Turn back the clock Which industries did not exist? –100 years –50 years –30 years –20 years –10 years –5 years

Blue Ocean Strategy Cirque du Soleil Creating Uncontested Market Space and Making the Competition Irrelevant

Red Ocean Strategy Blue Ocean Strategy

Summary of Blue Ocean Strategy  New Market Space  Continuing Creation of Blue Oceans  Impact of Creating Blue Oceans  Rising Imperative of Creating Blue Oceans  From Company and Industry to Strategic Move  Value Innovation  Formulating and Executing Blue Oceans

Continuing Creation of Blue Oceans Ford’s 1908 Model T CNN 1980 Real-Time News 24/ Apple’s ipod 1970 The First Mouse New Market Space New Market Space Creating Blue Oceans Is Consistent Across Time Regardless of Industry

Impact of Creating Blue Oceans

Rising Imperative of Creating Blue Oceans Driving forces include:  Technological advances & improved industrial productivity  Unprecedented array of products and services available  Supply exceeds demand  Globalization, niche markets and monopolies disappear  20th century strategy and management approach waning

Formulating and Executing Blue Oceans

Value Innovation, Blue Oceans Cornerstone From Company and Industry to Strategic Move From Company and Industry to Strategic Move

The Paradox of strategy The very language of strategy is deeply imbued with military references - chief executive "officers" in "headquarters,“ "troops" on the "front lines." Described this way, strategy is all about red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory. Blue ocean strategy, by contrast, is about doing business where there is no competitor. It is about creating new land, not dividing up existing land.

A blue ocean is created in the region where a company's actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates. The Simultaneous Pursuit of Differentiation and Low Cost

The Book and the Authors Prof Renee Mauborgne © JOHN ABBOTT Prof Chan Kim © JOHN ABBOTT

Accolades Over 2 million copies sold Translated into over 41 foreign languages – a world record Taught as the major theory of strategy at leading business schools Gives insights to CEOs, Executives, Heads of State and Prime Ministers

What is the Blue Ocean? High profit growth at low risk Industries not in existence today Untapped market demand Unknown market space

Conventional Logic Blue Ocean Logic Industry Assumption Industry conditions are given Industry condition can be shaped. Summary Strategic Focus Build competitive advantages to beat the competition. Create a quantum leap in buyer value to dominate the market. CustomersRetain and expand the customer base through further segmentation and customization. Think in terms of embracing customer differences. Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.

Conventional Logic Blue Ocean Logic Summary Assets & Capabilities Think in terms of a company’s existing assets and capabilities. Build on what it has. Think free from a company’s existing assets and capabilities. Ask, what if we start anew? Product/ Service offerings Think in terms of products/services offered by the industry. Seek to maximize the value of these offerings. Think in terms of buyers’ solution even if that transcends the industry. Seek to solve buyers’ major bottlenecks/chief compromises in using the products/services of the industry.

What factors should be eliminated that the industry has taken for granted? Eliminate What factors should be reduced well below the industry standard? Reduce What factors should be created that the industry has never offered? Create What factors should be raised well beyond the industry standard? Raise Four Actions to create a Blue Ocean