Blue Ocean Strategy

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Contents
1. Blue Ocean Vs. Red Ocean Strategy

2. Blue Ocean Strategy Tools

3. Strategy Canvas and Four Action Framework

4. Six Principles of Blue Ocean Strategy

5. Formulating Blue Ocean Strategy

6. Executing Blue Ocean Strategy

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Blue Ocean Vs. Red Ocean
Strategy

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Blue Ocean vs. Red Ocean Strategy

Blue Ocean Strategy Red Ocean Strategy

•• Create
Create uncontested
uncontested •• Compete
Competein in existing
existing
market
marketspace
space market
market space
space
•• Make
Makethethecompetition
competition •• Beat
Beatthe
thecompetition
competition
irrelevant
irrelevant
•• Create
Create and
and capture
capture •• Exploit
Exploitexisting
existing
new
newdemand
demand demand
demand

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Blue Ocean vs. Red Ocean Strategy

Blue Ocean Strategy Red Ocean Strategy

•• Break
Breakthe
thevalue-
value- cost
cost •• Make
Makethethevalue-cost
value-cost
tradeoff
trade off tradeoff
trade off
•• Align
Alignthe
thewhole
wholesystem
system •• Align
Alignthe
thewhole
wholesystem
system
ofaafirm’s
of firm’sactivities
activitieswith
with ofaafirm’s
of firm’sactivities
activitieswith
with
its strategic
its strategic choice
choice ofof its strategic
its strategic choice
choice ofof
differentiation and
differentiation andlow
low differentiation or
differentiation orlow
low
cost
cost cost
cost

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Blue Ocean Strategy Tools

• A diagnostic tool for building a

Strategy compelling blue ocean strategy
Canvas • It captures the current state of play in
the known market space
• Allow you to understand :
• where the competition is currently
investing
• the factors the industry currently
competes on in product, service and
delivery
• what customers receive from existing
competitive offerings on the market
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Four Action Framework

Eliminate Raise

Reduce Create

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Four Action Framework

Which of the factors that the industry

Eliminate takes for granted should be eliminated?

Which factors should be reduced well

Reduce below the industry’s standard?

Which factors should be raised well

Raise above the industry’s standard?

Which factors should be created that

Create the industry has never offered?

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Four Action Framework
The Case of Cirque du Soleil (A Circus Company)

Eliminate Reduce

• Star performers • Fun and humor

• Animal shows • Thrill and danger
• Aisle concession sales
• Multiple show arenas

Create Raise

• Theme • Unique venue

• Refined environment
• Multiple productions
• Artistic music and dance
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Six Principles of Blue Ocean Strategy

Formulation Principles Execution Principles

1. Reconstruct market 5. Overcome key

boundaries organizational
2. Focus on the big picture, hurdles
not the numbers 6. Build execution into
3. Reach beyond existing strategy
demand
4. Get the strategic
sequence right

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1. Reconstruct Market Boundaries

Head-to-Head Strategy Blue Ocean Strategy

• Focus on rivals within • Looks across alternative

industry industries
• Focuses on competitive • Looks across strategic
position within strategic group within industry
group • Redefines the industry
• Focuses on better buyer group
serving the buyer group

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1. Reconstruct Market Boundaries

Head-to-Head Strategy Blue Ocean Strategy

• Focuses on maximizing • Looks across to

the value of product or complementary product
service offerings within and service offerings
the bounds of its • Participates in shaping
industry external trends over time
• Focuses on adapting to
external trends as they
occur

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2. Focus on the Big Picture, not the Numbers

• Compare your business with your

Visual competitors’ by drawing your “as is”
Awakening strategy canvas
• See where your strategy needs to
change

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 3. Reach Beyond Existing Demand

• First tier: “Soon to be” non-

customers who are the edge of
your market, waiting to jump ship
The Three
Tier of Non- • Second tier: “Refusing” non-
customers customers who consciously
choose against your market

• Third tier: “Unexplored” non-

customers who are in markets
distant from yours

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4. Get The Strategic Sequence Right
The Sequence of Blue Ocean Strategy

Buyer utility Price

Is there exceptional buyer Is your price easily
utility in your business idea? accessible to the mass of
buyers?

Adoption Cost
What are the adoption Can you attain your cost
hurdles in actualizing your target to profit at your
business idea? strategic price?

A commercially viable
blue ocean idea 15
 Executing
Blue Ocean Strategy

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5. Build Execution Into Strategy
Fair Process of Strategy

StrategyFormulation
Strategy FormulationProcess
Process
FairProcess
Fair Process––Engagement,
Engagement,Explanation,
Explanation,Expectation
Expectationclarity
clarity

Attitudes
Attitudes
Trustand
Trust andCommitment
Commitment––“I“Ifeel
feelmy
myopinion
opinioncounts”
counts”

Behavior
Behavior
VoluntaryCooperation
Voluntary Cooperation––“I’ll
“I’llgo
gobeyond
beyondthe
thecall
callof
ofduty”
duty”

StrategyExecution
Strategy Execution
ExceedsExpectation
Exceeds Expectation––self
selfinitiated
initiated
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End of Material

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