Analytical Tools and Frameworks Group 6: Wayni Hebert, Sterling Rose, Justin Simpson, Gwen Singleton, Krista Wells

The Strategy Canvas Diagnostic and Action Framework for building a compelling blue ocean strategy. It compares core competencies for competition and their level of importance for each player in the market.

How to use it in BOS? Don’t: Offer a little more for a little less Do: Reorient strategic focus from competitors to alternatives and from customers to noncustomers of the industry.

The Four Actions Framework To create a new value curve To break the trade-off between differentiation and low cost

The Four Actions Framework A New Value Curve 1.Eliminate Which factors that the industry takes for granted should be eliminated? 4. Create Which factors should be created that the industry has not seen before? 3. Raise Which factors should be raised well above the industry standard? 2. Reduce Which factors should be reduced well below the industry standard? Figure 2-2

The Four Actions Framework 1. Eliminate (competition) Factors your industry competes on Change in what buyers value 2. Reduce (competition) Overdesigned products Over served customers 3. Raise (customers) Eliminate compromises 4. Create (customers) New sources of value New demand

McDonald’s Framework Create New Sources of Value: Brand customer care cost structure its patent target audience Sustainable – the key test of a core competency measures the ability of a firm to continually increase the advantage of the competency over many years. “The world has changed. Our customers have changed. We have to change too." - James R. Cantaloupe, Chairman and CEO, McDonald's, 2003 *

Eliminate-Reduce-Raise-Create Grid Figure 2-5: The Case of McDonald’s Eliminate Super Size Option Raise Health Standards Reduce Calories in burgers Create Salad Menu

Characteristics of a Good Strategy Focus Divergence Compelling Tagline

FOCUS Identify key factors of competition EX. Quality, speed, price, inovation….. Choose one factor Focus on that one factor

Divergence Break out of the common competing Techniques Ex. Price war, Revolutionize the industry Ex. McDonalds and Starbucks used brand divergence Make changes to the way things done in the industry. Ex. Southwest Airline

Compelling Tagline “The speed of a plane at the price of a car–whenever you need it.” What is a tagline? A short descriptive phrase Tagline should be Short and Clear Truthful Updated Ex. “I'm lovin' it” replacing "We love to see you smile."

Reading the Value Curves A Blue Ocean Strategy A Company Caught in the Red Ocean Over delivery Without Payback An Incoherent Strategy Strategic Contradictions An Internally Driven Company

The Strategy Canvas

Key Points 1. Diagnostic and Action Framework for building a compelling blue ocean strategy. 2. Create your own identity and value. 3. Act on the Four Actions Framework to create a new value curve. 4. Focus on one key competitive factor and use divergence to differentiate yourself from the industry. 5. Understanding the value curve can reveal strategic information that can help a company gain market share and become a winner in their industry.