Innovation Leadership Training Day Two Strategy Mapping February 6, 2009 All materials © NetCentrics 2008 unless otherwise noted

Welcome We’ll spend the next hour or so examining Blue Ocean concepts for discovering unmet, undermet and undiscovered opportunities using a Strategy Map.

What We Want to Accomplish

Goals for this section Map an existing market, opportunity or industry to understand the value drivers Seek out overserved, underserved or unserved needs Map a new product or service offering against the industry

Key Points Innovation often occurs when a product addresses an underserved or overserved need – Seek out opportunities to differentiate in existing products or services Innovation always occurs when we identify and serve unmet or undiscovered needs – These can become the “Blue Oceans” It’s important to understand what the industry or market thinks is valuable, and compare/contrast that with what the customers think is valuable

Need Hierarchy Examine needs and solutions more carefully A more fine grained approach addresses: – Undermet needs – Overmet needs – Unmet needs – Undiscovered needs Using this paradigm we can investigate innovation opportunities

Overmet / Undermet Overmet needs are needs that the current offering or solution provides more functionality or benefit than the customer wants or can use Undermet needs are needs that are partially met by the current offerings or solutions, but don’t fully satisfy the customer expectation Both of these situations are instances where innovation is possible.

Strategy Map The strategy map, or strategy canvas, is a concept suggested by Lee and Mauborgne in Blue Ocean Strategy The concept seeks to map the “average” offerings in the industry on a number of value segments to identify overmet, undermet and unmet needs or requirements

Identifying Overmet / Undermet Needs These needs were undermet by the existing airline industry These needs were overmet by the existing airline industry From Blue Ocean Strategy by Kim and Mauborgne

Southwest Airlines Southwest identified a segment of the population that did not care about frequent fliers, seat choices and meals. They felt the existing airline industry was overly focused on these issues and many clients didn’t care Southwest also identified some undermet needs – friendly service and speed – that the existing airline industry did not address

Unmet needs Note as well that Southwest identified an unmet or undiscovered need – frequent departures Frequent departures was not one of the value drivers that the airlines delivered or competed on Southwest built its operational model on the “fast turn” frequent departures that the “majors” have yet to copy

Strategy Map Using the Strategy Map in your organization We’ve found it useful when considering opportunities to innovate in an existing market, or to discover new opportunities

Strategy Map Place the key value drivers along the bottom axis, and map a competitor or industry in their provision of those value propositions. Also, consider how valuable or important these value drivers are to the customer.

Creating your own “curve” There are four actions you can take for any of these value drivers to create a new “curve” on the strategy map: – Reduce the delivery or emphasis of a factor – Raise a factor well above industry standard – Eliminate a factor all together – Create a new factor that hasn’t been offered

Southwest Example For the existing airline industry, Southwest chose to: – Eliminate seating choices, food and hubs – Reduce pricing – Increase friendliness and speed – Create frequent departures

Takeaways Innovation can happen by reducing or eliminating an existing factor or providing even better solutions along an existing factor (generally incremental innovation) Innovation can happen by identifying a completely new market or undiscovered need (generally disruptive innovation) Use a Strategy Map to identify what the market thinks is important and identify what the customer thinks is important

Questions

Exercise