Blue Ocean Strategy Book Review

1
Blue Ocean StrategyBook Review

• Team 4
• Crystal Hill
• Stephen Lechtenberg
• Anand McGee
• Allison Purtell
• Jason Torres

2
Strategic Move

• Correct unit of analysis for explaining the
  creation of blue oceans and sustained high
  performance, versus the company or industry
• Set of managerial actions and decisions involved
  in making a major market-created business offering

3
Red Ocean vs. Blue Ocean

• Red Oceans Conventional Approach
• Focus on beating the competition
• Compete in existing market space
• Build a defendable position within the existing
  industry
• Use competition as a benchmark
• Exploit existing demand
• Choice between differentiation and low cost
• - Greater value for customers at a higher cost or
  a reasonable value at a lower cost
• Blue Oceans Value Innovation (to capture
  market)
• Make competition irrelevant
• Create a leap in value for buyers and the company
• Create new a market space
• Pursue both differentiation and low cost

4
The Strategy Canvas

• Captures current state in known market space
• Fundamentally shift from focus on competitors to
  alternatives and customers to non customers
• Enables companies to see the future in the
  present
• Tells you if youre drifting into a red ocean
• Time to value innovate

5
The Four Actions Framework
2. Reduce Which factors should be reduced well
below the industry standard?
A New Value Curve

• Eliminate
• Which factors that the industry takes for granted
  should be eliminated?

4. Create Which factors should be created that
the industry has not seen before?
3. Raise Which factors should be raised well
above the industry standard?
6
Eliminate-Reduce-Raise-Create Grid
The Case Of Starbucks The Case Of Starbucks
Eliminate Underperforming Stores Raise Education of coffee with employees
Reduce Amount of time employees spend making individual drinks Calories in certain specialty drinks Create More loyalty rewards A better everyday brew
7
Challenge Fundamental Assumptions

• Find Blue Oceans by looking at
• the six paths of framework
• 1.) Look across alternative industries
• 2.) Look across strategic groups within
  industries
• 3.) Look across the chain of buyers
• 4.) Look across complementary product service
  offerings
• 5.) Look across functional of emotional appeal
  to buyers
• 6.) Look across time

8
Think Outside the Box

• Focus on the big picture instead of numbers.
• Potential blue oceans have focus, divergence, and
  a compelling tagline.
• Use Pioneer-Migrator-Settler Map
• Pioneers- unprecedented value, profitable
• Migrators- improved value but not innovative
• Settlers- conform to red oceans

9
Reaching beyond existing demand

• Looking to non customers
• Finding what buyers value
• 3 tiers of non consumers
• Soon to be customers
• Refusing customers
• Unexplored customers

10
Get the right strategic sequence

• Building a blue ocean through buyer
• Utility, price, cost and adoption
• Testing for exceptional utility
• Choosing the right strategic price
• Target costing
• Cost Adoption

11
Overcoming Key Organizational Hurdles

• Managers face four hurdles
• Cognitive waking employees up to the need for a
  strategic shift.
• Limited Resources
• Motivation
• Politics

12
Tipping Point Leadership in Action

• Strategy allows you to overcome the four hurdles
• Bill Bratton appointed police chief of New York
• Murder, muggings, mafia hits, armed robberies at
  an all time high, department morale at an all
  time low.
• After two years
• Felony crime fell 39
• Murders 50
• Theft 30
• Public confidence in NYPD jumped from 37 to 73
• It was his 5th strategic reversal

13
Breaking Through the Cognitive Hurdle

• Ride the electric sewer (New York Subway)
• Showing the worst reality to superiors and
  underlings can shift their mindset fast
• Meet with disgruntled Customers
• Bostons Police District 4
• Determined there was a gap in perceptions between
  residents and police.

14
Jump the Resource Hurdle

• Hot Spots, Cold Spots, and Horse Trading
• Redistribute Resources to Your Hot Spots
• Redirect Resources from your Cold Spots
• Engage in Horse Trading

15
Jump the Motivational Hurdle

• kingpins, fishbowl management, and atomization
• Zoom in on all Kingpins
• Place Kingpins in a Fishbowl
• Atomize to Get the Organization to change itself.

16
Knock Over the Political Hurdle

• Angels, Devils, and Consigliere
• Secure a Consilgiere on your top management team
• Leverage your angels and silence your devils
• Challenge conventional wisdom

17
The Power of Fair Process

• Imperative to strategy execution
• Must reflect attitude and behavior deep within
  the organization
• Trepidation
• Key variable in Blue Ocean Strategy
• People concerned about the actual process

18
The 3 Es of Fair Process

• Expectation Clarity
• Standards of Judgement
• Explanation
• Everyone should understand
• Engagement
• Encouraging involvement

19
Why Fair Process Matters

• People at the front lines care
• Intellectual and Emotional Recognition Theory
• Blue Oceans
• Intangible capital
• Building strategy formulation with execution
• Trust and Trust