Blue Ocean Strategy Book Review

1. Blue Ocean StrategyBook Review Team 4: Crystal Hill Stephen Lechtenberg Anand McGee Allison Purtell Jason Torres

2. Strategic Move Correct unit of analysis for explaining the creation of blue oceans and sustained high performance, versus the company or industry Set of managerial actions and decisions involved in making a major market-created business offering

3. Red Ocean vs. Blue Ocean Red Oceans – Conventional Approach Focus on beating the competition Compete in existing market space Build a defendable position within the existing industry Use competition as a benchmark Exploit existing demand Choice between differentiation and low cost - Greater value for customers at a higher cost or a reasonable value at a lower cost Blue Oceans – Value Innovation (to capture market) Make competition irrelevant Create a leap in value for buyers and the company Create new a market space Pursue both differentiation and low cost

4. The Strategy Canvas Captures current state in known market space Fundamentally shift from focus on competitors to alternatives and customers to non customers Enables companies to see the future in the present Tells you if you’re drifting into a red ocean Time to value innovate

5. The Four Actions Framework 2. Reduce Which factors should be reduced well below the industry standard? • Eliminate • Which factors that the industry takes for granted should be eliminated? A New Value Curve 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?

6. Eliminate-Reduce-Raise-Create Grid

7. Challenge Fundamental Assumptions Find Blue Oceans by looking at the six paths of framework: 1.) Look across alternative industries 2.) Look across strategic groups within industries 3.) Look across the chain of buyers 4.) Look across complementary product service offerings 5.) Look across functional of emotional appeal to buyers 6.) Look across time

8. Think Outside the Box Focus on the big picture instead of numbers. Potential blue oceans have focus, divergence, and a compelling tagline. Use Pioneer-Migrator-Settler Map Pioneers- unprecedented value, profitable Migrators- improved value but not innovative Settlers- conform to red oceans

9. Reaching beyond existing demand • Looking to non customers • Finding what buyers value • 3 tiers of non consumers • Soon to be customers • Refusing customers • Unexplored customers

10. Get the right strategic sequence • Building a blue ocean through buyer: • Utility, price, cost and adoption • Testing for exceptional utility • Choosing the right strategic price • Target costing • Cost Adoption

11. Overcoming Key Organizational Hurdles • Managers face four hurdles: • Cognitive: waking employees up to the need for a strategic shift. • Limited Resources • Motivation • Politics

12. Tipping Point Leadership in Action • Strategy allows you to overcome the four hurdles • Bill Bratton appointed police chief of New York • Murder, muggings, mafia hits, armed robberies at an all time high, department morale at an all time low. • After two years: • Felony crime fell 39% • Murders 50% • Theft 30% • Public confidence in NYPD jumped from 37% to 73% • It was his 5th strategic reversal

13. Breaking Through the Cognitive Hurdle • Ride the “electric sewer” (New York Subway) • Showing the worst reality to superiors and underlings can shift their mindset fast • Meet with disgruntled Customers • Boston’s Police District 4 • Determined there was a gap in perceptions between residents and police.

14. Jump the Resource Hurdle Hot Spots, Cold Spots, and Horse Trading Redistribute Resources to Your Hot Spots Redirect Resources from your Cold Spots Engage in Horse Trading

15. Jump the Motivational Hurdle kingpins, fishbowl management, and atomization Zoom in on all Kingpins Place Kingpins in a Fishbowl Atomize to Get the Organization to change itself.

16. Knock Over the Political Hurdle Angels, Devils, and Consigliere Secure a Consilgiere on your top management team Leverage your angels and silence your devils Challenge conventional wisdom

17. The Power of Fair Process • Imperative to strategy execution • Must reflect attitude and behavior deep within the organization • Trepidation • Key variable in Blue Ocean Strategy • People concerned about the actual process

18. The 3 E’s of Fair Process • Expectation Clarity • Standards of Judgement • Explanation • Everyone should understand • Engagement • Encouraging involvement

19. Why Fair Process Matters • People at the front lines care • Intellectual and Emotional Recognition Theory • Blue Oceans: • Intangible capital • Building strategy formulation with execution • Trust and Trust