Blue Ocean Strategy Ch. 4 Focus on the Big Picture, Not the Numbers Seth Schulz, Jacob Martin, Daniel Lujan

Strategic Planning Process Second Principle – Focus on the big picture, not the numbers How do you align your strategic planning process to focus on the big picture? – Draw a strategy canvas, don’t crunch numbers This approach consistently produces strategies that unlock the creativity of a wide range of people within an organization, open companies’ eyes to blue oceans, and are easy to understand and communicate for effective execution

Strategy Canvas 3 Things – 1. Shows the strategic profile of an industry by depicting the factors that affect competition among industry players – 2. Shows the strategic profile of current and potential competitors – 3. Shows the company’s value curve, depicting how it invests in the factors of competition and how it might invest in them in the future

Strategic Profile High blue ocean potential company’s have three qualities: – 1. Focus – 2. Divergence – 3. Compelling tagline If a company does not have these qualities, it’s strategy is undifferentiated, hard to communicate, and costly to execute

Drawing Your Strategy Canvas Drawing your company’s strategy canvas is somewhat difficult to do Assessing to what extent your competitors offer competitive factors is also difficult to do Most managers can pinpoint one or two dimensions there company and their competitors fare, but very few see the overall picture of the entire industry

The Four Steps of Visualizing Strategy 1. Visual Awakening 2. Visual Exploration 3. Visual Strategy Fair 4. Visual Communication European Financial Services adopted this process to break away from its competition. It resulted in a 30% revenue boost in its initial year of adopting the strategy

Step 1: Visual Awakening Executives are reluctant to accept the need for change – Takes a highly determined leader or a serious crisis EFS began the strategy process by bringing together more than 20 senior managers from there subsidiaries in Europe, North America, Asia, and Australia and splitting them into two teams. – Produce value curves depicting EFS’s current strategic profile in its traditional corporate foreign exchange business relative to its competitors and emerging online foreign exchange business relative to its competitors

Step 2 Visual Exploration

How do people use/don’t use the product or service? This is many times outsourced Sends a team into the field to figure things out Company should never outsource it’s eyes, no substitute for seeing yourself

Visual Exploration Michael Bloomberg Helped translate financial information online, to something much easier to understand Change in focus (IT purchasers  Users) Users are the main focus Go after non-customers as well What if customer and user is different? – Need to extend observations to users

Visual Exploration Identify the products and services that are complementary to your product or service May give insight to bundling opportunities European Financial Services (EFS) Sent own managers into field to observe – New customers, customers of competitors, companies that did not yet use corporate FX…. – Found that relationship managers were ineffective and speedy confirmation of transaction was what customers wanted

Step 3 Visual Strategy Fair

EFS Two teams (Online and Offline) Each had to create 6 curves Then invited the people interviewed by the managers earlier (non customers, competitors customers…) Had customers give feedback on each curve

Visual Strategy Fair EFS discovered 1/3 of what they perceived important, to be only marginal to customer Overlooked 1/3 of what was essential to the customer Learned each customer had a basic set of needs and expected services

Visual Strategy Fair In the end The final strategy formulated – Eliminated relationship mgmt because customers did not like – Reduced investment in account executives and corporate dealers to focus on only AAA accounts – Sent automatic confirmations to all customer because that was essential to every customer

Step 4: Visual Communication Easily Understood Must have a focus and avoid past jargon Moving from the old to the new

Strategy Canvas First Draw, then Sharing! Present their canvas and Implementations

Value Innovation Program Idea by Samsung Cross functional teams to meet and discuss their strategic projects. Institutionalized the system (Actual VIP Center) Awards ceremony to recognize the best cases.

PMS Map Pioneer- Business that offer unprecedented value Migrator- Offer value but not innovational value Settler- Saturated markets

Pioneers VS. Settlers Pioneers – Maximum growth but high cash consumer Settlers- Low growth but cash generators

Overcoming Limitations The Soul never thinks without an image. – Aristotle Numbers and documentation are still important