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Disruptive Innovation Blue Ocean Strategy Anomalies
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- 1. MM01 – Group #6 Creixems Mariana Dapas C. Gonzalo Dinkespiler Alexandre Lukovac Marko Peña Garcia María DISRUPTIVE INNOVATION International Business Strategy presentation
- 2. 2 Lay Out Objective: To create new market space 1. Blue Ocean Strategy and the concept of disruptive Innovation 2. Example of Netflix Framework and tools for creating a blue ocean • Identify analyzing the market • Visualization through the value curve 3. Anomaly
- 3. 3 Blue Ocean Strategy Red Ocean Strategy: businesses are viciously fighting against each other for a share of the marketplace E.g.: RyanAir competing in the low cost no frills market VS Blue Ocean Strategy: a business creates new market space by making the competition irrelevant. E.g.: Nintendo or Cirque du Soleil
- 4. 4 Frameworks and Tools for creating and capturing those "blue oceans” Ways of creating market space Examples Substitute industries (Value Curve) Netflix, Nintendo Wii, Southwest airlines: compared themselves to cars Looking across strategic groups Zara: Fashionable at low price Chain of buyers Cialis, Targeting doctors Looking across complementary product and service offerings Hardware brings software Functional/emotional orientation Starbucks added emotional competition. Third Place Looking across time EDIs vs. Cisco : breaking data into packages
- 5. 5 Disruptive Innovation A cheaper, and sometimes lower-quality, innovator (Netflix) can eventually overtake an incumbent (Blockbuster) by gradually eroding customers the incumbent doesn’t find profitable to defend. The Innovator´s Dilemma
- 6. 6 Netflix: the classic DVD-based version • Wide selection of movies to rent • Online delivery • Long period rentals • Personalized recommendations Low cost model: • Agreements with the major studios • Less stores with part-time employees => Lower cost drives lower rental prices per movie. The incumbent doesn’t find it profitable to defend. Creating elements the industry has never offered like long rental periods and customer´s recommendation system The example of Netflix
- 8. 8 Finally… • Blockbuster lost $518 billion in 2010 and closed most outlets. Retiring on 2014 • Netflix gained 16 million subscribers by running a well-executed operation, streaming movies online. • NetFlix executives understood that an emerging technology was rapidly changing the delivery of movie rentals.
- 9. 9 Netflix vs. Blockbuster revenues
- 10. 10 Anomaly: the case of Concorde Concorde is a passenger supersonic airliner that was in service from 1976 to 2003 It flew in less than half the time of other airliners
- 11. 11 Anomaly: the case of Concorde
- 12. 12 0 1 2 3 4 5 6 7 8 9 10 Price Speed Maintenance Safety Fuel Consumption Value curve Concorde Competitors Concorde value curve
- 13. 13 Anomaly: the case of Concorde Only 20 units were built in total. The development of Concorde was a substantial economic loss. Why?
- 14. 14 Anomaly: the case of Concorde
- 15. 15 Anomaly: the case of Concorde Concorde was retired in 2003 due to • A general downturn in the aviation industry after a crash on France in 2000, • The 11 September terrorist attacks in 2001 • A decision by Airbus to discontinue maintenance support Concorde did find a new market space but did not succeed
- 17. 17
- 19. Questions Observations Cannonballs Thank you for your attention!
Notas del editor
- The case we chose to explain the key learning points is Netflix. Netflix enter the market in 1997 to coincide with the emergence of DVD technology and the explosion of the cosumers access to internet and take orders through E-MAIL. But the model was something mundane (/MANDEIN/) : netflix used the U.S. Postal Service for delivering and DELIVERY in 24 hours period. Netflix further differentiated itself by Playing to two major holes in the traditional retail model: no late fees that frustrated customers and ilimited selection of older films, Two things bockbuster did not find necesary to defend. The inconvenience of DVDs by POSTAL mail was less than Blockbuster anticipated.
- Monthly fee, with ilimited orders Mail-order model, the company developed a capital-friendly and scalable distribution model that both increased inventory efficiency and added value for customers through recommendations model. Less Store Presence Less known titles, this is more variety, not only, successful and well known movie productions No late return comissions 24 hours delivery service in contrast to Inmediate access to movies provided by blockbuster
- The Concorde aircraft has so far been the only supersonic airliner in extensive commercial traffic. However, it catered to a small customer segment, which could later afford small private sub-sonic jets. The loss of speed was compensated by flexibility and a more direct routing (i.e. no need to go through a hub). Supersonic flight is also banned above inhabited land, due to sonic booms. Concorde service ended in 2003.[32]
- The Concorde aircraft has so far been the only supersonic airliner in extensive commercial traffic. However, it catered to a small customer segment, which could later afford small private sub-sonic jets. The loss of speed was compensated by flexibility and a more direct routing (i.e. no need to go through a hub). Supersonic flight is also banned above inhabited land, due to sonic booms. Concorde service ended in 2003.[32]