Post on 15-Dec-2015
www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Blue Ocean Strategy (BOS)
zaini@utm.myhttp://www.utm.my/vc
www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Prof. W. Chan KimRenée Mauborgne
● W. Chan Kim is Co-Director of the INSEAD Blue Ocean Strategy Institute and The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. Prior to joining INSEAD, he was a professor at the University of Michigan Business School, USA. He has served as a board member as well as an advisor for a number of multinational corporations in Europe, the U.S. and Pacific Asia. He is an advisory member for the European Union and serves as an Advisor to Malaysian Government.
● Kim is a Fellow of the World Economic Forum. His Harvard Business Review articles, co-authored with Renée Mauborgne, are worldwide bestsellers and have sold over half a million reprints. Their Value Innovation and Fair Process articles were selected as among the best classic articles ever published in Harvard Business Review. They have co--authored articles in The Wall Street Journal, The Wall Street Journal Europe, The New York Times, The Financial
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Blue Ocean Strategy? …● BOS is the simultaneous pursuit of differentiation and low cost.● The aim of BOS is not to out-perform the competition in the existing
industry, but to create new market space or a blue ocean, thereby making the competition irrelevant.
● While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers – as argued by Schumpeter and his followers – BOS offers systematic and reproducible methodologies and processes in pursuit of blue oceans by both new and existing firms.
● BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index.
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
… Blue Ocean Strategy?● BOS frameworks and tools are designed to be visual in order to not only
effectively build the collective wisdom of the company but also allow for effective strategy execution through easy communication.
● BOS covers both strategy formulation and strategy execution.● The three key conceptual building blocks of BOS are: value innovation,
tipping point leadership, and fair process. ● While competitive strategy is a structuralist theory of strategy where
structure shapes strategy, BOS is a reconstructionist theory of strategy where strategy shapes structure.
● As an integrated approach to strategy at the system level, BOS requires organizations to develop and align the three strategy propositions: value proposition, profit proposition and people proposition.
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Value InnovationThe cornerstone of Blue Ocean Strategy
Instead of focusing on beating competition, you 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 (pp. 12)
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Red Ocean vs Blue Ocean Strategy
RED OCEAN STRATEGY BLUE OCEAN STRATEGY
Compete in the existing market space
Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture new demand
Make the value-cost trade-off Break the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost
Align the whole system of a firm’s activities in pursuit of differentiation and low cost
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
The six principles of BOSFORMULATON PRINCIPLES
Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right
RISK FACTOR EACH PRINCIPLE ATTENUATES↓ Search risk↓ Planning risk↓ Scale risk↓ Business model risk
EXECUTION PRINCIPLES
Overcome key organizational hurdles Build execution into strategy
RISK FACTOR EACH PRINCIPLE ATTENUATES↓ Organizational risk↓ Management risk
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Analytical tools and frameworks● The strategy canvas● The four actions framework● The eliminate-reduce-raise-create grid● Value curves
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Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
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Yellow tail?
www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Eliminate-reduce-raise-create grid: The case of (yellow tail)ELIMINATE Enological terminology and distinctions Aging qualities Above-the-line marketing
RAISE Price vs. budget wines Retail store involvement
REDUCE Wine complexity Wine range Vineyard prestige
CREATE Easy drinking Ease of selection Fun and adventure
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Eliminate-reduce-raise-create grid: The case of Cirque du SoleilELIMINATE Star performers Animal show Aisle concession sales Multiple show arenas
RAISE Unique venue
REDUCE Fun and humor Thrill and danger
CREATE Theme Refined environment Multiple productions Artistic music and dance
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
Reconstruct market boundaries
● Look across alternative industries● Look across strategic groups within industries● Look across the chain of buyers● Look across complimentary product and services
offerings● Look across functional or emotional appeal to buyers● Look across time
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Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
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www.utm.my Inspiring Creative & Innovative Minds
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From head-to-head competition to Blue Ocean creationHead-to-head competition Blue Ocean Creation
Industry Focus on rivals within the industry Look across alternative industries
Strategic group Focus on competitive position within strategic group
Look across strategic groups within industry
Buyer group Focus on better serving the buyer group
Redefine the industry buyer group
Scope of product or service offering
Focus on maximizing the value of product and service offering within the bounds of its industry
Look across to complementary product and service offerings
Functional-emotional orientation
Focus on improving price performance within the functional-emotional orientation of its industry
Rethink the functional-emotional orientation of its industry
Time Focus on adapting to external trends as they occur
Participates in shaping external trends over time
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
FIGURE 4-4
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www.utm.my Inspiring Creative & Innovative Minds
Blue Ocean StrategyLeadership Discourse. 21 Oct 2011
To-do-list?
● Develop the canvas strategy of global higher education sector?
● Develop the canvas strategy of higher education sector in Malaysia?
● Develop the canvas strategy in your respective sectors (water, energy, transportation etc)?
● Develop the Four Action Framework for UTM
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