Source: “Blue Ocean Strategy”
19. Costs Buyer Value
Source: “Business Model Generation”
20. Red versus blue
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new demand
Make the value-cost trade-off Break the value-cost trade-off
Aling the whole system of a Aling the whole system of a
company’s activities with its company’s activities in pursuit of
strategic choice of differentiation differentiation and low cost
of low cost
Source: “Blue Ocean Strategy”
21. The process
Draw your “as-is” strategy canvas, comparing your
business with your competitors
Talk to and watch customers, noncustomers, users,
influencers, etc.
Explore new value curves using insights from research and
the six paths
Sketch your potential new value propositions
Test your potential new value propositions with customers,
noncustomers, customers of competitors, etc.