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Closing the Gab between Blue Ocean Strategy and Execution by W.Chan Kim and Renee Mauborgne

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Closing the Gab between Blue Ocean Strategy and Execution by W.Chan Kim and Renee Mauborgne

  1. 1. STRATEGY Closing the Gap Between Blue Ocean Strategy and Execution by W. Chan Kim and Renee Mauborgne FEBRUARY 05, 2015 CRITIQUE BY: Dr. Hossam GHONEIM
  2. 2. References …
  3. 3. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  4. 4. Strategic management Value proposition People proposition Profit proposition
  5. 5. What is Blue Ocean Strategy? • The avoidance of costly competition through innovation with the aim to create a market where no firms currently operate, leaving the company to expand without competition. www.derekhendrikz.com
  6. 6. RED ocean strategy Red Oceans represent all industries in existence today. They have defined rules, competitors, and market boundaries. Key words might include competition, price wars, market share, commoditization, benchmarking, strategic positioning, value add.
  7. 7. BLUE ocean strategy Blue Oceans represent all industries NOT in existence today. This is undefined market space, otherwise known as OPPORTUNITY Key words might be value innovation, focus, differentiation, creation of demand, new marketplace
  8. 8. The phrase “Blue oceans” is new, but the concept is not. Think of what industries existed in 1900.
  9. 9. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  10. 10. www.derekhendrikz.com
  11. 11. Blue ocean Vs. Red ocean
  12. 12. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  13. 13. Implementing BOS
  14. 14. Creating Blue Ocean Value innovation is the “new” strategic logic behind Blue Ocean Strategy. Instead of focussing on beating the competition, you focus on making it irrelevant by creating a leap in value for buyers and creating uncontested market space.
  15. 15. Creating Blue Ocean Value innovation only occurs when organizations have aligned innovation with utility, price and costs. The market must be ready to accept the product, meaning that timing is key. The focus is on both differentiation and low cost to provide value to both customers and the organization.
  16. 16. Value Innovation Eliminate Reduce Raise Create Simultaneous pursuit of differentiation & low cost
  17. 17. Creating Blue Ocean
  18. 18. Analytical tools & frameworks
  19. 19. Analytical tools & frameworks
  20. 20. Reconstructing Market Boundaries – 6 Path Framework
  21. 21. The big picture not the numbers
  22. 22. The non-customer approach
  23. 23. The Sequence of Blue Ocean Strategy
  24. 24. Buyer utility
  25. 25. Pricing & cost structure
  26. 26. Adoptions Employees - Companies should work with employees to find ways of defusing the threats so that everyone in the company wins, despite shifts in people’s roles, responsibilities, and rewards. Business Partners - Address resistance of partners who fear that their revenue streams or market positions are threatened by a new business idea. General Public - Opposition to a new business idea can also spread to the general public, especially if the idea is very new and innovative, threatening established social or political norms. - The company should take charge and educate public and address their concerns.
  27. 27. Implementing BOS Where are we?
  28. 28. Fair process Aligning people’s minds and hearts with the new strategy by building a culture of trust, commitment, and voluntary cooperation in its execution, as well as support for the leader - Engagement - Explanation - Expectation clarity
  29. 29. The Execution Consequences of the Presence and Absence of Fair Process in Strategy Making • Emotional – When individuals are treated with emotional recognition, they feel emotionally tied to the strategy and inspired to give their all • Intellectual – When individuals feel recognized for their intellectual worth, they are willing to share their knowledge;
  30. 30. Imitations barriers to BOS
  31. 31. Structure Framework BOS • Creation • Analytical tools & frame work Formulating BOS • Reconstruct market bounderies • Focus on big picture not numbers • Reach beyond existing demand • Get strategic sequence right Executing BOS • Overcome org hurdles • Build execution into strategy • Sustainability & renewals of BOS
  32. 32. BOS Want BOS? Creation VI 6 principles Analytical tools and framework Strategy canvas 4 action framework Cost Eliminate reduce Value Create raise Formulation Reconstruct market 6 path frameworkboundaries 1 Industry 2 strategic group 3 buyer group 4 scope of product or service offered 5 Functional-emotional orientation 6 time Focus on big picture not numbers Visual awakening Visual exploration Visual strategy fair Visual communication Reach beyond existing demand 3 tiers of non-customer Get strategic sequence right Strategic Sequence of BOS Buyer utility issues (map) Profit model (pricing & cost) Adoption Employees Business partener General public Execution Overcome key org hurdles Cognitive hurdle Resource hurdle Motivational hurdle Political hurdle Build execution into strategy Fair process (3 E’s) Engagement Explanation Execution clarity Sustainability & renewals of BOS ImmitationBarriers to BOS BOS Summary
  33. 33. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  34. 34. The perfect example • To understand how an organization achieves alignment to produce a high-performing and sustainable blue ocean strategy, let’s look at Comic Relief, a UK fund-raising charity.
  35. 35. Founded in 1985, Comic Relief leapfrogged existing UK fund-raising charities and emerged as one of the most distinctive charities in the UK that also enjoys the lowest costs In an overcrowded industry that suffered rising costs, declining demand, and a public confused by the sheer number of fund-raising charities, Comic Relief rapidly achieved 96 percent national brand awareness and has raised over £950 million by inspiring everyone from traditional wealthy donors to previous nondonors to give while UK charities get, on average, only 45 percent of their funds from the public—the rest coming from government grants and corporations—Comic Relief has raised 100 percent of its donations directly from the public and has done so with no paid marketing or mail solicitations
  36. 36. How did Comic relief ALIGN the three strategies to produce differentiation & low cost, BOS ? Value proposition People proposition Profit proposition
  37. 37. Value proposition – New value, Forget pity, guilt & grief; it’s FUNdraisng • REDNOSE day – Go to the mass not just the rich, old, educated, Government funds and NGO’s • no big checks • every penny counts (golden pound promise) • 100% collected is donated – Drop paid campaigns and solicitation of funds – Creating community fundraising, everyone is a volunteer customer and donor, its not a stranger that is asking for money, its your friend & family member.
  38. 38. Profit proposition – Achieving fundraising in a differentiated way by low cost. • NO trusts, funds, gala parties, dedicated charity shops, telemarketing or grant proposals • Partnering with megastores to sell their icons – With FUNdrasing its no more the charity pushing the donor but rather the cause pulling the donor • People are the fund raisers by engaging in the funny activities and antics … REDNOSE day that is unexpected, unplanned and infrequent. • On Red Nose Day, ordinary people do extraordinary things and raise huge amounts of money, from a large number of small contributions. – What’s more Red Nose Night—the star-studded comedy extravaganza that makes people laugh to raise money for charity—doesn’t cost a penny. Everyone gives his or her services for free and for fame(the network, the studios, the stars)
  39. 39. People proposition – Small number of motivated staff members who are inspired by its value proposition, Comic Relief’s people proposition focuses on inspiring volunteer fund- raisers, corporate sponsors, and celebrities whose buy-in is needed to make the value and profit propositions sustainable. – By offering people the opportunity to be actively involved in raising money through silly antics, not only are people having fun, but they become part of a greater cause of personally contributing to bettering the world – All of this is achieved while conserving volunteers’ most valuable resource, time; participating in Comic Relief doesn’t take a lot as you only have to do something silly every other year
  40. 40. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  41. 41. Critical Appraisal “Elements of Successful Marketing” The 4 P’s 1. Product 2. Price 3. Promotion 4. Place The new 4 P’s 1. People 2. P.R 3. Politics 4. Process Management
  42. 42. Criteria for a Good Differential advantage • Importance  to the buyer • Perceived  ensure that these advantages are perceived by the buyer. • Uniqueness  unique from other providers. This aspect of uniqueness is a particularly challenging in health care. • Sustainable  focusing on aspect of the operation or business that are sustainable for some period of time.
  43. 43. Critical appraisal Macroenvironment • Polytical • Economic • Social • Technical • Environmental • Legitimate P E S T E L
  44. 44. A New Value Curve Reduce Create Raise Eliminate Microenvironment BOS ROS Compet itiors New entry Buyer substitute supplier
  45. 45. Critical appraisal
  46. 46. Critical appraisal
  47. 47. Critical appraisal • Closing the gap between Blue ocean strategy and execution … • Key word … “People proposition” Explanation Expectation Clarity Engagement Value proposition People proposition Profit proposition
  48. 48. CONTENT & OBJECTIVES • Rationale & background • What is Blue Ocean Strategy? • Blue ocean Vs Red ocean • How to achieve Blue ocean? • The perfect example • Critical appraisal • Take home message
  49. 49. Take home message Value proposition People proposition Profit proposition
  50. 50. Structure Framework BOS • Creation • Analytical tools & frame work Formulating BOS • Reconstruct market bounderies • Focus on big picture not numbers • Reach beyond existing demand • Get strategic sequence right Executing BOS • Overcome org hurdles • Build execution into strategy • Sustainability & renewals of BOS
  51. 51. Thank YOU
  52. 52. Course structure • Unit One The Marketing Process 1.The Meaning of Marketing. 2.The Environment of Marketing Strategy. • Unit Two Understanding The Healthcare Customer 1.Buying Behavior. 2. Marketing Research. 3.Marketing Segmentation & Targeting. • Unit Three The Marketing Mix 1.Product. 2.Price. 3 Distribution. 4.Promotion. 5.Controlling & Monitoring of Marketing Activities.

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