Get the Strategic Sequence RightChapter 6 Blue Ocean Strategy

By: Laura Carr, Brad Klingberg, Ike Huestis, Treanne Turner

Summary

Get the Strategic Sequence Right

•4th principal•Fleshing out and validating blue ocean

ideas▫Ensure commercial viability

•Understand the right commercial sequence

•How it asses blue ocean ideas▫Dramatically reduce business risk

The Right Strategic Sequence

•Buyer utility•Price•Cost•Adoption

Buyer Utility

•Does your offering unlock exceptional utility?

•Is there a reason for a mass number of people to buy it?▫No? there is no blue ocean potential

Rethink it or get rid of idea▫Yes?

Continue to step two

Price

•Price to create demand•Product priced to create or attract target

buyers so they have ability to pay for the product?▫No? Customers can't buy it and will not last

in market

Cost

•Can you make a profit on the product?▫Easily accessible to target buyers

•Don’t let cost drive price

Adoption

•What are the adoption hurdles in making your business idea actually happen?

•Need to address up front

Stages of Buyers Experience Cycle

•Purchase- how long does it take•Delivery- get product delivered•Use- training or experience?•Supplements-other products•Maintenance- easy to maintain?•Disposal- waste items? Dispose?

Utility Layers (cont.)

•Unlock exponential utility for buyers•Productivity- so things faster•Simplicity- easy to use?•Convenience- easy to obtain?•Risk- reduce customers financial,

physical, or credibility •Fun and image- like product?•Environmental Friendless

Strategic Pricing (Cont.)

•Step 1: Identify the Price Corridor of the Mass▫Different form, same function

(i.e. Ford’s Model T vs. horse-drawn carriage)

▫Different form and function, same objective (i.e. Cirque du Soleil vs. restaurants/bars)

Strategic Pricing (Cont.)

•Step 2: Specify a Level Within the Price Corridor▫The degree to which a product/service is

legally protected through patents or copyrights

▫The degree to which the company owns some exclusive asset or core capability (i.e. expensive production plant)

Strategic Pricing (Cont.)

Target Costing

•Streamlining & Cost Innovations•Partnering•Pricing Innovation

Target Costing

Adoption

•Employees•Business Partners•The General Public

The Blue Ocean Idea Index

Summary of other Chapters

SMaC Recipe

•Specific, Methodical, and Consistent•Includes what to do and what not to do•A great company must evolve its recipe,

revising selected elements when conditions merit, while keeping most of its recipe intact.

Amending the SMaC Recipe

•2 approaches:▫Exercising empirical creativity▫Exercising productive paranoia

Property Rights

•Patents•Copyrights•Trademarks•Trade Secrets

Dish Network

The First and OnlyInteractive Golf Store

How is it Different?

•On-staff PGA and LPGA Professionals•On-Site Certified Club Technicians•Golf Course Simulators•Indoor driving bay•On-site full-sized bent-grass putting green

Buyer UtilityPurchase

Delivery

Use

Supplements

Maintenance

Disposal

Customer Productivity

Simplicity X XConvenience

Risk

Fun and Image

Environmental friendliness

X

Strategic Pricing: Identify the Price Corridor of the Mass•People usually buy their equipment and

get tips/lessons separately. • In order to attract customers, pricing

must be compared to that standard.

Strategic Pricing: Specifying a Level in the Price Corridor•Nonrival good: The idea of a interactive

golf store can be imitated•No legal protection but some resource

protection •PGA and LPGA pros are hired for Gold

Galaxy only•Lower to middle level pricing is optimal

Target Costing

•Streamlining: Pros can advise what equipment to buy as well as give lessons, giving customers more for the same cost.

•Partnering: Suppliers with high margin brand name products get specialty treatment, such as better product placement.