2- Blue Oceans – definitions and examples - Formulating Blue Ocean strategies- Executing Blue Ocean strategies- key take aways
3Blue Oceans – definitions and examples Red OceanBlue OceanCompete in existing mtksCreate uncontested mkt spaceBeat the competitionMake the comp irrelevantExploit existing demandCreate and capture new demandMake the value cost trade offBreak the value cost trade offCostsValue InnovationExamples of “blue Ocean”Cirque du SoleilAppleRyan Air (European Low cost airline)Value Innovation“instead of focusing on beating the competition focus on making the competition irrelevant by creating a leap in value for the customer“must align innovation to utility, price and cost and must time entry accordingly”Of all business launches in 108 companies studied86% line extensions (red ocean) – 62% total revenue and only 39% profit14% - “blue ocean” releases – 38% revenue and 61% profitBuyer Value
4Formulating Blue Ocean Strategy Formulation PrinciplesReconstruct Market BoundariesFocus on big picture, not the numbersReach beyond existing demandGet the strategic sequence rightOvercome key org hurdlesBuild execution into the strategyChoosing which “factors” to attack (industry specific – eg airline – price, meals, lounges, seating class choices, hub connectivity, service, speed, frequency point to point flights etc etc) – and using this to create a “strategy canvas”BA – focus on lounges, meals, seating class, hub connectivityRyan air – focus in price, cost, point to pointRed OceanBlue OceanIndustryFocuses on rivals within industryLooks across alternative industriesStrategic GroupFocus on strategic position within groupLooks across strategic groups in industryBuyer powerFocus on better serving buyer groupRedefines the industry buyer groupScope of product offeringMaximises value of prod within industryLooks across to complimentary product offeringsFunctional / emotional orientationFocus on improving price performanceRe-thinks the orientation within the industryTimeFocus on adapting to external trendsParticipates in shaping ext trends
5A “fictional” Strategy Map for Psion Teklogix… Where would you draw the strategy canvas for Psion Teklogix and our competitors?????
6Eliminate - reduce - Raise - Create grid: Trying to have a complete product for every market (IKON Variants)RaiseQualityEase to do business withRelationship ManagementReduceFocus on priceFocus on RuggednessCreateOSM & Modularity & commercialize this
7Getting the Strategic sequence right Exceptional utilityExceptional utilityRevenue FocusedNoYesPriceNoYesCostProfit FocusedYesNoAdaptionYesSustain, re – value innovate (protected by barriers to entry)Blue Ocean
8Key Take-away’sLook outside “the box” and beyond the competition to generate “value innovation”Strategy maps can be used to show the strategic pathMake decisions on “features” to eliminate, start, enhance or reduceBlue Oceans are usually “self protecting for a number of years” but will turn red over time – so continually look for fresh blue Oceans…..