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Blue Ocean Strategy Summary
W.Chan Kim / Renee Mauborgne
Summarized by Kworker.com
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What is Blue Ocean Strategy
Blue Ocean/. Blue Ocean Strategy.
Blue Ocean
All the industries not in existence today.
Blue Ocean
All the industries not in existence today.
Red Ocean
All the industries in existence today.
Red Ocean
All the industries in existence today.
z Compete in existing market place
z Beat the competition
z Exploit existing demand
z Make the value-cost trade-off
z Align the whole system of a firms activities with its strategic choice of differentiation or low cost
z Create uncontested market space
z Make the competition irrelevant
z Create and capture new demand
z Break the value-cost trade-off
z Align the whole system of a firms activities in pursuit of differentiation and low cost
Red Ocean Strategy Blue Ocean Strategy
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Then Profit and Growth Consequences of Creating Blue Ocean
108 Blue Ocean 38%, Profit 61%.
39
62
86
61
38
14
0 20 40 60 80 100
Red OceanBlue Ocean
Business Launch
Revenue Impact
Profit Impact
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Analytical Tools and Frameworks Strategy Canvas
Blue Ocean Strategy Canvas Frame. QB House Blue Club Blue Ocean
.Strategy Canvas of QB House
High
Price Reservation ExtraService
Range ofHair Treatment
Hygiene Time Savingon Waiting
Time Savingon Hair Cut
High performance
air wash
QB House
Average Japanese Barbershop
Low
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Analytical Tools and Frameworks ERRC Grid
Frame Eliminate-Reduce-Raise-Create Frame. Yellow Tail Casella
Eliminate-Reduce-Raise-Create Grid [yellow tail]
Eliminate Raise
Reduce Create
z Enological terminology and distinctions
z Aging Qualitiesz Above-the-line marketing
z Wine complexityz Wine rangez Vineyard prestige
z Price versus budget winesz Retail store involvement
z Easy drinkz Ease of selectionz Fun and adventure
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The Six Principles of Blue Ocean Strategy
Blue Ocean.
11 Reconstruct market boundariesReconstruct market boundaries
Blue Ocean CreationHead-to-Head Competition
z Looks across alternative industriesz Focuses on rivals within its strategy
z Focuses on competitive position within strategic group
z Looks across strategic groups within industry
StrategicGroup
z Focuses on better serving the buyer group
z Redefines the industry buyer groupBuyerGroup
z Focuses on maximizing the value of product and service offerings within the bounds of its industry
z Looks across to complementary product and service offerings
Scope ofProduct or Service
Offerings
z Focuses on improving price performance within the functional-emotional orientation
z Rethink the functional-emotional orientation of its industry
Functional-emotionalorientation
z Focuses on adapting to external trends as they occur
z Participates in shaping external trends over time
Time
Industry
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The Six Principles of Blue Ocean Strategy
Blue Ocean Strategy 6 Risk.
Formulating principles Risk Factors
11 Reconstruct market boundariesReconstruct market boundaries
22 Focus on the big picture, not the numbersFocus on the big picture, not the numbers
33 Reach beyond existing demandReach beyond existing demand
44 Get the strategic sequence rightGet the strategic sequence right
55 Overcome key organizational hurdlesOvercome key organizational hurdles
66 Build execution into strategyBuild execution into strategy
Execution principles
Search RiskSearch Risk
Planning RiskPlanning Risk
Scale RiskScale Risk
Business Model RiskBusiness Model Risk
Organizational RiskOrganizational Risk
Management RiskManagement Risk
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The Six Principles of Blue Ocean Strategy
Strategy Canvas Frame Blue Ocean Strategy.22 Focus on the big picture, not the numbersFocus on the big picture, not the numbers
z Compare your business with your competitors by drawing your as isstrategy canvas
z See where your strategy needs to change
z Go into the field to explore the six paths to creating blue oceans
z Observe the distinctive advantages of alternative products and services
z See which factors you should eliminate, create, or change
VisualAwakening
VisualAwakening
111Visual
ExplorationVisual
Exploration
222Visual
Strategy FairVisual
Strategy Fair
333
z Draw your to bestrategy canvas based on insights from field observations
z Get feedback on alternative strategy canvases from customers, competitorscustomers, and non customers
z Use feedback to build the best to be future strategy
VisualCommunication
VisualCommunication
333
z Distribute your before-and-after strategic profiles on one page for easy comparison
z Support only those projects and operational moves that allow your company to close the gaps to actualize the new strategy
Head-to-Head Competition
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The Six Principles of Blue Ocean Strategy
Insight. Blue Ocean.
33 Reach beyond existing demandReach beyond existing demand
Your Market
1st Tier
2nd Tier
3rd Tier
1st Tier Customer
2nd TierCustomer
3rd TierCustomer
z Soon-to-be noncustomers who are on the edge of your market, waiting to jump ship
z Refusing noncustomers who consciously choose against your market
z Un explored noncustomers who are in markets distant from yours
The Three Tires of Noncustomers
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44 Get the strategic sequence rightGet the strategic sequence right
The Six Principles of Blue Ocean Strategy
Blue Ocean Idea.
Buyer UtilityBuyer Utility
Is there exceptional buyer utilityin your business idea?
Is there exceptional buyer utilityin your business idea?
PricePrice
Is your price easily accessibleTo the mass of buyers?
Is your price easily accessibleTo the mass of buyers?
CostCost
Can you attain your cost targetTo profit at your strategic price?Can you attain your cost target
To profit at your strategic price?
AdoptionAdoption
What are the adoption hurdles in actualizing your business idea?
Are you addressing them up front?
What are the adoption hurdles in actualizing your business idea?
Are you addressing them up front?
Commercial ViableBlue Ocean Idea
The Sequence of Blue Ocean Strategy
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44 Get the strategic sequence rightGet the strategic sequence right
The Six Principles of Blue Ocean Strategy
6 Stages of the Buyer Experience Cycle 6 Utility Lever.
The Buyer Experience Cycle
PurchasePurchase DeliveryDelivery UseUse SupplementSupplement MaintenanceMaintenance DisposalDisposal
Customer Productivity
Simplicity
Convenience
Risk
Fun and Image
Environmental friendliness
UtilityLevers
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44 Get the strategic sequence rightGet the strategic sequence right
The Six Principles of Blue Ocean Strategy
Blue Ocean Idea 4. Frame.
Blue Ocean Idea (BOI) Index
UtilityUtility
PricePrice
CostCost
PhillipsCD-i
PhillipsCD-i
MotorollaIridium
MotorollaIridium
DoCoMoi-modeJapan
DoCoMoi-modeJapan
AdoptionAdoption
Is there exceptional utility? Are therecompelling reasons to buy your offering?
Is there exceptional utility? Are therecompelling reasons to buy your offering?
Is your price easily accessible to the massOf the buyers?
Is your price easily accessible to the massOf the buyers?
Does your cost structure meet the targetcost?
Does your cost structure meet the targetcost?
Have you addressed adoption hurdlesup front?
Have you addressed adoption hurdlesup front?
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The Six Principles of Blue Ocean Strategy
Blue Ocean Idea.
The Four Organizational Hurdles to Strategy Execution
55 Overcome key organizational hurdlesOvercome key organizational hurdles
CognitiveHurdles
CognitiveHurdles
An organizationWedded to the
Status quo
An organizationWedded to the
Status quo
Motivational HurdlesMotivational Hurdles
Unmotivated StaffUnmotivated Staff
Political HurdlesPolitical Hurdles
Opposition from powerfulVested interests
Opposition from powerfulVested interests
Resource HurdlesResource Hurdles
Limited resourcesLimited resources
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The Six Principles of Blue Ocean Strategy
Blue Ocean Idea Fair Process. 66 Build execution into strategyBuild execution into strategy
Fair Process
EngagementExplanation
Expectation Clarity
Fair Process
EngagementExplanation
Expectation Clarity
Trust and Commitment
I feel my opinioncounts
Trust and Commitment
I feel my opinioncounts
VoluntaryCooperation
Ill go beyondthe call of duty
VoluntaryCooperation
Ill go beyondthe call of duty
Exceeds Expectation
Self-initiated
Exceeds Expectation
Self-initiated
Strategy Formulation
Process
Attitude
Behavior
StrategyExecution
How Fair Process Affects Peoples Attitude and Behavior
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The Six Principles of Blue Ocean Strategy
Blue Ocean.
1908The Model T
1908The Model T
1924General Motors
1924General Motors
Blue Ocean Creation History in US Automobile Industry
z 1893,
z 1908 Henry Ford Model T, Blue Ocean
z 1908 Ford 6%1921 60%
z Ford Horseless carriage
z 1924 GM Value Blue Ocean
z GM 20%50%
z Ford 50%20%
z Chrysler Big3
z 1970, 70 Oil Shock
z 1980Big3 $4Bil (4)1970sJapanese Cars
1970sJapanese Cars
Blue Ocean z Big 3
1984Chryslers Minivan
1984Chryslers Minivan
z Chrysler VanMinivan Blue Ocean
z SUV
z 1998 SUV750
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16
The Six Principles of Blue Ocean Strategy
Durwood 63 Multiplex 95 Megaplex Blue Ocean AMC
1905Nickelodeon
Theater
1905Nickelodeon
Theater
1963Multiplex
1963Multiplex
1995Megaplex
1995Megaplex
Blue Ocean Creation History in US Movie Theater
z 1893 Kinetoscope,
z 1905 Live
Blue Ocean
z 19072
z Kansas City Durwood 1963 Multiplex Risk,
z Durwood AMC 2 Chain
z 1980 Multiplex
Valuez 1995 AMC 24
Megaplex
z 95 01
1215
z AMC MegaplexMultiplex 8.8%
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The Six Principles of Blue Ocean Strategy
PPT (Power Point) File, [email protected] 6
PPT File. .
kworker. .
What is Blue Ocean StrategyThen Profit and Growth Consequences of Creating Blue OceanAnalytical Tools and Frameworks Strategy CanvasAnalytical Tools and Frameworks ERRC GridThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean StrategyThe Six Principles of Blue Ocean Strategy