Professional Documents
Culture Documents
Strategy and Innovation 1 - VI (Blackboard)
Strategy and Innovation 1 - VI (Blackboard)
Strategic Inertia
Dominant Logic and
Strategic Drift
Strategy and Innovation 1:
Source: Barney (1991), Porter (1996) , Leavy and McKiernan (2009), Kim and Mauborgne (2005)
‘It’s a sobering thought that only 1 firm out of the
Dow Jones index actually made it through from
the beginning to the end of the 20th century’
Bessant (2003)
Blockbuster 2004
• 9000 Stores
• 60k employees
• $5.9bn earnings
In 2010
Blockbuster filed
for bankruptcy
Blockbuster 2004
• 9000 Stores
• 60k employees
• $5.9bn earnings
In 2010
failBlockbuster
Rare for large firms to because filed
of magnitude of innovation or
for bankruptcy
incompetent management
Rigidities and Path Dependency
In seeking advantage firms become locked in a self reinforcing pattern
of development and historic choices
Objects
Technology
e.g. docs
Value People’s
Behaviour
Network Strategic Choices
Regulators Shareholders
Analysts
Objects
Technology
e.g. docs
Professional
Bodies
Value People’s
Behaviour
Network Strategic Choices
Industry
Norms Standards, Training &
rules, education
language
Media
Unions Non-Execs
Regulators Shareholders
Analysts
Objects
Technology
e.g. docs
Professional
Bodies
Value People’s
Behaviour
Network Strategic Choices
Industry
Norms Standards, Training &
rules, education
language
Media
Unions Lock
Non-Execs
In
Environmental
change
Strategic
change
Customers
may be equally
trapped and
not realise
needs can be Time
better served Source: Based on Johnson et al (2011)
Strategy and Innovation debate
• Cognitive Limits
• Blue Ocean Strategy
• Disruptive Innovation
• Co-Creation
• Open Innovation
Strategy and Innovation 1:
Blue Ocean Strategy
Creating New Market
Space
Gainin Competitive Advantage
Constant
Complex System of
Unique Resource(s)
Activities aligned to
not easily obtained
market needs
Resource Activity
Blue Ocean
Ability to recognise
On going series of
change and move
advantages
more quickly than
others
Dynamic
Webb (2018)
Blue Ocean Strategy
Can you create new space/ways of competing rather than grinding it out
with the competition?
Blue Ocean Strategy Assumptions
Red Oceans:
• Existing firms fight for market
share
• Assumes market structures
are fixed
• Dividing demand to try to
defend position
Market Competing
Can you create new space/ways of competing rather than grinding it out
with the competition?
Blue Ocean Strategy Assumptions
Can you create new space/ways of competing rather than grinding it out
with the competition?
Breaking Industry Boundaries
Cost
• Rejects “dogma” of differentiation
vs low cost trade off
• Key is REALLY understanding what
Value
Innovation
customers value and what they
don’t
• ..and taking new perspectives on
the market space and its
boundaries
Buyer Value
t o the
an ges of
3. What Strategic Ch ctors
fa
e t ition
Moves - can we com
p
make?
High
Target
Amount of Factor
Value
Curve
“As Is”
Value
Low Curve
Factors of Competition
The Four Actions Framework
Really
understand Reduce
what customers
value and align
Which factors
should be reduced well ERIC!
below the industry standard?
A New
Eliminate Value Create
Which of the
Proposition Which factors should
factors that the be created that the industry
industry takes for has never offered?
granted should be
eliminated?
Increase
Which factors
should be raised well Strategic Moves
above the industry standard?
that change the
Kim and Mauborgne 2005 Value Proposition
Strategy Canvas: The Value Curve
Eliminate Reduce Raise Create
High
Quality Circuses
Low
s
as ow
er
ns
ow
ice
ng nd
m nd
rm
en h
sio
nc isle
Sh
er
ar le s
da ls a
Pr
Hu n a
fo
or
es
er
Co A
al
Fu
il
rP
Tr
im
lti
Mu
An
a
St
Competitive Factors
Kim and Mauborgne 2005
26
http://www.youtube.com/watch?v=4hF8YZfz7j8
Cirque Du Soleil: ERIC
Reduce
Fun and humor
Thrill and danger
“Take the kids” mind set
Eliminate Create
Star performers A New Theme
Animal shows Value Refined environment
Aisle concession sales Proposition Multiple productions
Multiple show arenas Artistic music and dance
Increase
Unique venue
ns
Mu
Quality Circuses
lti
p
ar le s
en h
as ow Small Regional Circuses
Fu
Hu n a
m nd
or
Tr
il
Reduce
da ls a
ng nd
er
Un
Competitive Factors
Ve ique
nu
e
Raise
Re Th
en in f em
vir ed e
on W
Mu m atc
en hi
lt i
pl t ng
eP
ro
Blue Ocean
Cirque du Soleil:The Value Curve
du
cti
Create
Ar on
s
Cirque du Soleil
an tist
d ic
da m
nc us
e ic
Created Highly Profitable Blue Ocean Space
Immersive
High
Key Elements
Winning
Market Ideas through Selecting and validating
Exploration structured winning Ideas
… and the ‘Buyer Utility Grid’ was used as a further filter to
brainstorming
produce the final short list of Value Propositions
Buyer experience cycle
U Customer
L
E
V
E
R
Risk
Quantifying
www.emergenceconsulting.com 40
© 2001 Emergence Con sult ing.
All rights reserved .
30
Blue Ocean Critique
• There are criticisms that the examples show its application after
the events took place (an exception is Nintendo Wii)
– Being the pioneer in any new market frequently does not deliver
success. Value is more often realised by “fast followers”
– Blue oceans will at some point become red – often quickly unless
imitation is difficult
Firms still fail despite having tools to recognise and respond to change
Conclusion
Constant
Complex System of
Unique Resource(s)
Activities aligned to
not easily obtained
market needs
Resource Activity
Blue Ocean
Ability to recognise
On going series of
change and move
advantages
more quickly than
others
Dynamic
Webb (2018)
Blue Ocean Strategy
ns
Mu
Quality Circuses
lti
p
ar le s
en h
as ow Small Regional Circuses
Fu
Hu n a
m nd
or
Tr
il
Reduce
da ls a
ng nd
er
Un
Competitive Factors
Ve ique
nu
e
Raise
Re Th
en in f em
vir ed e
on W
Mu m atc
en hi
lt i
pl t ng
eP
ro
Blue Ocean
du
Strategy Canvas: Cirque du Soleil
cti
Create
Ar on
s
Cirque du Soleil
an tist
d ic
da m
nc us
e ic
Systematic Process is the Core
Immersive
High
Key Elements
Winning
Market Ideas through Selecting and validating
Exploration structured winning Ideas
… and the ‘Buyer Utility Grid’ was used as a further filter to
brainstorming
produce the final short list of Value Propositions
Buyer experience cycle
U Customer
L
E
V
E
R
Risk
Quantifying
www.emergenceconsulting.com 40
© 2001 Emergence Con sult ing.
All rights reserved .
t o the
an ges of
c tured 3. What Strategic Ch ctors
Stru nstorm fa
e t ition
Bra
i Moves - can we com
p
make?
“As Is”
of a Factor
Value Curve
3 Star Hotels
Low
ice
..
..
..
ice
n
s
ze
n
y
ff
…
pe
io
rt
io
bb
ta
se t
Si
rv
Pr
m an
fo
at
pt
Ty
yS
Lo
om
oc
oo ur
ce
om
Co
bb
Ro
Ro
Lo
om
Pr
Ro
t o the
an ges of
3. What Strategic Ch ctors
fa
e t ition
Moves - can we com
p
make?
• Now adopt the customer viewpoint - seek to gain direct understanding of what
really matters to customers
• Uncovering hidden “pain points” by looking across the full range of ways the
industry delivers utility to buyers and more importantly blocks utility
Customer
Productivity
Simplicity
Buyer Utility Levers
Fun &
Image
Environmental
Friendliness
Supplements
Maintenance
Purchase
Disposal
Delivery
Customer Use
Pain
Points
CitzenM Hotels
Stages of the Buyer Experience Cycle
Service
Purchase Check In Stay Services Check Out
Recovery
Customer Limited
Productivity Internet
Waiting in Line
Wait in line
Simplicity Nowhere AGAIN!
to chill out
Buyer Utility Levers
Hidden
costs
Convenience
Location Food + drink
when I need it
Risk
reduction
Poor Having to tip
Bed/Showe everyone!
Fun & Price r
Image Fluctuation Room service
expensive
Dull!
Environmental
Friendliness Paper! Paper
AGAIN!
Factors of Competition
Limite d
Inte rne t
S e rvic e
Re c o ve ry
Che c k Out
Industry currently
Waitin g in Line
Wait in line
S implic ity No whe re AGAIN!
to c hill o ut
compete?
Lo c atio n Fo o d + drink
whe n I ne e d it
Ris k
re duc tio n
Po o r Be d/ Having to tip
S h o we r e ve ryo ne !
Fun & Pric e
Imag e Fluc tuatio n Ro o m s e rv ic e
e xpe ns ive
Dull!
Enviro nme ntal
Factors of
Frie ndline s s P ape r! Pape r
AGAIN!
Competition
t o the
an ges of
3. What Strategic Ch ctors
fa
e t ition
Moves - can we com
p
make?
47
Based on Kim and Mauborgne (1997 and 2018)
3. What Strategic Moves Can we Make?
Increase Create
Structured Brainstorming on each path • Sleeping Environment • ATM style check-in
creates partial ERIC grids/value • Prime location • Guest’s “Living Room”
curves that are then combined to • Free with 24/7 bar/pantry
number of possible strategies movies/internet/phone and iMacs
calls • Multitasking
“Ambassadors hired
for attitude
48
Based on Kim and Mauborgne (1997 and 2018)
49
Amount / Level
High
Low
of a Factor
Pr
ice
Re
ce
pt
io
Lo n
bb
yS
Re ta
ff
/ R sta
oo ur
m an
rv
ice
Lo
Eliminate
bb
Ro y
om
Ty
pe
s
Ro
om
Si
Ro ze
Reduce
om
Co
m
Pr fo
im rt
Fr eL
ee oc
Mo at
io
vie n
s/I
nt
Increase
er
AT ne
M t
Ch
Gu ec
es k-
tL in
ivi
ng
3 Star Hotels
Ro
Strategy Canvas: CitizenM Hotels
Am om
Create
ba
ss
ad
Citizen M
or
s
Factors of Competition
Limite d
Inte rne t
S e rvic e
Re c o ve ry
Che c k Out
Industry currently
Waitin g in Line
Wait in line
S implic ity No whe re AGAIN!
to c hill o ut
compete?
Lo c atio n Fo o d + drink
whe n I ne e d it
Ris k
re duc tio n
Po o r Be d/ Having to tip
S h o we r e ve ryo ne !
Fun & Pric e
Imag e Fluc tuatio n Ro o m s e rv ic e
e xpe ns ive
Dull!
Enviro nme ntal
Factors of
Frie ndline s s P ape r! Pape r
AGAIN!
Competition
High
5 S tar Luxury Ho te ls
Citize n M
Amo unt / Level
of a Factor
3 S tar Ho te ls
Low
29
Based on Kim and Mauborgne (1997 and 2018)
High
Breaking through industry
5 S tar Luxury Ho te ls boundaries and mindset
Citize n M
requires buy in from across
Amo unt / Le vel
o f a Fac to r
the firm
3 S tar Ho te ls
Low
rt
n
n
t
ze
s
om
y
in
f
s
se t
or
ne
af
io
io
rv
bb
fo
m n
pe
ic e
Si
k-
at
pt
St
er
ad
m
Ro
o o aur
Lo
ec
Ty
Pr
om
oc
ce
nt
Co
by
ss
Ch
s /I
ng
om
eL
/ Res t
Re
Ro
ba
b
om
iv i
M
Lo
v ie
Ro
R
im
Am
AT
tL
Ro
Pr
Mo
es
Gu
ee
Fr
51
Based on Kim and Mauborgne (1997 and 2018)
Citizen M Hotels
Key Figures
Cost of staff
50% lower than
Highest guest industry
rating in average
industry
90%
Highest occupancy
(industry average 60%)
profitability per
Sq.m in world In 2019, the company raised c.€200m of
capital through the sale of stock valuing
Based on Kumar (2017)) the company at €2bn
CitizenM’s Business Model
Company Perspective Customers’ Perspective
Over 50% Over 40% 35% reduction Efficiency Unique compelling
Prime 5-star sleeping
reduction in reduction in in constructing gains communal living
Location environment
staff required real guest rooms space
estate
Vis-à-vis comparable hotel operations Quick check-in Great service Free high speed
kiosk by internet and
ambassadors movies
Price
Luxury
Low Cost Position accessible to 3
star customers
+ experience
High growth in
Source: Kim and Mauborgne (2018)
revenues and profits
Systematic Process is the Core
Immersive
High
Key Elements
Winning
Market Ideas through Selecting and validating
Exploration structured winning Ideas
… and the ‘Buyer Utility Grid’ was used as a further filter to
brainstorming
produce the final short list of Value Propositions
Buyer experience cycle
U Customer
L
E
V
E
R
Risk
Quantifying
www.emergenceconsulting.com 40
© 2001 Emergence Con sult ing.
All rights reserved .
55
Conclusion