Chapter 2: Analytical Tools and Frameworks Team 4: Erica Jones, Steven Scalsky, Adilene Vasquez, Brad Townley, Caroline Duncan Blue Ocean Strategy

The Strategy Canvas Action framework for building Blue Ocean Strategy Serves two purposes Central to the creation of blue oceans. Two purposes: captures the current state of play in the known market space. This lets us understand where the competition is investing and the factors the industry is competing on. It also shows what the customers receive from the competitive offerings.

Here is an example of what a strategy canvas looks like Here is an example of what a strategy canvas looks like. It is a graph where the horizontal axis shows the competing factors in which the industry competes on. The book talks about a wine company, Yellow Tail, and provides 7 factors for their strategy canvas. Some of which were Price per bottle, aging quality, above the line marketing, and distinct packaging to stand out. Market Street? The vertical axis on the strategy canvas shows how well that specific factor is offered to the customers. High scores indicate that the company offers more of this to customers than its competitors. Price is a little different here because a high score on price just means the product cost more than the competitions By looking at the strategy canvas you can see a company’s value curve. The value curve is a graphic depiction of a company’s relative performance across the industry’s competing factors

Shifting the Strategy Canvas “Offer more for Less” is not the answer Redefine industry problems You cant just offer more for less and expect to outcompete them. The book says that to seek a blue ocean you need to shift your strategic focus from competitors and focus on alternatives. And instead of looking at who are already customers of yours, you need to look at the noncustomers. The example in the book about the wine companies stated that the wineries were overdelivering on the prestige and quality of the wine, and that all the companies were promoting a similar message. Instead of following along with the rest of the competition, Casella Wines redefined the problem they were facing and tried to make a “fun and nontraditional wine” that was easy to drink for everyone. They looked at all the noncustomers, in this case was beer drinkers and other cocktail drinkers, and they saw this new market as a potential blue ocean. With this insight they were able to redraw their strategic focus to reach a blue ocean. Marketstreet?

Four Actions Framework Four questions to challenge an industry’s strategic logic and business model: Which of the factors that the industry takes for granted should be eliminated? Which factors should be reduced well below the industry’s standard? Which factors should be raised well above the industry’s standard? Which factors should be created that the industry has never offered?

Eliminate Eliminating factors that companies in your industry have long competed on. Market Street: Eliminate packaged foods and TV dinners

Reduce Determine whether products or services have been overdesigned in the race to match and beat the competition. Market Street: Reduce bad eating habits and junk food intake

Raise Pushes you to uncover and eliminate the compromises your industry forces customers to make. Market Street: Raise health awareness

Create Discover entirely new sources of value for buyers and create new demand and shift the strategic pricing of the industry. Market Street: Create fresh family-style meals

Yellow Tail Reduced or Eliminated: tannins, oak, complexity, and aging Raise: price versus budget wines Create: ease of selection

The Eliminate- Reduce-Raise Create Grid It pushes them to simultaneously pursue differentiation and low cost to break the value-cost trade off. It is easily understood for manager. It drives companies to robustly scrutinize every factor the industry competes on, making them discover the assumptions that they make unconsciously in competing.

The ERRC Grid: The Case of Cirque du Soleil

Three Characteristics of a Good Strategy Focus Every great strategy has a focus… Divergence When a company’s strategy is formed reactively as it tries to keep up with the competition, it loses it’s uniqueness. Compelling Tagline A good strategy has a clear-cut & compelling tagline…

Reading the Value Curves Being able to read the Strategy canvas enables a company to see into the future and also into the present.

Blue Ocean Strategy Focus Divergence Compelling Tagline These are key factors to see the viability of a Blue Ocean Idea

Incoherent Strategy

Other things to look for Strategic Contradictions & Internally Driven Company's