Outcomes of BOS

1. Outcomes of BOS The outcome will be sustainable competitive advantage through uncontested market space. Your blue ocean strategy will be characterized by a focus on: - Keeping current customers and attracting non or underserved customers -Creating mass appeal opportunities - Defining hard to copy opportunities - Achieving high value and low costs

2. What is Strategy?Six Assumptions 123 cont’d Define the industry similarly and focus on being the best within it. Strive to stand out in a selected, generally accepted industry group. Focus on same buyer group and influencers. Define scope of products and services offered by their industry similarly. Accept their industry’s functional and emotional orientation. Focus on the same point in time; often on current competitive threats.

3. What is Strategy? • Critical Drivers of Success • Innovation and sustainable differentiation • Execution • Internal evolution for long term impact

4. Strategy Comparison 132

5. Blue Ocean Introduction Head to Head Competition Blue Ocean Creation 131

6. SMP Map Introduction Purpose: Sustainability analysis to test our strategic potential. Business products or services can be divided into 3 categories: Pioneers –These are the “bleeding edge” products, that open up new and uncontested markets. (Value Innovation) The only ones with a mass following. Migrators - The best in the crowd. Settlers that have been improved. (Value Improvement) Settlers - Me-too products and services. Commodity market. (Value Imitator) - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy 133

7. Testing Strategic Potential –SMP Map Company A Company B Pioneers ? Pioneers Migrators Migrators Settlers Settlers • Do they value innovate? • Does your organization believe that innovation builds margins or that innovation has a lengthy ROI cycle? • Is your innovation tied to sound research? • Is innovation a ‘process’ in your company? Is it a stable, repeatable process? 134

8. Strategy Canvas “The strategy canvas is both a diagnostic and an action framework for building a compelling blue ocean strategy. It serves two purposes. First, it captures the current state of play in the known market space. This allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, service and delivery, and what customers receive from the existing competitive offerings on the market.” - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy 136

9. Exercise-As Is Strategy Canvas 1. Select one of your businesses or products/services. Indentify the dominant customer group your industry focuses on. Label this information on your Strategy Canvas. • Identify the key competitive factors your industry competes on/invests in to capture this dominant customer group. No less than 5, no more than 12. Price is always included in your key competitive factors. • Rate your relative offering level of each factor on the horizontal axis. A relatively low offering level should be plotted lower, high offerings should be higher. Price is always an absolute figure; a high price is plotted high, etc. • Now connect the dots to create your “As Is” canvas. • Repeat this process for your “best competitor”. • Analyze the results using the questions provided. 140

10. As Is Strategy Canvas Example Barnum & Bailey/Ringling Brothers Circus High Low - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy 137

11. Premium Wines Budget Wines As Is Strategy Canvas Example The US Wine Industry hi offering level lo Use of enological terminology and distinctions in wine communication Above-the- line marketing Vineyard prestige and legacy Wine complexity Wine range Aging quality Price - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy 138

12. Exercise 1. Using your “As Is” Strategy Canvas, create a draft “To Be”. 2. Do this by applying the “four” blue ocean principles – Reduce, Eliminate, Enhance, Create 3. Create a blue ocean graph. 4. What does this tell you about what your strategies should be? 147

13. Blue Ocean Strategy-ERRC Grid Reduce Which factors should be reduced below industry standards? Create Which factors should be created that the industry has never created? Eliminate Which factors should be eliminated that the industry takes for granted? A New Value Curve Raise Which factors should be raised above industry standards? 144 - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy

14. “To Be” Strategy Canvas Drawing your To Be Canvas • Analyze each factor in your As is Strategy Canvas, using the Eliminate, Reduce, Raise, Create Grid. • If you are using your As Is Strategy Canvas with non-customer groups, use the ERRC Grid for each distinct non-customer group. • Plot your To Be Strategy Canvas using the ERRC Grid. • Does the strategy canvas meet the three targets of a compelling strategy? A. Is it divergent B. It is focused? C. Is there a tagline that speaks both internally and externally.

15. “To Be” Strategy Canvas Example Cirque du Soleil’s Strategy Canvas High Low - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy

16. Premium Wines Budget Wines Example Strategy Canvas of [yellow tail] hi [yellow tail] offering level lo Fun & Adventure Easy drinking Ease of selection Use of enological terminology and distinctions in wine communication Above-the- line marketing Vineyard prestige and legacy Wine complexity Wine range Aging quality Price - W. Chan Kim & Renee Mauborgne, Blue Ocean Strategy

17. Four Hurdles to Successful Execution • Cognitive: Wedded to the status quo. • “This is how we’ve always done it here.” • Political: Opposition from powerful vested interests. • “NIMBY”/ “Not at our expense.” • Complacency. • “If it ain’t broke….” • Resource/Priorities: • “Five signatures to spend $50 on a customer!”

18. The Role of the Leader in Strategy • Requires self and others to think about factors, activities, processes and/or services that are well past their prime • Requires self and others to think about how customer values have changed • Requires self and others to think about non-customers • Provides insight into how the buyer experience works • Requires self and others to explore ways to create new demand by thinking outside the status quo • Requires self and others to uncover and eliminate some of the compromises we otherwise willingly make