Transcript Continuing Creation of Blue Oceans
Turn back the clock
• Which industries did not exist?
– 100 years – 50 years – 30 years – 20 years – 10 years – 5 years
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Creating Uncontested Market Space and Making the Competition Irrelevant
Cirque du Soleil Blue Ocean Strategy
Red Ocean Strategy Blue Ocean Strategy
Summary of Blue Ocean Strategy
New Market Space Continuing Creation of Blue Oceans Impact of Creating Blue Oceans Rising Imperative of Creating Blue Oceans From Company and Industry to Strategic Move Value Innovation Formulating and Executing Blue Oceans
New Market Space
Creating Blue Oceans Is Consistent Across Time Regardless of Industry Ford’s 1908 Model T
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CNN 1980 Real-Time News 24/7
Quick Time™ a nd a TIFF ( Unco mpre ssed ) dec ompr esso r 2002 Apple’s ipod
Continuing Creation of Blue Oceans
Impact of Creating Blue Oceans
Rising Imperative of Creating Blue Oceans
Driving forces include: Technological advances & improved industrial productivity Unprecedented array of products and services available Supply exceeds demand Globalization, niche markets and monopolies disappear 20th century strategy and management approach waning
Formulating and Executing Blue Oceans
From Company and Industry to Strategic Move Value Innovation, Blue Oceans Cornerstone
The Paradox of strategy
• The very language of strategy is deeply imbued with military references - chief executive "officers" in "headquarters,“ "troops" on the "front lines." • Described this way, strategy is all about red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory. • Blue ocean strategy, by contrast, is about doing business where there is no competitor. It is about creating new land, not dividing up existing land.
A blue ocean is created in the region where a company's actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.
The Simultaneous Pursuit of Differentiation and Low Cost
The Book and the Authors
© JOHN ABBOTT
Prof Chan Kim
© JOHN ABBOTT
Prof Renee Mauborgne
Accolades
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Over 2 million copies sold
• • •
Translated into over 41 foreign languages – a world record Taught as the major theory of strategy at leading business schools Gives insights to CEOs, Executives, Heads of State and Prime Ministers
What is the Blue Ocean?
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High profit growth at low risk
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Industries not in existence today
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Untapped market
Summary
Conventional Logic Industry Assumption Industry conditions are given Blue Ocean Logic Industry condition can be shaped.
Strategic Focus Customers Build competitive advantages to beat the competition.
Create a quantum leap in buyer value to dominate the market.
Retain and expand the customer base through further segmentation and customization.
Think in terms of embracing customer differences.
Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities .
Summary
Conventional Logic Assets & Capabilities Think in terms of a company’s existing assets and capabilities.
Build on what it has.
Blue Ocean Logic Think free from a company’s existing assets and capabilities.
Ask, what if we start anew?
Product/ Service offerings Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings.
Think in terms of buyers’ solution even if that transcends the industry.
Seek to solve buyers’ major bottlenecks/chief compromises in using the products/services of the industry.
Four Actions to create a Blue Ocean
Raise
What factors should be raised well beyond the industry standard?
Eliminate
What factors should be eliminated that the industry has taken for granted?
Create
What factors should be created that the industry has never offered?
Reduce
What factors should be reduced well below the industry standard?