Presentation on theme: "Zane Barnes Johnnie Davis Nolan Bosworth Kimberly Smith Shaina Weaver Anna Sterling Clay Jones."— Presentation transcript:
Zane Barnes Johnnie Davis Nolan Bosworth Kimberly Smith Shaina Weaver Anna Sterling Clay Jones
Barriers to Imitation A blue ocean strategy brings with it considerable barriers to imitation Some are operational and others are cognitive. These barriers can usually last 10 to 15 years without credible challenges Examples include: Cirque du Soleil, Southwest Airlines, FedEx, The Home Depot, Bloomberg, and CNN
Value Innovation A value innovation move does not make sense based on conventional strategic logic. An example is CNN, who was ridiculed by CBS, ABC, and NBC for the idea of 24/7, real-time news without star broadcasters. CNN was referred to as Chicken Noodle News by the industry. Ridicule does not inspire rapid imitation.
Imitation Barrier #2: Brand Image Conflict Brand image conflict prevents companies from imitating a blue ocean strategy. Body Shop example
Imitation Barrier #3: Natural Monopolies Natural monopolies block imitation when the size of the market can not support another player. Kineplois example in Belgium
Imitation Barrier #4: Patents Patents or legal permits such as copyrights block imitation.
Imitation Barrier #5: High Volume High volume generated by value innovation leads to rapid cost advantages Wal-Mart example
Imitation Barrier #6: Networks externalities Having an established specialized network can create competition from imitating your blue ocean. eBay Example- the more people eBay has within its network the more attractive it is to the customers. Switching to a new electronic auction web site with less users in its network is not desirable.
Imitation Barrier #7: Imitations require substantial changes To imitate some blue oceans substantial changes would need to be made. Southwest Airlines Example- to imitate Southwest the competitors would have to make very radical changes very fast, that would put to much stress on the organization and caused it to fail. Example of substantial changes needed: changing years of business practices, culture, prices, marketing, flexibility, retraining staff, new equipment, and changing company politics.
Imitation Barrier #8: Customer Loyalty Companies that value-innovate earn brand buzz and a loyal customer following that tends to shun imitators. Example: Microsoft has been trying to loosen Quicken’s grip on money and business management software to no avail. The brand buzz and loyalty toward Quicken are so great that even though MS manufactures the most popular operating system in the world and bundles in MS Money, Quicken is still the premier personal finance software in the U.S.
Imitation Barriers to Blue Ocean Strategy The barriers to imitate Blue Oceans are many and difficult to overcome. Blue ocean strategy is a systems approach that requires not only getting each strategic element right but also aligning them in an integral system to deliver value innovation. (BOS pg. 187) Synergy
Imitation Barriers to Blue Ocean Strategy: The List Value innovation does not make sense to a company’s conventional logic. Blue ocean strategy may conflict with other companies’ brand image. Natural monopoly: The market often cannot support a second player. Patents or legal permits block imitation. High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market. Network externalities discourage imitation. Imitation often requires significant political, operational, and cultural changes. Companies that value-innovate earn brand buzz and a loyal customer following that tends to shun imitators.
When to Value-Innovate Again Eventually almost every blue ocean strategy will be imitated - Causes you to fall into the trap of competing, in order to beat the new competition Over time you start to focus on the competition, and not the buyer - If you stay on this course, the basic shape of your value curve will begin to converge with those of the competition
When to Value-Innovate Again To avoid the trap of competing you need to monitor your value curve on the strategy canvas. - monitoring value curves signals when to value-innovate and when not to It alerts you to reach out for another blue ocean when your value curve begins to converge with those of the competition
When to Value-Innovate Again Monitoring your value curve also keeps you from pursuing another blue ocean when there is still a profit stream to be collected from your current offering.. When a company’s value curve still has focus, divergence, and a compelling tagline then you should resist the temptation to value-innovate again and should instead focus on lengthening, widening, and deepening your rent stream through operational improvements and geographical expansion to achieve maximum economies of scale and market coverage.
When to Value-Innovate Again Because your aim is to dominate the blue ocean over your imitators for as long as possible you should… Swim as far as possible into the blue ocean Make yourself a moving target Distance yourself from early imitators
When to Value Innovate Again cont… Rivalry Increases + (Total Supply > Total Demand) = Bloody Competition and Red Ocean Plot your own and your competitors’ value curve on a strategy canvas to determine when you should create a new blue ocean. The closer they are, the more imitation and convergence there is, and the closer you are to a red ocean. – Ex: Body Shop
Four Actions Framework Good to Great: Stop doing List.
Six Principles The 6 principles of blue ocean strategy proposed should serve as essential pointers for every company thinking of its future strategy 6 principles: Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right Overcome key organizational hurdles Build execution into strategy
Conclusion To obtain high performance in this overcrowded market, companies should go beyond competing for share to creating blue oceans. Because red and blue oceans have always coexisted, reality suggests that companies succeed in both oceans and master strategies for both. Companies need to learn how to make competitors irrelevant This book aims to help balance the scales so that formulating and executing blue ocean strategy can become as systematic and actionable as competing in the red oceans of known market space.