- 1 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is Map our business portfolio Pioneers, Migrators, Settlers Map Is the portfolio of products/services in our business positioned for future growth? The Pioneers, Migrators, Settlers map is a great visual tool to answer this question. By comparing current and future product/service portfolios, we can see if our company has a high or low growth trajectory. Examples: ￭ If we have too many me-too products (Settlers) we might need to kick off a program to foster value innovation. Even if we are still making profits today, a portfolio high in Settlers can represent a risk. We could fall into the typical trap of competitive benchmarking, imitation and price-driven competition. ￭ Having a lot of Migrators implies that we can expect reasonable growth. However, it shows that we are not fully exploiting our potential for growth. We may risk being offset and marginalized by a competitor that value-innovates. ￭ We need to make sure that we have enough Pioneers to generate profitable future growth. However, these may be very cash consuming. The art of strategy is to balance a good mix between cash-generating Settlers and cash consuming Pioneers. Revenue, profitability, market share, and customer satisfaction depict a picture of “today”. They are not metrics that will help us look at our future performance. We need to focus on future oriented profitable growth indicators. DESIGN PHASE ALIGN PHASE EXECUTE PHASE Map our business portfolio Visualize our current strategy Discover blocks to customer utility Alternative industries Strategic groups within industries Chain of buyers Complementary offerings Functional & emotional appeal Time Identify target customers Reconstruct the offering Build the future strategy Strategic Pricing Align: Implementation Project Charter Align: Project Charter for Business Model Innovation Visual Strategy Fair Market Validation Align: Business Model Approval Visual ExplorationVisual Awakening Awaken the need for change Explore opportunities Define the future strategy Redefine market boundaries and value elements Design the new offering Create buy-in Visual Communication: Stakeholder alignment Frame the implementation Align: Overcome hurdles and sustain execution Share a visual representation of the As-Is Detail the integration Target Costing & Business Model Design Adapted from the upcoming Blue Ocean Strategy Toolkit

- 2 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio Proxies to plot a Pioneers, Migrators, Settlers map S ETTLERS M IGRATORS P IONEERS TODAYTOMORROW T HE P IONEERS M IGRATORS S ETTLERS M AP I NDICATIONS FROM THE ORIGINAL PUBLICATION The Blue Ocean Strategy framework does not indicate which quantitative metrics to use in order to plot products and services on the diagram below. It simply describes groups of offerings in terms of “sources of profitable growth”. OUR RECOMMENDED PROXIES We believe that the most relevant metric for this exercise is the contribution margin, or the marginal profit per unit of sale (unit price – unit variable costs). This can be translated for comparison purposes into the contribution margin ratio, i.e. unit contribution margin over unit price, or in totals: total contribution margin over revenue). Contribution margin analysis is a measure of operating leverage, as it measures how growth in sales translates in growth in profits. To plot offerings on a service/portfolio map, we recommend to use two other metrics: the expected market growth, and the forecasted sales growth. Depending on the usage, sales growth can be replaced by current or future sales volumes. The following slide provides an example of this analysis. To plot products and services on the pioneers, migrators, settlers map, we recommend to use three proxies of profitable future growth: the contribution margin ratio, the expected market growths rate, and expected sales growth rates.

- 3 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio Sample contribution margin / growth and sales diagram S ETTLERS (R ED O CEANS ) - Me- too businesses whose value curves conform to the basic shape of the industry. Do not contribute to future growth. M IGRATORS - Businesses that extend the industry’s curve by giving customers more for less, but do not alter its basic shape. P IONEERS (B LUE O CEANS ) - Businesses with unprecedented value. Blue oceans with the most powerful sources of profitable growth. The graph below puts together the contribution margin ratio and the market growth rate for a portfolio of product/services. Bubbles sizes represent forecasted sales volumes. The pictures shows that: Products a and c, though representing almost half of total sales, have a low contribution margin and a low expected market growth rate. They can be described as Settlers in the BOS terminology. Product b could be a typical Migrator. Market rates are relatively high but profitability is low. The aim here should be to seize market growth in a more profitable way by reengineering the value curve of this product/service. Products/services d and e could be considered as Pioneers. They both have a high contribution margin and their related market growth is relatively high, particularly for e. However, sales for e are relatively low; digging into the value proposition and the business model for this offering would be recommended.

- 4 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio Mapping proxies to the Pioneers, Migrators, Settlers Map Contribution Margin RatioHigh Moderate Low Market GrowthHighAvg to LowHighAvg to LowHighAvg to Low Forecasted Sales Growth vs. Market Growth rates ≥<≥<≥< or ≥ PioneerMigrator? Settler? Migrator?Settler Offering well positioned for profitable growth. Maximize sales. Evaluate how to reengineer the offering to develop a new market and grow sales. Evaluate how to reengineer the offering to improve profits. Reconsider offering to improve margins and increase sales. Reengineer offering to improve margins and grow more profitably. Growing or not, our profitability is poor. Consider reengineering or discarding. The table below provides an example of the relationship between the three profitable growth proxies – contribution margin ratio, market growth, and expected sales growth – can help us position individual offerings on the Pioneers, Migrators, Settlers Map. EXAMPLE

- 5 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio Pioneers, migrators, settlers map Product/Service Contribution margin (a)% (b)% (c)% (d)% (e)% (f)% (g)% O UR P ORTFOLIO OF PRODUCTS AND SERVICES S ETTLERS (R ED O CEANS ) Me-too businesses whose value curves conform to the basic shape of the industry. Do not contribute to future growth. M IGRATORS Businesses that extend the industry’s curve by giving customers more for less, but do not alter its basic shape. P IONEERS (B LUE O CEANS ) Businesses with unprecedented value. Blue oceans with the most powerful sources of profitable growth. TODAYTOMORROW … a a … b b … c c … d d … e e … f f … a a … c c … e e … d d … b b … f f … g g The pioneers, migrators, settlers map allows us to visualize which products and/or services within our business contribute most to our current and future profitability. In this version of the template we plot our offerings on a matrix based on the guidelines of the original BOS publication, but using contribution margin as a proxy. Contribution margin Low High

- 6 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio Pioneers, migrators, settlers map – alternative version   : Bubble size indicates an offering’s contribution to profits (e.g. profit margin) S ETTLERS M IGRATORS P IONEERS TODAYTOMORROW O UR P ORTFOLIO OF PRODUCTS AND SERVICES a a b b c c d d e e f f a a c c e e d d b b f f g g Contribution margin Low High As an alternative to the previous version, only the circles representing our offerings are plotted on the matrix. Their relative size indicates current and expected sales volumes. An adjacent table is used to provide the details. See slide notes for PowerPoint technicalities on the graph. Total Sales Product/Service Contribution marginTodayTomorrow (a)% (b)% (c)% (d)% (e)% (f)% (g)%

- 7 -Blue Ocean Strategy Templates Templates ｜ Design Phase ｜ 1. Share a visual representation of the as-is ｜ Mapping our business portfolio When to use a Pioneers, Migrators, Settler Map Before a BOS initiative BEFORE even starting a Blue Ocean Strategy project, it is useful to plot the as-is part of the Pioneers Migrators Settlers map based on what we have described so far. This will highlight the positioning (and proportion) of profitably growing products in our offering portfolio. Migrators and Settlers (with lower relative contribution margins) are good candidates to be reengineered based on an in-depth BOS approach. Plotting products and services before a BOS exercise allows to identify which service offerings could potentially be reengineered. The map can be completed more accurately after a BOS project to emphasize the new distribution of products and services. During/after a BOS project Coming back to the Pioneers, Migrators, Settler map is useful after the design phase of a Blue Ocean Strategy, once we have depicted the new value curves. The “tomorrow” part of the map can be completed more accurately, showing how the profitability portfolio improves thanks to reengineered existing offers, discarded ones, and newly created ones.