www.utm.myinspiring creative & innovative minds blue ocean strategy leadership discourse. 21 oct...

www.utm.my Inspiring Creative & Innovative Minds

Blue Ocean StrategyLeadership Discourse. 21 Oct 2011

Blue Ocean Strategy (BOS)

[email protected]://www.utm.my/vc



Prof. W. Chan KimRenée Mauborgne

● W. Chan Kim is Co-Director of the INSEAD Blue Ocean Strategy Institute and The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. Prior to joining INSEAD, he was a professor at the University of Michigan Business School, USA. He has served as a board member as well as an advisor for a number of multinational corporations in Europe, the U.S. and Pacific Asia. He is an advisory member for the European Union and serves as an Advisor to Malaysian Government.

● Kim is a Fellow of the World Economic Forum. His Harvard Business Review articles, co-authored with Renée Mauborgne, are worldwide bestsellers and have sold over half a million reprints. Their Value Innovation and Fair Process articles were selected as among the best classic articles ever published in Harvard Business Review. They have co--authored articles in The Wall Street Journal, The Wall Street Journal Europe, The New York Times, The Financial

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Blue Ocean Strategy? …● BOS is the simultaneous pursuit of differentiation and low cost.● The aim of BOS is not to out-perform the competition in the existing

industry, but to create new market space or a blue ocean, thereby making the competition irrelevant.

● While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers – as argued by Schumpeter and his followers – BOS offers systematic and reproducible methodologies and processes in pursuit of blue oceans by both new and existing firms.

● BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index.

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… Blue Ocean Strategy?● BOS frameworks and tools are designed to be visual in order to not only

effectively build the collective wisdom of the company but also allow for effective strategy execution through easy communication.

● BOS covers both strategy formulation and strategy execution.● The three key conceptual building blocks of BOS are: value innovation,

tipping point leadership, and fair process. ● While competitive strategy is a structuralist theory of strategy where

structure shapes strategy, BOS is a reconstructionist theory of strategy where strategy shapes structure.

● As an integrated approach to strategy at the system level, BOS requires organizations to develop and align the three strategy propositions: value proposition, profit proposition and people proposition.

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Value InnovationThe cornerstone of Blue Ocean Strategy

Instead of focusing on beating competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested

market space (pp. 12)

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Red Ocean vs Blue Ocean Strategy

RED OCEAN STRATEGY BLUE OCEAN STRATEGY

Compete in the existing market space

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

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The six principles of BOSFORMULATON PRINCIPLES

Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right

RISK FACTOR EACH PRINCIPLE ATTENUATES↓ Search risk↓ Planning risk↓ Scale risk↓ Business model risk

EXECUTION PRINCIPLES

Overcome key organizational hurdles Build execution into strategy

RISK FACTOR EACH PRINCIPLE ATTENUATES↓ Organizational risk↓ Management risk

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Analytical tools and frameworks● The strategy canvas● The four actions framework● The eliminate-reduce-raise-create grid● Value curves

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Yellow tail?



Eliminate-reduce-raise-create grid: The case of (yellow tail)ELIMINATE Enological terminology and distinctions Aging qualities Above-the-line marketing

RAISE Price vs. budget wines Retail store involvement

REDUCE Wine complexity Wine range Vineyard prestige

CREATE Easy drinking Ease of selection Fun and adventure

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Eliminate-reduce-raise-create grid: The case of Cirque du SoleilELIMINATE Star performers Animal show Aisle concession sales Multiple show arenas

RAISE Unique venue

REDUCE Fun and humor Thrill and danger

CREATE Theme Refined environment Multiple productions Artistic music and dance

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Reconstruct market boundaries

● Look across alternative industries● Look across strategic groups within industries● Look across the chain of buyers● Look across complimentary product and services

offerings● Look across functional or emotional appeal to buyers● Look across time

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From head-to-head competition to Blue Ocean creationHead-to-head competition Blue Ocean Creation

Industry Focus on rivals within the industry Look across alternative industries

Strategic group Focus on competitive position within strategic group

Look across strategic groups within industry

Buyer group Focus on better serving the buyer group

Redefine the industry buyer group

Scope of product or service offering

Focus on maximizing the value of product and service offering within the bounds of its industry

Look across to complementary product and service offerings

Functional-emotional orientation

Focus on improving price performance within the functional-emotional orientation of its industry

Rethink the functional-emotional orientation of its industry

Time Focus on adapting to external trends as they occur

Participates in shaping external trends over time

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FIGURE 4-4

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To-do-list?

● Develop the canvas strategy of global higher education sector?

● Develop the canvas strategy of higher education sector in Malaysia?

● Develop the canvas strategy in your respective sectors (water, energy, transportation etc)?

● Develop the Four Action Framework for UTM

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