Blue Ocean Strategy

1. Blue Ocean Strategy Rebecca Eggerman Alexander Johnson Miguel A. Lopez Hannah Stephens Carissa Tarnowski

2. Preview • Cirque du Soleil • Blue Vs. Red Ocean • Creation of New Blue Oceans • Blue Oceans • Blue Vs. Red • Result of Blue Ocean Initiatives • The Rising Imperative of Creating Blue Oceans • Results • From Company and Industry to Strategic Move

3. Preview • The Strategic Move • Value Innovation • Value-Cost Trade-off • Benchmarking Competition • Breaking the Market Boundaries • Formulating and Executing Blue Ocean Strategy • Frameworks for Success • Beyond the Text

4. Cirque du Soleil • Created in 1984 by group of street performers • Seen by 40 million people in 9 cities around the world • Achieved the same level of revenues that Ringling Bros. and Barnum & Bailey made in 100 years but in only 20 years

5. Blue Vs. Red Ocean • Red Ocean • Represents all the industries in existence today • This is known as the market place • Industry boundaries are defined and accepted • Competitive rules of the game are known • Companies try to outperform their rivals to grab a greater share of existing demand

6. Blue Vs. Red Ocean • Blue Ocean • Is defined by untapped market space, demand creation, and the opportunity for highly profitable growth • Some are created within red oceans by expanding existing industry • Competition is irrelevant because the rules of the game are waiting to be set • They are uncharted

7. Creation of New Blue Oceans • New industries are constantly being created • Historically, countless industries that exist today did not exist decades ago • Change from SIC to NAICS • Military strategy in business

8. Blue Oceans • New industries are constantly being created that would not have even been thought of 30 or even 10 years ago • Smartphones, flat screen televisions, clean jet engines vs. airplane, automobile, radio, television

9. Blue Ocean vs. Red Ocean • Majority of new business plans are aimed at red ocean strategies • Only 14 percent of new business launches were aimed at blue oceans

10. Result of Blue Ocean Initiatives • Blue ocean business launches do not affect revenues but increase profits much more often than red ocean endeavors • Impact of blue oceans is notable even though they make up such a small minority of business endeavors

11. The Rising Imperative of Creating Blue Oceans • Technological advances • Increasing numbers of industries • Supply exceeds demand • Globalization • Readily available consumer information • Drowning markets

12. Results • Accelerated commoditization • Products and services becoming similar • Consumer selection based on price • Ex. Colgate vs. Crest • Red oceans become “deeper” • More cut throat competition • Need for blue oceans

13. From Company and Industry to Strategic Move • How to achieve blue ocean status • Researching “excellence” and “visionaries” • Ex. In Search of Excellence and Built to Last • Industry vs. company success (Creative Destruction) • Ex. Hewlett-Packard • Right one minute, wrong another • Companies and industries not correct analysis unit

14. The Strategic Move “Set of managerial actions and decisions involved in making a major market creating business offering” • Blue ocean research • Small/large companies • Young/old managers • Private/public • Low/high –tech • Similar pattern • Strategy

15. Value Innovation: The cornerstone of Blue Ocean Strategy • Approach to strategy- what separated the winners from the losers • Consistent across time regardless of industry • Red ocean companies raced to beat competition through defensible position • Blue ocean companies didn’t use competition as a benchmark • Followed value innovation

16. Value Innovation • Focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space • Equal emphasis on value and innovation • Value without innovation= value creation • Innovation without value= technology driven, market pioneering, or futuristic • Occurs only when companies align innovation with utility, price, and cost positions • A new way of thinking about and executing strategy that results in creation of a blue ocean and a break from competition

17. Value-cost trade-off • Conventional belief- companies can create greater value to customers at a higher cost or create reasonable value at a lower cost • Examples? • Should pursue low cost and differentiation simultaneously

18. Benchmarking competition and maximizing shrinking share • Red ocean strategy

19. Breaking the market boundaries of theater and circus • Blue ocean strategy • Achieved both differentiation and low cost

20. Red Ocean Vs. Blue Ocean Strategy

21. Formulating and Executing Blue Ocean Strategy • Success • Lower odds? • Strategy • Opportunity • Risk • Analytical Frameworks and Tools • Red Oceans

22. Frameworks For Success • Chapter 2 • Analytical Tools • Chapter 3 • Search Risk • Chapter 4 • Value Innovations • Chapter 5 • Market Size • Chapter 6 • Business Model • Chapter 7 • Tipping Point Leadership • Chapter 8 • Strategy Making • Chapter 9 • Dynamic Aspects

23. Principles

24. Beyond the Text • Single-cup Coffee Makers

25. Overview • Cirque du Soleil • Blue Vs. Red Ocean • Creation of New Blue Oceans • Blue Oceans • Blue Vs. Red • Result of Blue Ocean Initiatives • The Rising Imperative of Creating Blue Oceans • Results • From Company and Industry to Strategic Move

26. Overview • The Strategic Move • Value Innovation • Value-Cost Trade-off • Benchmarking Competition • Breaking the Market Boundaries • Formulating and Executing Blue Ocean Strategy • Frameworks for Success • Beyond the Text

27. “We cannot predict the future. But we can create it.” -Jim Collins, Great by Choice