Blue Occean TVP

8/3/2019 Blue Occean TVP

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Blue Ocean Strategy Blue Ocean Strategy

Dr.Dr. TejashTejash PujaraPujara



ContentsContents

1.1. Blue Ocean Vs. Red Ocean Strategy Blue 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 Strategy Six Principles of Blue Ocean Strategy

5.5. Formulating Blue Ocean Strategy Formulating Blue Ocean Strategy

6.6. Executing Blue Ocean Strategy Executing Blue Ocean Strategy



Blue Ocean Vs. Red OceanBlue Ocean Vs. Red OceanStrategy Strategy



Blue Ocean vs. Red Ocean Strategy Blue Ocean vs. Red Ocean Strategy

Create uncontested

market space

Make the competition

irrelevant

Create and capture new

demand

Compete in existing

market space

Beat the competition

Exploit existing

demand

Blue Ocean Strategy Blue Ocean Strategy Red Ocean Strategy Red Ocean Strategy



Blue Ocean vs. Red Ocean Strategy Blue Ocean vs. Red Ocean Strategy

Break the value- cost

trade off

Align the whole system

of a firms activities with

its strategic choice of

differentiation and lowcost

Make the value-cost

trade off

Align the whole system

of a firms activities with

its strategic choice of

differentiation or lowcost

Blue Ocean Strategy Blue Ocean Strategy Red Ocean Strategy Red Ocean Strategy



Costs

Buyer Value

ValueInnovation

Value Inno vation Value Inno vation



Blue Ocean Strategy ToolsBlue Ocean Strategy Tools

Strategy Strategy

CanvasCanvas

A diagnostic tooldiagnostic tool for building a compelling blue

ocean strategy

It captures the current stateof play current stateof 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



Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate



Four Action FrameworkFour Action Framework

EliminateEliminate

ReduceReduce

RaiseRaise

CreateCreate

W hich of the factors that the industry takes for

granted should be eliminated?eliminated?

W hich factors should be reduced well belo wreduced well belo w the

industrys standard?

W hich factors should be createdcreated that the industry

has never offered?

W hich factors should be raised well abo veraised well abo ve the

industrys standard?



C

ricket af

ter IPLC

ricket af

ter IPLHigh

Low

ReduceReduce

CreateCreateRaiseRaise



Four Action Framework (IPL)Four Action Framework (IPL)

Frenchise

City Loyalty

Cheer Leaders

EliminateEliminate ReduceReduce

RaiseRaiseCreateCreate

Time

Classic

Reputation Patience

Pace

Result

Entertainment

Athleticism



Six Principles of Blue Ocean Strategy Six 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. O vercome key

organizational hurdles

6. Build execution into

strategy

Formulation PrinciplesFormulation Principles Execution PrinciplesExecution Principles



FormulatingFormulatingBlue Ocean Strategy Blue Ocean Strategy



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

HeadHead--toto--Head Strategy Head Strategy Blue Ocean Strategy Blue Ocean Strategy

Looks across alternative

industries Looks across strategic group

within industry

Redefines the industry buyer

group



1. Reconstruct Market Boundaries1. Reconstruct Market Boundaries

Focuses on maximizing the

value of product or serviceofferings within the bounds of

its industry

Focuses on adapting to

external trends as they occur

HeadHead--toto--Head Strategy Head Strategy Blue Ocean Strategy Blue Ocean Strategy

Looks across to complementary

product and service offerings Participates in shaping external

trends over time



2. Focus on the Big Picture, not the Numbers2. Focus on the Big Picture, not the Numbers

Focus on the BigBig

PicturePicture, not the

Numbers

The Four Steps of

Visualizing Strategy

Visual Awakening

Visual Exploration

Visual Strategy Fair

Visual Communication




Visual Visual

Awakening Awakening

Compare your business with your

competitors by drawing your as is

strategy canvas

See where your strategy needs tochange




Visual Visual

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




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




Visual

Communication

Distribute your before-and-after

strategic profiles on one page for easy

comparison

Support only those projects andoperational moves that allow your

company to close the gap to actualize

the new strategy



3. 3. Reach Bey ond Existing DemandReach Bey ond Existing Demand

The ThreeThe Three

Tier of NonTier of Non--

customerscustomers

First tier: Soon to be nonSoon to be non--customerscustomers

who are the edge of your market, waiting to

jump ship

Second tier: Ref using nonRef using non--customerscustomers

who consciously choose against your

market

Third tier: Unexplored nonUnexplored non--customerscustomers who are in markets distant from yours



Y ourMarket

FirstTier

Second

Tier

ThirdTier

Three Tiers of NoncustomersThree Tiers of Noncustomers



4.4. Get The Strategic Sequence RightGet The Strategic Sequence Right

The Sequenceof Blue Ocean Strategy The Sequenceof Blue Ocean Strategy

Buyer utility Buyer 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 yourstrategic price?

Adoption Adoption

W hat are the adoption

hurdles in actualizing your

business idea?

A commercially viable blue A commercially viable blue

ocean ideaocean idea



Buyer Utility MapBuyer Utility Map

1.

Purchase

2.

Delivery

3.

Use

4.

Supplements

5.

Maintenance

6.

Disposal

CustomerProductivity

Simplicity

Convenience

Risk

Fun andImage

Environmentalf riendliness

The Six Stages of the Buyer Experience C ycle

T h

e S i x U t i l i t y L e v e r

s



Buyer ExperienceC

ycleBuyer ExperienceC

ycle

Purchase Delivery Use Supplements Maintenance Disposal

How long does ittake to find theproduct youneed?

Is the place of purchaseattractive andaccessible?

How secure is the

transactionenvironment?

How rapidly can you make apurchase?

How long doesit take to getthe productdelivered?

How difficult isit to unpackand install thenew product?

Do buyers have

to arrangedelivery themselves? If yes, how costly and difficult isthis?

Does the productrequire training orexpert assistance?

Is the product easy tostore when not in use?

How effective are theproducts features andfunctions?

Does the product orservice deliver farmore power or optionsthan required by theaverage user? Is inovercharged with bellsand whistles?

Do you need otherproducts and servicesto make this product work?

If so, how costly arethey?

How much time dothey take?

How easy are they toobtain?

Does the productrequire externalmaintenance?

How easy is it tomaintain andupgrade the product?

How costly ismaintenance?

Does use of theproduct create waste items?

How easy is it todispose of theproduct?

Are there legalorenvironmental

issues indisposing of theproduct safely?

How costly isdisposal?



Unco vering Blocks to Buyer Utility Unco vering Blocks to Buyer Utility

Purchase Delivery Use Supplements Maintenance Disposal

Customer Productivity: In which stage are the biggest blocks to customer productivity?

Simplicity: In which stages are the biggest blocks to simplicity?

Convenience: In which stage are the biggest blocks to convenience?

Risk: In which stage are the biggest blocks to reducing risks?

Fun and Image: In which stage are the biggest blocks to fun and image?

Environmental

Friendliness:

In which stage are the biggest blocks to environmental friendliness?



ExecutingExecuting

Blue Ocean Strategy Blue Ocean Strategy



5.5. Overcome Key Organizational HurdlesOvercome Key Organizational Hurdles

Overcome Key Overcome Key OrganizationalOrganizational

HurdlesHurdles

CognitiveCognitive

HurdleHurdle

MotivationalMotivational

HurdleHurdle

ResourceResource

HurdleHurdle

PoliticalPolitical

HurdleHurdle




CognitiveCognitive

Hurdle (statusHurdle (status

quo)quo)

ResourceResource

HurdleHurdle

Go to the Field

Meet with Disgruntled (dissatisfied) Customers

Redistribute resources to your hot spots

Redirect resources from your cold spots

Engage in horse trading




MotivationalMotivational

HurdleHurdle

PoliticalPolitical

HurdleHurdle

Zoom in on Kingpins (key influencers)

Place kingpins on a fishbowl (make their action

/ inaction transparent)

Atomize to get the organization to change itself

Secure a consigliere (trusted friend / aide) on

your top management team Leverage your angels and silence your devils



5. Build Execution Into Strategy 5. Build Execution Into Strategy

Fair Process of Strategy Fair Process of Strategy

Strategy Formulation Process

Fair Process Engagement, Explanation, Expectation clarity

Attitudes

Trust and Commitment I feel my opinion counts

Behavior

Voluntary Cooperation Ill go beyond the call of duty

Strategy Execution

Exceeds Expectation self initiated



Source of Ref erenceSourceof Ref erence

W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy, HBS

Publication



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