Blue Ocean Strategy. Natalie Stucki Brian Tims Christy Horne Chase Griffiths Zhimin Zheng Keenan Atwood. Red Ocean Strategies. Cost Leadership Generate Economic Value with Lower Costs Wal-Mart Product Differentiation
Blue Ocean Strategy Natalie Stucki Brian Tims Christy Horne Chase Griffiths Zhimin Zheng Keenan Atwood
Red Ocean Strategies • Cost Leadership • Generate Economic Value with Lower Costs • Wal-Mart • Product Differentiation • Generate Economic Value by Having a Product Customers Prefer to Competitors • HEMI
Red Ocean Strategy Compete in existing market space Beat the competition Exploit existing demand Blue Ocean Strategy Create uncontested market space Make the competition irrelevant Create and capture new demand Red Ocean vs. Blue Ocean
Cirque du Soleil • Circus Industry • 3 Rings • Animal Performances • Red Ocean - Benchmarking and Competing • Competitive Advantage • Combined Thrills & Theatre • Eliminated High Costs & Charge Premium to a More Sophisticated Market
Creating Blue Oceans “The only way to beat the competition, is to stop trying to beat the competition.”
Blue Ocean Strategy • No Direct Competition • Make the Competition Irrelevant • Pursue “Value Innovation” • Cost Leadership & Product Differentiation
The Four Actions Framework Reduce Factors that should be reduced below industry standard Eliminate Factors that are taken for granted and should be emliminated Create Factors industry has never offered that should be created New Value Curve Raise Factors that should be raised above industry standard
3 Characteristics of Good Strategy • Focus • Divergence • Compelling tagline
Reconstruct Market Boundaries • Break free from the competition and create Blue Oceans
6 Paths Framework • Look across: • Alternative industries • Strategic groups • Buyer groups • Complementary product and service offering • Functional-emotional orientation of industry • Time
Focus on the Big Picture,Not the Numbers • The Four Steps of Visualizing Strategy • Visual awakening • Visual exploration • Visual strategy fair • Visual communication
A Strategy Is Only As Good As Its Implementation • Leadership • Overwhelming outlook for change • Tipping points • Disproportionate Influence factors • Four Organizational Hurdles to Strategy Execution
Organization • Organization • A firm’s structure and control mechanisms must be aligned so as to give people ability and incentive to exploit the firm’s resources • Three E’s • Engagement, Explanation, and Expectation clarity • Clear mission statement and objectives
Sustainability Can Blue Oceans create long-term sustainable competitive advantages?
Sustainability Cont. Is the Blue Ocean… • Valuable? • Rare? • Imitable? • Organized right?
Application • “Think outside the box!” • Don’t be contained by Red Oceans • So much untapped potential • Be efficient! • Don’t waste effort on things of no value
References Barney J., & W. Hesterly. (2008). Strategic Management and Competitive Advantage. Pearson Prentice Hall. Kim W., & R. Mauborgne. (2005). Blue Ocean Strategy. Harvard Business School Press.