Blue Ocean Strategy Book Review Daisy, Sara, Cher, Sarah, Sean

Ch. 1 Creating Blue Oceans Red Oceans Blue Oceans Compete in existing market space. Create uncontested market space. Beat the competition. Make the competition irrelevant. Exploit the existing demand. Create and capture new demand. Make the value-cost trade-off. Break the value-cost trade-off. Strategic choice of differentiation or low cost. Pursuit of differentiation and low cost.

Value Innovation: Cornerstone of BOS Approach to strategy separates the winners from the losers. Creators do not use the competition as a benchmark. Value Innovation Instead of beating the competition, focus on making competition irrelevant. Value innovation occurs when innovation is aligned with utility, price, and cost positions. Create Blue Oceans by pursuing differentiation and low cost simultaneously.

Six Principles of Blue Ocean Strategy 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

Ch. 2 Analytical Tool and Frameworks Strategy Canvas An analytic framework that is central to value innovation and the creation of blue oceans. Value Curve graphic depiction of a company’s relative performance across its industry’s factors of competition. Four Actions Framework Questions to challenge strategic logic and business model Eliminate-Reduce-Raise-Create Grid Act on Four Actions to create a new value curve Characteristics of a Good Strategy Focus, Divergence, & Compelling Tagline Company is on the right track if it meets the criteria.

CH 3: Breaking from Competition Break from the competition to create blue oceans Are there systematic patterns for reconstructing market boundaries to create blue oceans? If so, can they be applied across all industry sectors? Yes, there are six basic approaches to remaking market boundaries. Six Paths Framework

CH 3: Six Paths Framework Path 1: Look across Alternative Industries Path 2: Look Across Strategic Groups Within Industry Path 3: Look Across the Chain of Buyers Path 4: Look Across Complementary Product and Service Offerings Path 5: Look Across Functional or Emotional Appeal to Buyers Path 6: Look Across Time

CH 4: Visual Awakening Strategy Step 1: Visual Awakening As-Is strategy- compare your company with competitors Step 2: Visual Exploration Send managers into field to study use of products Observe advantages of alternative products Find factors to eliminate, create or change in your business Step 3: Visual Strategy Fair Business units present their strategy to everyone to see business portfolio and big picture

CH 4: Using the Pioneer-Migrator-Settler (PMS) Map Pioneer- the businesses that offer unprecedented value Pioneers have maximum growth potential but often consume cash to finance growth as they expand. Settler - the businesses whose value curves conform to the basic shape of the industry’s Even though settlers have marginal growth potential, they are frequently today’s cash generators. Migrators- lie somewhere in between the pioneers and the settlers, and fall between red oceans and blue oceans.

Chapter 5: Reach Beyond Existing Demand How do you maximize the size of the blue ocean you are creating? You reach beyond existing demand (the 3rd principle of blue ocean strategy) To maximize the size of your blue ocean you need to concentrate your focus on non-customers and commonalities in what those buyers value Non-customers before customers Commonalties before differences De-segmentation before finer segmentation

Chapter 5: Reach Beyond Existing Demand Three tiers of non-customers Soon-to-be non-customers Refusing non-customers Unexplored non-customers Within these three groups there is an ocean of untapped demand waiting to be released

Chapter 5: Reach Beyond Existing Demand Remember you should go for the biggest catchment, or the biggest group of non-customers

Chapter 6: Get the Strategic Sequence Right The 4th principle of blue ocean strategy: get the strategic sequence right Discusses the strategic sequence of fleshing out and validating blue ocean ideas to ensure their commercial viability

Chapter 6: Get the Strategic Sequence Right Your business must pass all of these four tests to become a viable blue ocean idea

CH 7: Breaking through Hurdles Break through the cognitive hurdle Jump the resource hurdle Jump the motivational hurdle Knock over the political hurdle

CH 7: Tipping Point Leadership Tipping Point Leadership-allows you to overcome these four hurdles fast and at low cost while winning employees’ backing in executing a break from the status quo. Ex. Target

CH 8: The power of fair process Strategy formulation process- fair process Attitudes-trust and commitment Behavior-voluntary cooperation Strategy Execution-exceeds expectations

CH 8: Successful companies Successful companies do not consist of top, middle, and bottom hierarchies; it is a collective process that includes all who make up the organization. Intangible capital(commitment, trust, voluntary cooperation) is a must have in order to be successful. Ex. Target in the community

CH 9: Imitators Once a company creates a blue ocean and their performance is known… Sooner or later there will be companies trying to imitate As they succeed and expand the blue ocean, more companies will try to join themselves. Barriers to Imitation Some are operational, and others are cognitive. Most often a blue ocean strategy will go without competition for 10 to 15 years. This is due to imitation barriers rooted in blue ocean strategy

CH 9: Imitation Barriers 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 of legal permits block imitation. High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market

CH 9: When to Value- Innovate Again Almost every blue strategy will be imitated. Avoid the trap of competing by monitoring value curves on the strategy canvas. This will signal when to value-innovate and when not to. You should swim as far as possible in the blue ocean, making yourself a moving target, distancing yourself from your early imitators, and discouraging them in the process. You need to dominate the blue ocean over your imitators for as long as possible.

Conclusion: Blue Ocean Strategy Ch 2: Six Principles to Blue Ocean Strategy Ch 3: Six Paths Framework Ch 5: Go for the biggest catchment Ch 6: The four tests: Utility, Price, Cost, Adoption Ch 7: Breaking through Hurdles Ch 9: Imitation Barriers