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Blue ocean strategy by shubham

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Blue Ocean Strategy
Blue Ocean Strategy
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Blue ocean strategy by shubham

  1. 1. CONTENTS INTRODUCTION TO BOS ANALYTICAL TOOLS OF BOS FORMULATING PRINCIPLES OF BOS EXECUTION PRINCIPLES OF BOS EXAMPLES OF BOS 1 2 3 4 5
  2. 2.  The blue ocean strategy means creating a new market space  The aim of BOS is not to out-perform the competition in the existing industry  To create new market space thereby making the competition irrelevant  Blue ocean strategy is based on the simultaneous pursuit of differentiation and low cost  It is an “and-and,” not an “either-or” strategy  Makes competition zero INTRODUCTION
  3. 3.  Blue ocean strategy offers systematic tools and frameworks to break away from the competition  Thus create a blue ocean of uncontested market space  These tools helps to skillfully achieve blue ocean  These tools are ANALYTICAL TOOLS OF BOS 1 2 3 VALUE INNOVATION STRATEGY CANVAS FOUR ACTION FRAMEWORK
  4. 4. VALUE INNOVATION  Value innovation is the corner stone of Blue Ocean Strategy  Value innovation places equal emphasis on value and innovation  It is a new way of thinking about and executing strategy that results in the creation of a blue ocean  The creation of blue oceans is about driving costs down while simultaneously driving value up for buyers The focus is on both differentiation and low cost to provide value to both customers and the organization
  5. 5. VALUE INNOVATION COST BUYER VALUE VALUE INNVATION Cost saving-Eliminate & Reduce competing factors Buyer value lifted- create & raise new elements
  6. 6.  The strategy canvas is both a diagnostic and an action framework for building a BOS  It captures the current state of play in the known market space  This allows you to understand the factors the industry currently competes on its products, service, and delivery  Also shows what customers receive from the existing competitive offerings on the market  The value curve then provides a graphic depiction of a company’s relative performance across its industry’s factors of competition  The horizontal axis captures the range of factors the industry competes on an invests in  The vertical axis captures the offering level that buyers receive across all these key competing factors STRATEGY CANVAS
  7. 7. STRATEGY CANVAS ( cont )
  8. 8. FOUR ACTION FRAMEWORK A New Value Curve Reduce Which factors should be reduced well below the industry’s standard? Create Which factors should be created that the industry has never offered? Raise Which factors should be raised well above the industry’s standard? Eliminate Which of the factors that the industry takes for granted should be eliminated?
  9. 9. PRINCIPLES OF BOS FORMULATING PRINCIPLES 1) Reconstruct market boundaries 2) Focus on big picture , not the numbers 3) Reach beyond existing demand 4) Get the strategic sequence right EXECUTION PRINCIPLES 1) Overcome key organizational hurdles 2) Build execution into strategy SIX PRINCIPLES OF BOS
  10. 10. BLUE OCEAN RECONSTRUCT MARKET BOUNDARIES Look across alternative industries Look across strategic groups within industries Look across the chain of buyers Look across complementary product & service Look across functional or emotional appeal to buyers Look across time
  11. 11.  How you align your strategic process to focus on big picture & apply these ideas to draw your company’s BOS?  Company and manager focus their main attention on big picture rather than immersed in numbers  Here strategy canvas tool is used to prepare strategy  Drawing strategy canvas does three things It shows 1) Strategic profile of an industry- - Identify the factors that can affect competition among industry players 2) Strategic profile of current & potential competitors- - Indentify which factors they invest in strategically 3) company’s strategic profile - - Depicting how it invests in competing factors FOCUS ON BIG PICTURES NOT NUMBERS
  12. 12. Visual Awakening Visual Exploration Visual strategy fair visual communication Compare your business with your competitors' by drawing your “As Is Strategy Canvas” Go into the field to explore the six paths to creating blue oceans Draw your “To Be Strategy Canvas” based on insights from field observations Distribute your before- and-after strategic profiles on one page for easy comparison See where your strategy needs to change See which factors you should eliminate, create or change Get feedback on alternative strategy canvases from customers, competitors’ customers and non- customers Support those Projects & operational moves that allow company to close the gaps to actualize the new strategy Observe the distinctive advantages of alternative products &services Use feedback to see the best to be future strategy FOCUS ON BIG PICTURES NOT NOMBERS(cont)
  13. 13. REACH BEYOND EXISTING DEMAND  The question here is “ how do you maximize the size of blue ocean that you are creating?” This can be done by 3rd principle “ reach beyond existing demand” General strategies of company- 1) focus on existing customers 2) finer segmentation to accommodate buyer diffrences To create BOS they need to 1) look at non-customers 2) build on powerful commonalities in buyer group values  This allows company to reach beyond existing demand to unlock new mass of customers that did not exist before
  14. 14. THIRD TIER SECOND TIER FIRST TIER YOUR MARKET  First Tier: “Soon-to-be” Noncustomers who are on the edge of your market, waiting to jump ship  Second Tier: “Refusing” Noncustomers who consciously choose against your market  Third Tier: “Unexplored” Non customers who are in markets distant from yours THE THREE TIERS OF NONCUSTOMERS REACH BEYOND EXISTING DEMAND
  15. 15. Buyer utility Is there exceptional buyer utility in your business idea? Price Is your price easily accessible to the mass of buyers? Cost Can you attain your cost target to profit at your strategic price? Adoption What are the adoption hurdles in actualizing your business idea? The Sequence of Blue Ocean Strategy A Commercially viable BLUE OCEAN IDEA GET THE STRATEGIC SEQUENCE RIGHT Y E S Y E S Y E S Y E S NO NO NO RETHINK RETHINK RETHINK
  16. 16. An organization wedded to the status quo Limited resources Internal & External resistance to change Unmotivated staff COGNITIVE HURDLE POLITICAL HURDLE MOTIVATIONAL HURDLE RESOURCE HURDLE FOUR KEY ORGANIZATIONAL HURDLES
  17. 17. COGNITIVE Ride the electric sewer - Experience first hand the ‘real situation on the ground’ Meet with Disgruntled Customers - ‘You can’t outsource your eyes’ - Get feedback from biggest critics MOTIVATIONAL Focus on ‘kingpins’ – The key influencers Fishbowl management of kingpins -Kingpins’ actions and inactions are made as transparent to others as are fish in a bowl of water Atomization- Framing of the strategic challenge RESOURCE Hot spots -Low resources input but high potential performance gains Cold spots -Activities that have high resource input but low performance impact Horse trading -Swap the resources around units to where it is needed POLITICAL Leveraging -Those who have the most to gain from the strategic shift Getting a consigliere on their top management team OVERCOME FROM ORGANIZATIONAL HURDLES
  18. 18. FAIR PROCESS Fair Process Engagement Explanation Expectation clarity Trust and Commitment “I feel my opinion counts” Voluntary Cooperation “I’ll go beyond the call of duty” Exceeds Expectations Self-initiated Strategy Formulation Process Attitudes Behavior Strategy Execution
  19. 19. NOVO NORDISC Danish insulin producing company Decided to create blue ocean Focused their attention on patients rather than doctors Novopen -the first user-friendly insulin delivery device Novolet- a pre-filled disposable insulin injection pen with a dosing system Innovo- an integrated electronic memory & cartridge based delivery system
  20. 20. Adnan Shennib Founder & CEO of iHear Medical I can’t image starting another medical device company without thinking Blue Ocean Strategy. BOS helped us focus on consumer needs and creating uncontested markets Taig Mac Carthy Co-Founder of GIK Blue Wine Blue Ocean Strategy has sincerely changed my life. And not in the mystic or metaphoric way people usually talk about books helping them: it provided a framework and specific tools that I applied and now I am the owner of a successful company at the age of 25 Brian Halligan Founder of HubSpot When we first started HubSpot, Dharmesh & I used Blue Ocean Strategy to map out our approach. The book is great at challenging you to differentiate from not only your competitors, but your alternatives

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