423110 Brooks Garner, Alex Mills, and Grayson Watson Blue Ocean Strategy Chapter 6: Get The Strategic Sequence Right Team 4 Ford Motor Company 423110 Brooks Garner, Alex Mills, and Grayson Watson

Building their Blue Ocean Strategy Buyer utility- Is there a compelling reason for the target mass of people to buy it? Price- Don’t rely solely on price to create demand. Cost- Can you produce your offering at the target cost and still earn a healthy profit margin. Adoption- address your adoption hurdles up front.

Testing for Exceptional Utility Philips CD-i was an engineering marvel that failed to offer people a compelling reason to buy it. Don’t revel in the bells and whistles of new technology. Bleeding-edge technology doesn’t necessarily relate to bleeding-edge utility Typically, unless technology will make people’s lives simpler, more convenient, and more productive, then technology will not attract the masses no matter how many awards it wins.

6 Stages of the Buyer Experience Cycle Purchase- Time to find product? Is place of purchase accessible? How rapidly can you make the purchase? Delivery- Delivery time? Difficulty to unpack and install? Use- Requires training? How easy to store? How effective? Does it have excess things we don’t need? Supplements- Need any other products to make it work? How costly? Time? Pain and effort? Easy to obtain? Maintenance- Requires external maintenance? Easy to maintain or upgrade? Costly? Disposal- Create waste items? Easy to dispose? Legal or environmental issues of disposing? Costly?

Ford uncovering the blocks to buyer utility More than 500 automakers in the United States focused on building custom-made luxury autos for the wealthy. Ford made the Model T and it was a car for every man. All companies created cars that could not handle most roads during this time. Ford beat the two utility blocks by creating a car that was easy to fix, dependable, durable, and a car for everyday use. This set them above all of the other companies in the United States.

From Exceptional Utility to Strategic Pricing Changes in costs: R&D vs. MFG “Volume generates higher returns” Number of people using a product dictates value Ideas are unlimited in who uses them Excludability Price must attract and retain customers

From Strategic Pricing to Target Costing Price-MINUS Costing Operations Partnering Price model

Price and Value Innovation Begins with strategic price Deduct target profit margin to arrive at target cost Factor in cost innovations and partnerships End with pricing innovation

From Utility, Price, and Cost to Adoption Unbeatable business model is not enough for blue ocean Blue Oceans challenge the status quo Promotes fear and resistance among stakeholders, employees, partners, and general public Must first educate the fearful

Employees Failure to inform employees on new business idea can be catastrophic Before companies go public with an idea they should make an effort to communicate to employees Try and diffuse threats so everyone in the company wins Keep them engaged/involved and reward employees when successful

Business Partners Potentially more damaging than employees is fearful or hesitant business partners Solve dilemmas by openly discussing issues Properly incentivise partners to implement new ideas and systems which is usually done by proving increases in efficiency and profits

The General Public New Business ideas can and will also spread to the general public Especially dangerous if challenges social or political norms Proactively educate the public about your new concept Social Media a strong influencer in today's society Key in all three aspects to have open and honest communication

Blue Ocean Idea Index

Once You Pass Ready to shift gears from formulation to execution of strategy Must bring entire company with you to execute new idea and depart from the past It is challenging to ingrain a new process within a company, but must stick to it to see results

THANK YOU