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Blue Ocean StrategyBlue Ocean Strategy

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ContentsContents
1.1. Blue Ocean Vs. Red Ocean StrategyBlue Ocean Vs. Red Ocean Strategy
2.2. Blue Ocean Strategy ToolsBlue Ocean Strategy Tools
3.3. Strategy Canvas and Four Action FrameworkStrategy Canvas and Four Action Framework
4.4. Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy
5.5. Formulating Blue Ocean StrategyFormulating Blue Ocean Strategy
6.6. Executing Blue Ocean StrategyExecuting Blue Ocean Strategy
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Blue Ocean Vs. Red OceanBlue Ocean Vs. Red Ocean
StrategyStrategy

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Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy
• Create uncontested
market space
• Make the competition
irrelevant
• Create and capture
new demand
• Create uncontested
market space
• Make the competition
irrelevant
• Create and capture
new demand
• Compete in existing
market space
• Beat the competition
• Exploit existing
demand
• Compete in existing
market space
• Beat the competition
• Exploit existing
demand
Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy

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Blue Ocean vs. Red Ocean StrategyBlue Ocean vs. Red Ocean Strategy
• Break the value- cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation and low
cost
• Break the value- cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation and low
cost
• Make the value-cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation or low
cost
• Make the value-cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation or low
cost
Blue Ocean StrategyBlue Ocean Strategy Red Ocean StrategyRed Ocean Strategy

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Blue Ocean Strategy ToolsBlue Ocean Strategy Tools
StrategyStrategy
CanvasCanvas
• A diagnostic tooldiagnostic tool for building a
compelling blue ocean strategy
• It captures the current state of playcurrent state of play in
the known market space
• Allow you to understand :
• where the competition is currently
investing
• the factors the industry currently
competes on in product, service and
delivery
• what customers receive from existing
competitive offerings on the market

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Four Action FrameworkFour Action Framework
EliminateEliminate
ReduceReduce
RaiseRaise
CreateCreate

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Four Action FrameworkFour Action Framework
EliminateEliminate
ReduceReduce
RaiseRaise
CreateCreate
Which of the factors that the industry
takes for granted should be eliminated?eliminated?
Which factors should be reduced wellreduced well
belowbelow the industry’s standard?
Which factors should be createdcreated that
the industry has never offered?
Which factors should be raised wellraised well
aboveabove the industry’s standard?

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Four Action FrameworkFour Action Framework
The Case of Cirque du Soleil (A Circus Company)The Case of Cirque du Soleil (A Circus Company)
• Theme
• Refined environment
• Multiple productions
• Artistic music and dance
EliminateEliminate ReduceReduce
RaiseRaiseCreateCreate
• Star performers
• Animal shows
• Aisle concession sales
• Multiple show arenas
• Fun and humor
• Thrill and danger
• Unique venue

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Six Principles of Blue Ocean StrategySix Principles of Blue Ocean Strategy
1. Reconstruct market
boundaries
2. Focus on the big picture,
not the numbers
3. Reach beyond existing
demand
4. Get the strategic
sequence right
5. Overcome key
organizational
hurdles
6. Build execution into
strategy
Formulation PrinciplesFormulation Principles Execution PrinciplesExecution Principles

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FormulatingFormulating
Blue Ocean StrategyBlue Ocean Strategy

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New Market Space
• In Red Oceans, industry boundaries are defined and
accepted, and the competitive rules of the game are
known
• In Blue Oceans, there exists untapped market space,
demand creation, and the opportunity for highly
profitable growth
• Most Blue Oceans are created from within red oceans
by expanding industry boundaries

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1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries
• Focus on rivals within
industry
• Focuses on competitive
position within strategic
group
• Focuses on better
serving the buyer group
Head-to-Head StrategyHead-to-Head Strategy Blue Ocean StrategyBlue Ocean Strategy
• Looks across alternative
industries
• Looks across strategic
group within industry
• Redefines the industry
buyer group

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1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries
• Focuses on maximizing
the value of product or
service offerings within
the bounds of its
industry
• Focuses on adapting to
external trends as they
occur
Head-to-Head StrategyHead-to-Head Strategy Blue Ocean StrategyBlue Ocean Strategy
• Looks across to
complementary product
and service offerings
• Participates in shaping
external trends over time

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2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
Focus on the
Big PictureBig Picture, not
the Numbers
The Four Steps of
Visualizing Strategy
• Visual Awakening
• Visual Exploration
• Visual Strategy Fair
• Visual Communication

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2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
VisualVisual
AwakeningAwakening
• Compare your business with your
competitors’ by drawing your “as is”
strategy canvas
• See where your strategy needs to
change

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2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
VisualVisual
ExplorationExploration
• Go to the field to explore the six
paths to creating blue oceans
• Observe the distinctive advantages
of alternative products and services
• See which factors you should
eliminate, create, or change

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2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
Visual
Strategy
Fair
• Draw your “to be” strategy canvas
based on insights from field
observations
• Get feedback on alternative
strategy canvases from
customers, competitors’
customers, and noncustomers
• Use feedback to build the best “to
be” future strategy

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2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers
Visual
Communication
• Distribute your before-and-after
strategic profiles on one page for
easy comparison
• Support only those projects and
operational moves that allow your
company to close the gap to
actualize the new strategy

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3.3. Reach Beyond Existing DemandReach Beyond Existing Demand
The ThreeThe Three
Tier of Non-Tier of Non-
customerscustomers
• First tier: “Soon to be” non-“Soon to be” non-
customerscustomers who are the edge of
your market, waiting to jump ship
• Second tier: “Refusing” non-“Refusing” non-
customerscustomers who consciously
choose against your market
• Third tier: “Unexplored” non-“Unexplored” non-
customerscustomers who are in markets
distant from yours

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4.4. Get The Strategic Sequence RightGet The Strategic Sequence Right
The Sequence of Blue Ocean StrategyThe Sequence of Blue Ocean Strategy
Buyer utilityBuyer utility
Is there exceptional buyer
utility in your business idea?
PricePrice
Is your price easily
accessible to the mass of
buyers?
CostCost
Can you attain your cost
target to profit at your
strategic price?
AdoptionAdoption
What are the adoption
hurdles in actualizing your
business idea?
A commercially viableA commercially viable
blue ocean ideablue ocean idea

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ExecutingExecuting
Blue Ocean StrategyBlue Ocean Strategy

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5.5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles
Overcome KeyOvercome Key
OrganizationalOrganizational
HurdlesHurdles
CognitiveCognitive
HurdleHurdle
MotivationalMotivational
HurdleHurdle
ResourceResource
HurdleHurdle
PoliticalPolitical
HurdleHurdle

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5.5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles
CognitiveCognitive
HurdleHurdle
(status quo)(status quo)
ResourceResource
HurdleHurdle
• Ride the “Electric Sewer”
• Meet with Disgruntled Customers
• Redistribute resources to your hot
spots
• Redirect resources from your cold
spots
• Engage in horse trading

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5.5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles
MotivationalMotivational
HurdleHurdle
PoliticalPolitical
HurdleHurdle
• Zoom in on Kingpins (key influencers)
• Place kingpins on a fishbowl
• Atomize to get the organization to
change itself
• Secure a consigliere on your top
management team
• Leverage your angels and silence
your devils

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5. Build Execution Into Strategy5. Build Execution Into Strategy
Fair Process of StrategyFair Process of Strategy
Strategy Formulation Process
Fair Process – Engagement, Explanation, Expectation clarity
Strategy Formulation Process
Fair Process – Engagement, Explanation, Expectation clarity
Attitudes
Trust and Commitment – “I feel my opinion counts”
Attitudes
Trust and Commitment – “I feel my opinion counts”
Behavior
Voluntary Cooperation – “I’ll go beyond the call of duty”
Behavior
Voluntary Cooperation – “I’ll go beyond the call of duty”
Strategy Execution
Exceeds Expectation – self initiated
Strategy Execution
Exceeds Expectation – self initiated

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Source of ReferenceSource of Reference
• W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy,
HBS Publication

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Assignment:
Choose a real product that is already on the
market (it can be either one of the above or your
own preferences of product), brainstorm the value
factors of the product and develop the Strategy
Canvas

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End of MaterialEnd of Material