Dr. Akash Anand Shrivastava[MD] Hospital Administration

KMC, Manipal

Dr. Somu G.

Professor & Head Dept. Of Hospital Administration

KMC, Manipal

Blue Ocean Strategy

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The Literature – The Authors

Prof Renee Mauborgne

© JOHN ABBOTT

Prof Chan Kim

© JOHN ABBOTT

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What is a Blue Ocean? Blue oceans denote all the

industries not in existence today. This is the unknown market space.

Red oceans represent all the industries in existence today. This is the known market space.

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Red Vs. Blue

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LOOK BACK ONE HUNDRED YEARS AND ASK YOURSELF

How many of today’s industries were then unknown?

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The Answer Automobiles Music recording Aviation Petrochemicals Healthcare

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30 yrs ago……

Mutual Funds cell phones

biotechnology coffee bars

Only thirty years ago

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Now put the clock forward twenty years

AND ASK YOURSELF HOW MANY NOW UNKNOWN INDUSTRIES WILL LIKELY EXIST THEN ?

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The reality is that industries never stand still. They continu- ously evolve. Operations improve, markets expand, and players come and go.

History teaches us that we have a hugely underestimated capacity to create new industries and re-create existing ones.

How can a company break out of the red ocean of bloody competition?

How can it create a blue ocean?

Is there a systematic approach to achieve this and thereby sustain

high performance?

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The Cornerstone – Value innovation

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Analytical tools

Four Action Framework

Eliminate- Reduce-Raise-

Create Grid

Strategy Canvas

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Analytical tools and Framework

Four Action Framework

1.

2.

3.

4.

Drop Cost structure

Lift Buyer Value/

Create New demand15/01/14

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Collectively allow : reconstruct buyer

value elements across alternative industries

to offer buyers an entirely new experience

while simultaneously keeping cost structure

low.

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Eliminate Reduce Raise Create Grid

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Ex of Cirque du Soliel (A circus)

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Strategy Canvas

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Examples

Net Jets : Aviation Industry

Casella (Yellow tail) : Wine Industry

Case study of Novo Nordisk : Pharma

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Net Jets The most lucrative mass of customers in the aviation

industry are corporate travelers.

When business travelers want to fly they have two principal choices On the one hand, a company’s executives can fly

business class or first class on a commercial airline.

On the other hand, a company can purchase its own aircraft to serve its corporate travel needs.

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The Strategic question

By focusing on the key factors that lead corporations to trade across alternatives and eliminating or reducing everything else, NetJets created its blue ocean strategy.

Why would corporations choose one alternative over another?

So NetJets offers its customers one-sixteenth ownership of an

aircraft to be shared with fifteen other customers, each one

entitled to fifty hours of flight time per year.Owners can purchase a share in a $6 million aircraft.

Customers get the convenience of a private jet at the price of a

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Casella Wines CASELLA WINES CREATED YELLOW TAIL, A WINE WHOSE

STRATEGIC PROFILE BROKE FROM THE COMPETITION AND CREATED A BLUE OCEAN.

• Price per bottle of wine • An elite, refined image in packaging• Above-the-line marketing to raise consumer awareness• Aging quality of wine • The prestige of a wine’s vineyard and its legacy • The complexity and sophistication of a wine’s taste, ex tannins

and oak• A diverse range of wines to cover all varieties of grapes

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Grid of Yellow Tail

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Results Instead of offering wine as wine, Casella created a social

drink accessible to everyone: beer drinkers, cock- tail drinkers, and other drinkers of non-wine beverages.

In the space of two years, the fun, social drink [yellow tail] emerged as the fastest growing brand in the histories of both the Australian and the U.S. wine industries and the number one imported wine into the United States, surpassing the wines of France and Italy.

By August 2003 it was the number one red wine in a 750-ml bottle sold in the United States, outstripping California labels.

By mid-2003, [yellow tail]’s moving average annual sales were tracking at 4.5 million cases.

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Case of Novo Nordisk Historically, the insulin industry, like most of the

pharmaceutical industry, focused its attention on the key influencers: doctors. The importance of doctors in affecting the insulin purchasing decision of diabetics made doctors the target buyer group of the industry.

Industry geared its attention and efforts to produce purer in- sulin in response to doctors’ quest for better medication.

Significant challenges in administering : vials left the patient with the complex and unpleasant task of handling syringes & needles.

Social stigmatism for patients.

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Novo Nordisk to the blue ocean opportunity of NovoPen, launched in 1985.

The NovoPen resembled a fountain pen; it contained an insulin cartridge.

The pen had an integrated click mechanism, making it possible for even blind patients to control the dosing and administer insulin.

Inject insulin with ease and convenience without the embarrassing complexity of syringes.

Later, Innovo was designed to manage the delivery of insulin through built-in memory and to display the dose, the last dose, and the elapsed time.

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Grid of Novo NordiskELIMINATE RAISE

REDUCE CREATE

Dependency on doctors/family Administration Risk minimization

Administration Convenience

Self Esteem

Efficacy

Side effects Minimization

Patient out of pocket minimization

Compliance and adherence assistance

Self Tracking Capability

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Draw the SC based on: Price

Efficacy

Side effects

Admin risk

Convenience

Self esteem

Compliance

Self Tracking

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Strategy Canvas – Novo Nordisk

Novo NordiskRegular

Pri

ce

Eff

icac

y

Sid

e ef

fect

s

Adm

in. R

isk

Con

veni

ence

Sel

f es

teem

Com

plia

nce

Sel

f tr

ack

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The Six Principles

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Visualizing Strategy

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The Six Principles

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Noncustomers

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Transform

Look for commonal

ities across their

responses (NOT THE DIFFEREN

CES)

What are the reasons 1st tier customers want to jumpship and

leave ?

What are the reasons 2nd tier

customers refuse to use

products offered ?

You will glean insight into how to unleash an ocean of latent untapped demand. 15/01/14

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The Six Principles

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The Sequence

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The Six Principles

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The Four Organizational Hurdles

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The Question Remains

Where is Blue Ocean …….

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Health Care's Blue OceanBy Joseph A. Jackson, LICSW

In the coming years we will see: 1) An exponential increase in the number of people

with disabling, chronic health problems, 2) A concomitant decrease in available caregivers, 3) Diminishment in the resources that will support

health care, especially under commercial and government health insurance, and

4) An inevitable increase in stress on family caregivers

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Physician, Hospital and Insurance driven Healthcare will give way to Home based healthcare.

Implementing Telemedicine programs for Home health care like Cardiocom

Game-changing technology is just around the corner : online diagnostic and treatment software

Insurance that will best enhance health and cut health care costs is the one that engages patients as both health care decision makers and payers, i.e. – the one that includes health savings accounts (HSAs). The reason: People are more likely to change unhealthy lifestyles if by

doing so they get richer.

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References 1. Blue Ocean Strategy – How to create uncontested

market space and make the competition irrelevant; W. Chan Kim, Renee Mauborgne; Harvard Business Press (2005)

2. Essentials of Management – An International Leadership Perspective; 9th Ed; Mc Graw Hill; Harold Koontz, Heinz Weihrich

3. Healthcare’s Blue Ocean; Joseph a. Jackson; Eldcare Advisor’s Inc. – The care planning company

4. How to find Blue Ocean in Healthcare; Richard Prest; Finsights; July 17th 2012

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