How to Create Uncontested Market Space and Make Competition Irrelevant

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Blue Ocean
Strategy :
How to Create Uncontested Market Space
and Make Competition Irrelevant

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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
• Create uncontested
market space
• Make the competition
irrelevant
• Create and capture
new demand
• Compete in existing
market space
• Beat the competition
• Exploit existing
demand
Blue Ocean Strategy Red Ocean Strategy

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Blue Ocean vs. Red Ocean Strategy
• Break the value- cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation and low
cost
• Make the value-cost
trade off
• Align the whole system
of a firm’s activities with
its strategic choice of
differentiation or low
cost
Blue Ocean Strategy Red Ocean Strategy

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Blue Ocean Strategy Tools
Strategy
Canvas
• A diagnostic tool for building a
compelling blue ocean strategy
• 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
Reduce
Raise
Create

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Four Action Framework
Eliminate
Reduce
Raise
Create
Which of the factors that the industry
takes for granted should be eliminated?
Which factors should be reduced well
below the industry’s standard?
Which factors should be created that
the industry has never offered?
Which factors should be raised well
above the industry’s standard?

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Four Action Framework
The Case of Cirque du Soleil (A Circus Company)
• Theme
• Refined environment
• Multiple productions
• Artistic music and dance
Eliminate Reduce
Raise
Create
• Star performers
• Animal shows
• Aisle concession sales
• Multiple show arenas
• Fun and humor
• Thrill and danger
• Unique venue

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Six Principles of Blue Ocean Strategy
1. Reconstruct market
boundaries
2. Focus on the big picture,
not the numbers
3. Reach beyond existing
demand
4. Get the strategic
sequence right
5. Overcome key
organizational
hurdles
6. Build execution into
strategy
Formulation Principles Execution Principles

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Formulating
Blue Ocean Strategy

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1. Reconstruct Market Boundaries
• Focus on rivals within
industry
• Focuses on competitive
position within strategic
group
• Focuses on better
serving the buyer group
Head-to-Head Strategy Blue Ocean Strategy
• Looks across alternative
industries
• Looks across strategic
group within industry
• Redefines the industry
buyer group

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1. Reconstruct Market Boundaries
• Focuses on maximizing
the value of product or
service offerings within
the bounds of its
industry
• Focuses on adapting to
external trends as they
occur
Head-to-Head Strategy Blue Ocean Strategy
• Looks across to
complementary product
and service offerings
• Participates in shaping
external trends over time

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2. Focus on the Big Picture, not the Numbers
Focus on the
Big Picture, not
the Numbers
The Four Steps of
Visualizing Strategy
• Visual Awakening
• Visual Exploration
• Visual Strategy Fair
• Visual Communication

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2. Focus on the Big Picture, not the Numbers
Visual
Awakening
• Compare your business with your
competitors’ by drawing your “as is”
strategy canvas
• See where your strategy needs to
change

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2. Focus on the Big Picture, not the Numbers
Visual
Exploration
• Go to the field to explore the six
paths to creating blue oceans
• Observe the distinctive advantages
of alternative products and services
• See which factors you should
eliminate, create, or change

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2. Focus on the Big Picture, not the Numbers
Visual
Strategy
Fair
• Draw your “to be” strategy canvas
based on insights from field
observations
• Get feedback on alternative
strategy canvases from
customers, competitors’
customers, and noncustomers
• Use feedback to build the best “to
be” future strategy

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2. Focus on the Big Picture, not the Numbers
Visual
Communication
• Distribute your before-and-after
strategic profiles on one page for
easy comparison
• Support only those projects and
operational moves that allow your
company to close the gap to
actualize the new strategy

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3. Reach Beyond Existing Demand
The Three
Tier of Non-
customers
• First tier: “Soon to be” non-
customers who are the edge of
your market, waiting to jump ship
• Second tier: “Refusing” non-
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
Is there exceptional buyer
utility in your business idea?
Price
Is your price easily
accessible to the mass of
buyers?
Cost
Can you attain your cost
target to profit at your
strategic price?
Adoption
What are the adoption
hurdles in actualizing your
business idea?
A commercially viable
blue ocean idea

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Executing
Blue Ocean Strategy

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5. Overcome Key Organizational Hurdles
Overcome Key
Organizational
Hurdles
Cognitive
Hurdle
Motivational
Hurdle
Resource
Hurdle
Political
Hurdle

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5. Overcome Key Organizational Hurdles
Cognitive
Hurdle
(status quo)
Resource
Hurdle
• Ride the “Electric Sewer”
• Meet with Disgruntled Customers
• Redistribute resources to your hot
spots
• Redirect resources from your cold
spots
• Engage in horse trading

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5. Overcome Key Organizational Hurdles
Motivational
Hurdle
Political
Hurdle
• Zoom in on Kingpins (key influencers)
• Place kingpins on a fishbowl
• Atomize to get the organization to
change itself
• Secure a consigliere on your top
management team
• Leverage your angels and silence
your devils

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5. Build Execution Into Strategy
Fair Process of Strategy
Strategy Formulation Process
Fair Process – Engagement, Explanation, Expectation clarity
Attitudes
Trust and Commitment – “I feel my opinion counts”
Behavior
Voluntary Cooperation – “I’ll go beyond the call of duty”
Strategy Execution
Exceeds Expectation – self initiated

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Source of Reference
• Blue Ocean Strategy, HBS Publication.
You can obtain this excellent book at this link: http://www.amazon.com/Blue-Ocean-Strategy-Uncontested-
Competition/dp/1591396190/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1219801926&sr=1-1

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