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Bs blue ocean strategy

  1. 1. Business Strategy Blue Ocean Strategy April 2013
  2. 2. Blue Ocean Strategy is a powerful concept to work on the value proposition and explore new market segments
  3. 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. 4. Traditional logic Focus on beating the competition, winning market share, capturing consumers and outselling the competition
  5. 5. The worst error in strategy is competing with rivals on the same dimensions Source: professor Michael E. Porter
  6. 6. Four key elements
  7. 7. The strategy canvas captures the current state of competition in an industry and the company’s value curve
  8. 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. 9. Playstation, Xbox Wii Reduce Raise Create Eliminate High Value curve Low
  10. 10. Higher-end retailers Lower-end retailers IKEA High Low
  11. 11. Noncustomers usually offer far more insight into how to create a blue ocean than do existing customers
  12. 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. 13. The six paths to shift the strategic focus from customers to alternatives
  14. 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. 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. 16. The Eliminate – Raise – Reduce – Create grid is the key to breaking the trade- off between differentiation and low cost
  17. 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”
  18. 18. Costs Value Innovation Buyer Value
  19. 19. Costs Buyer Value Source: “Business Model Generation”
  20. 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. 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.
  22. 22. Jorge López jlopez@barrabes.com Twitter: @jorgelopezryc www.barrabesnext.com

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