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Transcript of 1Blue Ocean Strategy Innovation Strategy: Blue Ocean Strategy Jonathan Weaver UDM Mechanical...
![Page 1: 1Blue Ocean Strategy Innovation Strategy: Blue Ocean Strategy Jonathan Weaver UDM Mechanical Engineering Department weaverjm@udmercy.edu.](https://reader036.fdocuments.us/reader036/viewer/2022062321/56649dc85503460f94abd651/html5/thumbnails/1.jpg)
1Blue Ocean Strategy
Innovation Strategy:Blue Ocean Strategy
Jonathan WeaverUDM Mechanical Engineering Department
![Page 2: 1Blue Ocean Strategy Innovation Strategy: Blue Ocean Strategy Jonathan Weaver UDM Mechanical Engineering Department weaverjm@udmercy.edu.](https://reader036.fdocuments.us/reader036/viewer/2022062321/56649dc85503460f94abd651/html5/thumbnails/2.jpg)
2Blue Ocean Strategy
References
• Blue Ocean Strategy, W. Chan Kim & Renee Mauborgne, Harvard Business School Press, 2005 (all embedded figures are from this reference)
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3Blue Ocean Strategy
Fundamental Premise
“Don’t Compete with Rivals – Make Them Irrelevant”
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4Blue Ocean Strategy
Red Oceans
• Represent all industries in existence today
• Industry boundaries are defined and accepted
• Companies try to outperform each other to gain market share
• The market space becomes crowded and the products become commoditized
• Prospects for profit and growth are reduced
• Competition turns the red ocean bloody
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5Blue Ocean Strategy
Blue Oceans
• Defined by untapped market space, demand creation, and high-profit growth potential
• Some are new industries, but most are created from within red oceans by expanding existing industry boundaries or competing with a fundamentally different strategy
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6Blue Ocean Strategy
Impact of Blue Oceans
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7Blue Ocean Strategy
Examples
• CNN in 1980 with 24/7 news coverage
• Starbucks with upscale coffee/beverages in a pleasant environment
• Southwest airlines with a “better than driving” sort of strategy
• Cirque du Soleil creating a new circus/theatre market
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8Blue Ocean Strategy
How to Create Blue Oceans
• Most business research and education (and I’d argue most practice) focuses on competing in the bloody red oceans
• The book provides frameworks and analytics for systematic creation and capture of blue oceans
• The cornerstone is value innovation– Creating a leap in value for your buyers thereby opening
up new and uncontested market space– Pursue differentiation and low cost simultaneously– Involves driving costs down while increasing buyer value
• It is really STRATEGY that is key
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9Blue Ocean Strategy
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10Blue Ocean Strategy
Strategy Canvas
• The Strategy Canvas is one way to understand the competition and clearly show how a Blue Ocean can be created
• Consider the strategy canvas for the U.S. Wine Industry in the Late 1990s
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11Blue Ocean Strategy
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12Blue Ocean Strategy
Casella Wines
• Australia’s Casella Wines studied what turned people off from wine and created a Blue Ocean Strategy shown on the canvas on the next slide
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13Blue Ocean Strategy
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14Blue Ocean Strategy
Four Guiding Principles
1. Reconstruct Market Boundaries
2. Focus on the Big Picture, Not the Numbers
3. Reach Beyond Existing Demand
4. Get the Strategic Sequence Right
Let’s look briefly at each principle.
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15Blue Ocean Strategy
Principle 1: Reconstruct Market Boundaries
• Path 1: Look across alternative industries
– NetJets as alternative to private jet or commercial airlines
– Home Depot with expertise of contractors and lower prices than hardware stores
• Path 2: Look Across Strategic Groups Within Industries
– Curves, the Texas based Fitness center for women
• Path 3: Look Across the Chain of Buyers
– Novo Nordisk’s prefilled disposable insulin injectors
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16Blue Ocean Strategy
Principle 1: Reconstruct Market Boundaries (Cont.)
• Path 4: Look Across Complementary Product and Service Offerings– Nabi fiberglass buses (competing on lifecycle cost, not
purchase price)• Path 5: Look Across Functional or Emotional Appeal to
Buyers– Swatch transformed functionally driven budget watch
industry into an emotionally driven fashion statement• Path 6: Look Across Time (finding actionable insights on
observable trends)– iTunes leaping past pirated downloads
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17Blue Ocean Strategy
Principle 2: Focus on the Big Picture, Not the Numbers
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18Blue Ocean Strategy
Principle 3: Reach Beyond Existing Demand
• JCDecaux with it’s outdoor furniture advertisements
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19Blue Ocean Strategy
Principle 4: Get the Strategic Sequence Right
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20Blue Ocean Strategy
Wrap Up on Blue Ocean Strategy
• See Chapters 7-9 for guidelines on implementing a Blue Ocean Strategy
• Don’t bleed – stay out of Red Oceans and Create Yourself a Blue One!
• There are MANY other examples (not in the book), such as:
– Jiffy Lube
– Jim Poss’s solar powered trash compactors