Outcomes of BOS

1
Outcomes of BOS

• The outcome will be sustainable competitive
  advantage through uncontested market space.
• Your blue ocean strategy will be characterized by
  a focus on
• - Keeping current customers and attracting non
  or underserved customers
• -Creating mass appeal opportunities
• - Defining hard to copy opportunities
• - Achieving high value and low costs

2
What is Strategy?Six Assumptions

• Define the industry similarly and focus on being
  the best within it.
• Strive to stand out in a selected, generally
  accepted industry group.
• Focus on same buyer group and influencers.
• Define scope of products and services offered by
  their industry similarly.
• Accept their industrys functional and emotional
  orientation.
• Focus on the same point in time often on current
  competitive threats.

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3
What is Strategy?

• Critical Drivers of Success
• Innovation and sustainable differentiation
• Execution
• Internal evolution for long term impact

4
Strategy Comparison
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5
Blue Ocean Introduction
Head to Head Competition Blue Ocean
Creation
131
6
SMP Map Introduction

• Purpose Sustainability analysis to test our
  strategic potential.
• Business products or services can be divided
  into 3 categories
• Pioneers These are the bleeding edge
  products, that open up new and uncontested
  markets. (Value Innovation) The only ones with a
  mass following.
• Migrators - The best in the crowd. Settlers
  that have been improved. (Value Improvement)
• Settlers - Me-too products and services.
  Commodity market. (Value Imitator)

- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
133
7
Testing Strategic Potential SMP Map
Company B
Company A
Pioneers
?
Pioneers
Migrators
Migrators
Settlers
Settlers

• Do they value innovate?
• Does your organization believe that innovation
  builds margins or that innovation has a lengthy
  ROI cycle?
• Is your innovation tied to sound research?
• Is innovation a process in your company? Is
  it a stable, repeatable process?

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8
Strategy Canvas

• The strategy canvas is both a diagnostic
  and an action framework for building a compelling
  blue ocean strategy. It serves two purposes.
  First, it captures the current state of play in
  the known market space. This allows you to
  understand where the competition is currently
  investing, the factors the industry currently
  competes on in products, service and delivery,
  and what customers receive from the existing
  competitive offerings on the market.

- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
136
9
Exercise-As Is Strategy Canvas

• 1. Select one of your businesses or
  products/services. Indentify the dominant
  customer group your industry focuses on. Label
  this information on your Strategy Canvas.
• Identify the key competitive factors your
  industry competes on/invests in to capture this
  dominant customer group. No less than 5, no more
  than 12. Price is always included in your key
  competitive factors.
• Rate your relative offering level of each factor
  on the horizontal axis. A relatively low
  offering level should be plotted lower, high
  offerings should be higher. Price is always an
  absolute figure a high price is plotted high,
  etc.
• Now connect the dots to create your As Is
  canvas.
• Repeat this process for your best competitor.
• Analyze the results using the questions provided.

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10
As Is Strategy Canvas Example
Barnum Bailey/Ringling Brothers Circus
High
Low
- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
137
11
As Is Strategy Canvas Example
The US Wine Industry
hi
offering level
lo
Use of enological terminology and distinctions
in wine communication
Vineyard prestige and legacy
Above-the- line marketing
Wine range
Aging quality
Wine complexity
Price
- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
138
12
Exercise

• 1. Using your As Is Strategy Canvas, create a
  draft To Be.
• 2. Do this by applying the four blue ocean
  principles Reduce, Eliminate, Enhance, Create
• 3. Create a blue ocean graph.
• 4. What does this tell you about what your
  strategies should be?

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13
Blue Ocean Strategy-ERRC Grid
Reduce Which factors should be reduced
below industry standards?
Create Which factors should be created that the
industry has never created?
Eliminate Which factors should be eliminated that
the industry takes for granted?
A New Value Curve
Raise Which factors should be raised
above industry standards?
144
- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
14
To Be Strategy Canvas

• Drawing your To Be Canvas
• Analyze each factor in your As is Strategy
  Canvas, using the Eliminate, Reduce, Raise,
  Create Grid.
• If you are using your As Is Strategy Canvas with
  non-customer groups, use the ERRC Grid for each
  distinct non-customer group.
• Plot your To Be Strategy Canvas using the ERRC
  Grid.
• Does the strategy canvas meet the three targets
  of a compelling strategy?
• A. Is it divergent
• B. It is focused?
• C. Is there a tagline that speaks both
  internally and externally.

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To Be Strategy Canvas Example
Cirque du Soleils Strategy Canvas
High
Low
- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
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Example
Strategy Canvas of yellow tail
hi
yellow tail
offering level
lo
Fun Adventure
Easy drinking
Ease of selection
Vineyard prestige and legacy
Above-the- line marketing
Use of enological terminology and distinctions
in wine communication
Wine range
Aging quality
Wine complexity
Price
- W. Chan Kim Renee Mauborgne, Blue Ocean
Strategy
17
Four Hurdles to Successful Execution

• Cognitive Wedded to the status quo.
• This is how weve always done it here.
• Political Opposition from powerful vested
  interests.
• NIMBY/ Not at our expense.
• Complacency.
• If it aint broke.
• Resource/Priorities
• Five signatures to spend 50 on a customer!

18
The Role of the Leader in Strategy

• Requires self and others to think about factors,
  activities, processes and/or services that are
  well past their prime
• Requires self and others to think about how
  customer values have changed
• Requires self and others to think about
  non-customers
• Provides insight into how the buyer experience
  works
• Requires self and others to explore ways to
  create new demand by thinking outside the status
  quo
• Requires self and others to uncover and eliminate
  some of the compromises we otherwise willingly
  make