Blue Ocean Strategy Chapter 4 Focus on the Big Picture, Not the Numbers

The Big Picture Focus on the Big Picture, Not the numbers Use the strategy canvas Blue Ocean strategies have three qualities Focus Divergence Compelling tagline The book starts off with the idea about looking at the bigger picture. this approach provides an opportunity for a wide range of people to express their creativity that could potentially lead to a blue ocean The strategy canvas is one of the main tools used in this process. By building your strategic planning around the canvas, it allows you to focus on the bigger pictures as opposed to all the numbers. The strategy canvas does three things. It shows the strategic profile of and industry by showing the competitive factors, shows the strategic profile of competitors, and it shows the value curve, showing how you stack up compared to the competition. Blue ocean strategies: focus, divergence, compelling tagline. A good strategy will clearly point out these three distinct things, which will help lead to a blue oecan

Difficulty of the Canvas Drawing the strategy canvas is not an easy task Four Steps Visual Awakening Visual Exploration Visual Strategy Fair Visual Communication It is difficult to draw a strategy canvas. Managers tend to have an idea of how they are stacking up, but they may be focusing on the wrong competitive offerings. To draw up a good strategy canvas to lead to a blue ocean, there are four steps that should be taken. Step 1 is visual awakening, step 2 is visual exploration, step 3 is visual strategy fair, and the last step is visual communication. These are all important to developing a good working strategy canvas, and im gonna pass it on to….to tell you more about these.

European Financial Services European Financial Services (EFS) is 150 year old service that adopted this method of developing strategy. Because of the strategy it yielded a 30% revenue boost in the first year. Is the example company used in the book.

Step 1: Visual Awakening Problems Its common mistake to discuss changes in strategy before resolving difference of opinion about the current state of play. Executives are reluctant to accept the need for change Compare side by side with your competitors by drawing your “as is” strategy See where your strategy needs to be changed.

Step 2: Visual Exploration Explore the six paths to creating a blue ocean. 1. Look across alternative industries 2. Look across strategic group within industry 3. Redefine the industry buyer group. 4. Look across to complementary products and service offerings. 5. Rethink the functional-emotional orientation of its industry. 6. Participate in shaping external trends over time.

Step 2: Visual Exploration cont. Observe the advantages of alternative products and services. See what factors your should eliminate, create, or change. EFS sent managers to find information about how to create a blue ocean.

Step 3: Visual Strategy Fair EFS held a visual strategy fair where both teams presented their strategy canvases Attendees ranged from noncustomers to senior corporate executives 12 strategies were presented and after each judge was given 5 sticky notes to place next to their favorite and explain why they did not vote for the other value curves

Visual Strategy Fair Results 1/3 of what they thought were key competitive factors, were marginal to customers 1/3 were not well articulated or had been overlooked in the visual awakening phase Executives needed to reassess assumptions, such as EFS’s separation of its online and traditional business Following the strategy fair, the teams were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced earlier. By collapsing its online and traditional businesses into one compelling offering, EFS substantially cut the operational complexity of its business model, making systematic execution far easier.

EFS Eliminate-Raise-Reduce-Create Grid Relationship Management Raise Ease of use Security Accuracy Speed Market Commentary Reduce Account executives Corporate dealers Create Confirmation Tracking

Step 4: Visual Communication EFS gave every employee a one-page picture showing its new and old strategic profiles so that everyone could see where to focus their efforts to create a compelling future. The new picture became a reference point for all investment decisions. Only ideas that would help EFS move from the old to the new value curve were approved.

Visualizing Strategy at the Corporate Level When businesses presents their strategy canvases to one another, they deepen their understanding of the other businesses in the corporate portfolio. Creation of the Value Innovation Program (VIP) Center Various business units come together to typically discuss strategy canvases.

PMS Map A visualizing strategy can help managers see future growth and profits. Company’s are sorted into three different categories. Pioneers- Blue ocean strategist most powerful source of profitable growth. Value curve diverges from competition. Settlers- Have a “me to” approach to business, stuck in the red ocean. Value curve conforms to the basic shape of the industry. Migrators- “more for less business approach, offer improved value but no innovative value. The try to extend the industries value curve

Innovation!! The more settlers the better opportunity to value-innovate and create a blue ocean.

PMS MAP Shift your future growth to pioneers Settlers generate cash but marginal growth. Pioneers have much growth potential as a offset of growth. Managers should manage their portfolios wisely with a balance between profitable growth and cach flows.

Overcoming the Limitations of Strategic Planning Ideal Strategic Planning: Collective wisdom building Conversational Building the big picture Creative component Motivational/invoking willing commitment Existing Strategic Planning: Top-down or bottom-up planning Solely documentation-driven Number-crunching exercises Strictly analysis-driven Bargaining-driven/producing negotiated commitment Managers are often unhappy with existing strategic planning—the core activity of strategy.

“The soul never thinks without an image” -Aristotle