Team 4:

Brent Hare

Ty Parasiliti

Josh Fernino

Vincent Ukwu

Lance Hollister

Chris Kerschen

Victor Hemmati

Value Innovation

“The Cornerstone of the Blue Ocean Strategy”

Blue Oceans◦ Make the competition irrelevant◦ Create and captures new demand

Red Oceans◦ Compete in existing market space◦ Beat the competition

Value Innovation

Cirque Du Soleil Is it circus, theater, ballet, or a Broadway

show? Creates value while at the same time it is

very innovative

Strategy Canvas◦ Captures the current conditions of competitors in

an industry 4 Actions Framework

◦ Helps companies break away from the traditional value curve and create a new one

Eliminate/Reduce/Raise/Create Grid◦ Helps companies to act on the 4 questions

presented in the framework to create the new value curve

3 Characteristics of a good strategy◦ Focus : A company’s value curve should show that

its efforts are not scattered across all key factors of competition

◦ Divergence : Blue ocean value curves always stand apart from competitors

◦ Compelling Tagline : Must deliver a clear message to customers that compels them to use the product

Understanding Value Curves

Six Paths Framework: Path 1: Look Across Alternative Industries Path 2: Look Across Strategic Groups Within

Industries Path 3: Look Across the Chain of Buyers Path 4: Look Across Complementary Product

and Service Offerings Path 5: Look Across Functional or Emotional

Appeal to Buyers Path 6: Look Across Time

Path 1: Look Across Alternative Industries

Alternatives VS. Substitutes◦ Substitutes: products in different forms that have

the same functionality◦ Alternatives: products with different functions

that serve the same purpose

Path 2: Look Across Strategic Groups Within Industries

Companies in a particular industry that pursue a similar strategy

Based on two dimensions◦ Price◦ Performance

Key to creating blue oceans is to break out of this narrow tunnel vision

Path 3: Look Across the Chain of Buyers

There is a chain of “buyers” who are directly or indirectly involved in the buying decision◦ Purchasers: pay for the product or service◦ Users: people who use the product or service◦ Influencers: influence a decision one way or the

other These groups may overlap, but often differ

Path 4: Look Across Complementary Product and Service Offerings

The key is to define the total solution buyers seek when they choose a product or service.

Way to do this is by thinking about what happens before, during, and after your product is used.

e.g. Babysitting and parking, operating and application software, airline ground transportation

Path 5: Look Across Functional or Emotional Appeal to Buyers

Path 5 looks at the competition in an industry not just in the scope of its products and services but also on two possible bases of appeal.

Functional Appeal◦ Some industries compete based on price and function

largely on calculations of utility, their appeal is rational. Emotional Appeal

◦ Other industries compete largely on feelings: their appeal is emotional, more personal.

Path 6: Look Across Time

• All industries are subject to external trends that affect their businesses over time

- Rapid rise of the internet - Global movement toward protecting the

environment• These trends can help create blue ocean

opportunities

Focusing on the Big Picture

BOS develops alternative approach of drawing strategic canvas

Find new opportunities and break away from existing red oceans

Focus on the big picture and not just numbers and operational procedures

Strategy Canvas

Four steps of visualizing strategy:◦ Visual Awakening

Compare with competitor’s businesses by creating an “as is” strategy canvas

Discuss what changes should be made◦ Visual Exploration

Decide where to implement six paths of Blue Oceans Decide what factors to keep, eliminate, or modify

Strategy Canvas Cont.

Visual Strategy Fair◦ Get feedback on alternative strategy canvases from

customers, competitor’s customers, and noncustomers◦ Use feedback to build the best “to be” future strategy

Visual Communication◦ Compare before and after strategic profiles ◦ Support only those projects that allow your company

to close the gaps to actualize the new strategy

Pioneer-Migrator-Settler (PMS) Map

Identifies strengths and weaknesses Pioneers: Blue Ocean Businesses Migrators: Improved value, but not

innovative value Settlers: Stuck in red ocean and do not

contribute to future growth Ultimately helps visualize, plan, and predict

a company’s future growth and profit

Maximizing the Blue Ocean

To maximize the size of their Blue Ocean companies need to reverse course and consider:

◦ Looking to Non-Customers

◦ Building powerful commonalities on what customers buy

Doing this will allow companies to reach beyond existing demand to unlock a new mass of customers

From Exceptional Utility to Strategic Pricing

• To secure a strong revenue stream for your offering, you have to set the right strategic price.

• Many companies may take the reverse course and test the product in different situations before deciding to lower their prices.

• It is crucial to know how the company will set its pricing strategy from the start.

Tipping point leadership & conventional wisdom

• Conventional wisdom asserts that the greater the change, the greater the resources and time you will need to bring about results.

Transforming the extremes will transform the masses.

Leveraging tipping point leadership.

Focus on acts of disproportionate influence.

Align employees’ actions with the new strategy.

Fair process and blue ocean strategy

Commitment, trust, and voluntary cooperation are not merely attitudes or behaviors; they are intangible capital

Trust brings heightened confidence in one another’s intentions and actions

Commitment enables people to override personal self-interest in the interest of the company

Fair process and blue ocean strategy

Commitment, trust, and voluntary cooperation allow companies to stand apart in the speed, quality, and consistency of their execution and to implement strategic shifts fast at low cost

The question raised by management is how to create trust, voluntary cooperation, and commitment deep within the organization