blue ocean
TRANSCRIPT
Focus on the Big Picture,
Not the Numbers
Presenter:
AMBER FATIMA
Chapter 4 B l u e O c e a n S t ra t e g y
The “Typical” Strategic plan
By doing things this way,
managers spend the majority of
the time filling in boxes
A very long document made up of mishmash
data
from different people of lengthy
description
of current industry
conditions and competitive situations
followed by a discussion of
how to increase market shares,
capture new segments, or cut
costs.Then an outline of goals and budgets with graphs
and spreadsheets
Develop a clear picture
of how to break from
the competition
No ‘muddle’—easy to
understand and communicate for
effective execution
Focus on the big picture,
not the numbers
• Lessens chance that strategy will be a red ocean move
• No documents, only a canvas
• Consistent in unlocking employee creativity to blue ocean strategy
Think Outside the Box
Focus on the BIG Picture
Drawing a strategy
canvas does 3 things:
Shows strategic profile of an industry by clearly depict the factors (and possible future factors) that affect competition
among industry players
Shows strategic profile of current and potential competitors and which factors
they invest in strategically
Shows company’s value curve depicting how it invests in the factors of competition and how
it might invest in the future
Had been struggling for a long time with an ill-defined
and poorly communicated
strategy
Deeply Divided : Began the strategy
process by bringing together
upper management from
Europe, N. American, Asia,
and Australia
corporate culture =“Nuts in the field,
brains in the center”
Example: EFS : European Financial ServicesBefore Implementing a Blue Ocean Strategy
The Four Steps of Visualizing Strategy
1. Visual Awakening
2. Visual Exploration
3. Visual Strategy Fair
4. Visual Communication
Step 1: Visual Awakening
Compare your business with
your competitors’ by
drawing your “as is” strategy
canvas.
See where your strategy needs
to change.
Common MistakesDiscussing strategy before resolving differences
Executives are reluctant to accept change
EFS Strategy Canvas (offline) TEAM -1
Price
Risk m
anage
ment consu
ltancy
Corporate dealers
Flexible paym
ent term
sSp
eed
Relationsh
ip manag
ement
Ease
of use
Responsiv
eness
Knowledge
EFS and its Nonbank Competitors
Banks
Offerings
Competitive Factors
High
Low
EFS Strategy Canvas (online) TEAM -2
Price
Electr
onic data
inter
chan
ge
Real-ti
me rate
s
Customer
support
Web sit
e attrac
tiveness
Speed
Ease o
f use
Accurac
y
Security
EFS Online
ClearSkies
Other Online Competitors
Offerings
Competitive Factors
High
Low
Step 2: Visual Exploration
Send team hands on approach.
• How people use or don’t use products or services.
Managers cannot outsource the face to
face interaction.
• Often rely on reports from people who are not directly impacted.
• “ A company should never outsource its eyes. There is not substitute for seeing for yourself.”
Step 2: Visual ExplorationEFS Collecting Data
EFS sent managers into the field to
explore the paths to create a blue ocean.
Interviewed people involved with
corporate foreign exchange.
Involved people and companies who
could benefit from using their services.
Looked at subordinate products
and services that their customers
used.
Step 2: Visual ExplorationEFS Evaluations from Fieldwork
• Speedy confirmation of transactions was item that customers valued most.
• What they thought was important turned out not to be what the customer thought was important.
• Because of these findings, EFS was able to reformulate new strategies.
• Redid the value curves and formulated new compelling taglines that fit their business model.
Managers research showed that conclusions were inaccurate.
Step 2: Visual ExplorationEFS
For each visual strategy team had to write compelling
tagline.
Led to competition between the two
teams and process was more enjoyable in
developing blue ocean strategies
Hands on approach with fieldwork is
important for managers.
“When you keep your hands on the objects in view, it gives you a far better idea about
the object than if seen otherwise.”
Washington University psychologists
Great strategic insight come from
seeing what is beyond the
boundaries and borders
Following the visual strategy fair, the teams were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced earlier.
They realized that 1/3 of what they had thought were key competitive factors were, in fact, marginal to customers. Another 1/3 either were not well articulated or had been overlooked in the visual awakening phase. It then
became clear that the executives needed to reassess things such as EFS’s separation of its online & traditional business.
After all 12 strategies were presented, each judge was given 5 sticky notes and told to put them next to his/her favorite, then explain why they did not choose certain curves.
Attendees included…
senior corporate executives noncustomers
customers of competitors
demanding EFS customers
(6 by the online group/6 by the offline group)
Both teams presented their strategy canvases at a visual strategy fair.
Step 3: Visual Strategy Fair
Price
Relationship M
anagement
Account E
xecutives
Corporate
Dealers
Ease of u
se
Secu
rity
Accuracy
Speed
Market
Commentary
Confirmation
Track
ing
EFS : Before and After EFS After Strategy Tagline
The Federal Express of corporate foreign exchange :•Easy , reliable ,fast and track able
Offerings
Competitive Factors
High
Low
EFS After Strategy
EFS and Other Traditional Competitors Before Strategy
The new value curve exhibited the criteria of a successful
strategy, and it displayed more focus than the previous
strategy
Figure summarize EFS’s 4 actions (Eliminate-Reduce-Raise-Create Grid) to create
value innovation, which is the cornerstone of blue ocean
strategy.
EliminateRelationship Management
RaiseEase of useSecurityAccuracySpeedMarket commentary
ReduceAccount ExecutivesCorporate Dealers
CreateConfirmationTracking
Step 3: Visual Strategy FairEFS Value Curve
EFS received a level of
feedback they never
expected.
1/3 of what they thought were key
factors were in fact marginal to customers
They learned that they needed to reevaluate long-held
assumptions.
Step 3: Visual Strategy FairWhat EFS Learned
They were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced
earlier.
They were in a position to draw a
future distinct strategy.
They were able to shift focus from
account executives to integration with
online services.
They could offer payment tracking similar to FedEx and UPS do for
parcels
“The FedEx of corporate foreign exchange: easy,
reliable, fast, and trackable.”
Step 3: Visual Strategy FairHow EFS Changed
Step 4: Visual Communication
This last step is important because you are to communicate the future strategy in a way for all
employees to understand.When communicating the future strategy, you need to “dumb it down”.
All employees, in all departments, need to understand.
Use only one page for easy comprehension.
Make sure everyone understands.
Support only plans in the direction of the new strategy.
Step 4: Visual CommunicationOne-Page Picture
History has shown it to be very helpful to put the firm’s new and old strategic profiles on
one page.
This makes it easier for all employees to see where their company has been, and where it
needs to go.
Used the one-page picture to demonstrate to all employees
Employees could see clearly where the company was and where it needed to focus to
have a promising future.
Senior managers held meetings discussing the picture and what needed to be eliminated and
raised to pursue a blue ocean.
Visualizing strategy can help managers predict and plan the company’s future growth
Pioneers:• Offer unprecedented value• Mass following of customers• Blue ocean strategists: most powerful sources of profitable growth
Settlers : “Me-too businesses”• Conform to basic shape of the industry• Confined to Red Oceans with low growth trajectory
Migrators• Give customers more for less, don’t alter basic shape• Offer improved value but not innovative value• Fall between red and blue oceans• Reasonable growth expected, but not exploiting potential growth
Using the Pioneer-Migrator-Settler(PMS)MAP
Using PMSA useful exercise for corporate management
profitable growth is to plot the company’s current and planned portfolios on PMS map
If current and planned portfolios consist mainly of settlers then:• (red ocean) and needs to push for value
innovation
If current and planned portfolios consist mainly of migrators then:• Reasonable growth can be expected but they
are not exploiting its potential fro growth
The more an industry is populated by settlers, the greater is the opportunity to value-innovate
and create a blue ocean of new market space
Pioneers
Migrators
Settlers
Today Tomorrow
Traditional strategic planning can be ridiculous waste of time due to:• Being documentation driven• Number crunching• Excessive bargaining• inflexibility
However, managers have an appetite for change
Overcoming the limitations of Strategic Planning
THANK YOU