rebecca eggerman alexander johnson miguel a. lopez hannah stephens carissa tarnowski
TRANSCRIPT
Blue Ocean Strategy
Rebecca EggermanAlexander Johnson
Miguel A. LopezHannah StephensCarissa Tarnowski
PreviewCirque du SoleilBlue Vs. Red OceanCreation of New Blue OceansBlue OceansBlue Vs. RedResult of Blue Ocean InitiativesThe Rising Imperative of Creating Blue
OceansResultsFrom Company and Industry to Strategic
Move
PreviewThe Strategic MoveValue InnovationValue-Cost Trade-off Benchmarking CompetitionBreaking the Market BoundariesFormulating and Executing Blue Ocean
StrategyFrameworks for SuccessBeyond the Text
Cirque du SoleilCreated in 1984 by group of street
performers
Seen by 40 million people in 9 cities around the world
Achieved the same level of revenues that Ringling Bros. and Barnum & Bailey made in 100 years but in only 20 years
Blue Vs. Red OceanRed Ocean
Represents all the industries in existence todayThis is known as the market placeIndustry boundaries are defined and acceptedCompetitive rules of the game are knownCompanies try to outperform their rivals to
grab a greater share of existing demand
Blue Vs. Red OceanBlue Ocean
Is defined by untapped market space, demand creation, and the opportunity for highly profitable growth
Some are created within red oceans by expanding existing industry
Competition is irrelevant because the rules of the game are waiting to be set
They are uncharted
Creation of New Blue OceansNew industries are constantly being createdHistorically, countless industries that exist
today did not exist decades agoChange from SIC to NAICSMilitary strategy in business
Blue OceansNew industries are constantly being created
that would not have even been thought of 30 or even 10 years ago
Smartphones, flat screen televisions, clean jet engines vs. airplane, automobile, radio, television
Blue Ocean vs. Red OceanMajority of new business plans are aimed at
red ocean strategiesOnly 14 percent of new business launches
were aimed at blue oceans
Result of Blue Ocean InitiativesBlue ocean business launches do not affect
revenues but increase profits much more often than red ocean endeavors
Impact of blue oceans is notable even though they make up such a small minority of business endeavors
The Rising Imperative of Creating Blue Oceans Technological advances
Increasing numbers of industriesSupply exceeds demand
GlobalizationReadily available consumer informationDrowning markets
ResultsAccelerated commoditization
Products and services becoming similarConsumer selection based on price
Ex. Colgate vs. Crest
Red oceans become “deeper”More cut throat competitionNeed for blue oceans
From Company and Industry to Strategic MoveHow to achieve blue ocean status
Researching “excellence” and “visionaries” Ex. In Search of Excellence and Built to Last
Industry vs. company success (Creative Destruction) Ex. Hewlett-Packard
Right one minute, wrong another Companies and industries not correct analysis unit
The Strategic Move
Blue ocean research Small/large companiesYoung/old managersPrivate/publicLow/high –tech
Similar patternStrategy
“Set of managerial actions and decisions involved in making a major market creating business offering”
Value Innovation: The cornerstone of Blue Ocean StrategyApproach to strategy- what separated the
winners from the losersConsistent across time regardless of industry
Red ocean companies raced to beat competition through defensible position
Blue ocean companies didn’t use competition as a benchmarkFollowed value innovation
Value InnovationFocus on making the competition irrelevant by creating a
leap in value for buyers and your company, thereby opening up new and uncontested market space
Equal emphasis on value and innovation Value without innovation= value creation Innovation without value= technology driven, market
pioneering, or futuristic
Occurs only when companies align innovation with utility, price, and cost positions
A new way of thinking about and executing strategy that results in creation of a blue ocean and a break from competition
Value-cost trade-off Conventional belief- companies can create
greater value to customers at a higher cost or create reasonable value at a lower costExamples?
Should pursue low cost and differentiation simultaneously
Benchmarking competition and maximizing shrinking share
Red ocean strategy
Breaking the market boundaries of theater and circus
Blue ocean strategyAchieved both differentiation and low cost
Red Ocean Vs. Blue Ocean StrategyRed Ocean Strategy Blue Ocean Strategy
Compete in existing market place 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
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
Formulating and Executing Blue Ocean StrategySuccess
Lower odds?Strategy
OpportunityRisk
Analytical Frameworks and ToolsRed Oceans
Frameworks For SuccessChapter 2
Analytical ToolsChapter 3
Search RiskChapter 4
Value Innovations
Chapter 5Market Size
Chapter 6Business Model
Chapter 7Tipping Point
LeadershipChapter 8
Strategy MakingChapter 9
Dynamic Aspects
Principles
Beyond the TextSingle-cup Coffee Makers
OverviewCirque du SoleilBlue Vs. Red OceanCreation of New Blue OceansBlue OceansBlue Vs. RedResult of Blue Ocean InitiativesThe Rising Imperative of Creating Blue
OceansResultsFrom Company and Industry to Strategic
Move
OverviewThe Strategic MoveValue InnovationValue-Cost Trade-off Benchmarking CompetitionBreaking the Market BoundariesFormulating and Executing Blue Ocean
StrategyFrameworks for SuccessBeyond the Text
“We cannot predict the future. But we can create it.”
-Jim Collins, Great by Choice