Blue Ocean Strategy Dr. Zia By

Blue Ocean Strategy Dr. Zia By
By: Prof. Dr. M. Zia-ur-Rehman, By: Prof. Dr. M. Zia-ur-Rehman, Blue Ocean Strategy By Dr. Zia A/Professor, National Defence University Higher Education Commission Approved Ph.D. Supervisor Academician, Educationist, Trainer & Consultant Ph.D., MA Eng., MPM, MBA, M.Ed., LLB, Mob By: Prof. Dr. M. Zia-ur-Rehman, By: Prof. Dr. M. Zia-ur-Rehman, Prof. Dr. Muhammad Zia-ur-Rehmanan

Red and Blue ocean Book named “Blue ocean strategy” writen by:
W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD, France (the world’s second largest business school) And Renée Mauborgne is The INSEAD Distinguished Fellow and a Professor of Strategy and Management at INSEAD, France (the world's second largest business school). She was born in the United States. Mauborgne is a fellow of the World Economic Forum. Her Harvard Business Review articles, co-authored with W. Chan Kim, are worldwide bestsellers and have sold over half a million reprints. Their Value Innovation and Fair Process articles were selected as among the best classic articles ever published in Harvard Business Review. They have co-authored articles in The Wall Street Journal, They co authored articles in Academy of Management Journal, Management Science, Organization Science, Strategic Management Journal, Administrative Science Quarterly, Journal of International Business Studies, Harvard Business Review, Sloan Management Review and others BOS is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years ( ). BOS is the simultaneous pursuit of differentiation and low cost. The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant. BOS offers a set of methodologies and tools to create new market space. While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers – as argued by Schumpeter and his followers – BOS offers systematic and reproducible methodologies and processes in pursuit of innovation by both new and existing firms. BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index. These frameworks and tools are designed to be visual in order to not only effectively build the collective wisdom of the company but also to effectively execute a strategy through easy communication. BOS covers both strategy formulation and strategy execution. The three key conceptual building blocks of BOS are: value innovation, tipping point leadership, and fair process.

Red Ocean and its strategy

Blue ocean and its strategy

1. Introduction 2. Red & Blue Oceans ? Blue Ocean Strategy By Dr. Zia
By: Prof. Dr. M. Zia-ur-Rehman, 1. Introduction By: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman 2. Red & Blue Oceans ? Copyright: Prof. Dr. M. Zia-ur-Rehman 7. Q & A Session Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Blue Ocean Strategy By Dr. Zia Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman 6. Activity Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman 3. Minimizing planning risk by focusing on big picture Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Surfing …. What colour is of ur strategy ? Ppl have different strategies – like one friend said u can have one billion in 3 years – just start with 3 billion n after 2 years u will be left with one Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman 5. Pioneers-migrator-settles map 4. Visual big picture tools Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman By: Prof. Dr. M. Zia-ur-Rehman By: Prof. Dr. M. Zia-ur-Rehman, By: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman Copyright: Prof. Dr. M. Zia-ur-Rehman

To win in the future, companies must stop competing with each other.
The premise is simple: To win in the future, companies must stop competing with each other. The only way to beat the competition is to stop trying to beat the competition.

The “Typical” strategic plan
A very long document from different people of lengthy description of current industry conditions and competitive situations followed by a discussion of how to increase market shares, capture new segments, or cut costs. Then an outline of goals and budgets with graphs and spreadsheets

Focus on the BIG Picture
Alternative strategy approach that consistently produces strategies that open companies eyes to blue oceans By building a companys strategic planning process around a strategy canvas, the company focuses their main attention on the big picture rater than becoming immersed in numbers and jargon

Drawing Your Strategy Canvas
Drawing strategy canvas does three things: Strategic profile of the org. Strategic profile of others Value curve Drawing strategy canvas does three things: Shows the strategic profile of an industry by depicting very clearly the factors that affect competition among industry players Shows the strategic profile of current and potential competitors Company’s strategic profile-or value curve- depicting how it invests

Drawing Your Strategy Canvas may be difficult and laborious task.
So you need to see the big picture first. And for that – we use visualizing strategy

The Four Steps of Visualizing Strategy
This pushes a company’s strategy toward a blue ocean 1. Visual Awakening 2. Visual Exploration 3. Visual Strategy Fair 4. Visual Communication Visual Awakening: Compare your business with your competitors’ by drawing your “as is” strategy canvas. See where your strategy needs to change. COMMON MISTAKES: Discussing strategy before resolving differences Executives are reluctant to accept change WHAT PROMPTED A CHANGE IN STRATEGY: A highly determined leader Serious Crisis Ex: General Motors Used a reactive instead of a proactive approach. POORLY COMMUNICATED AND DEEPLY DIVIDED 2. VISUAL EXPLORATION : Send team hands on approach. How people use or don’t use products. Managers cannot outsource the face to face interaction. Often rely on reports from people who are not directly impacted. “ A company should never outsource its eyes. There is not substitute for seeing for yourself.” (p. 88). Strategic insight allowed him to challenge the boundaries that were created. Examine the strategic need first focus on customers . Identify the product or service can lead to bundling opportunities. Ex: AT&T bundling wireless, internet, and cable Alternative ways of that carry advantages and characteristics. Ex: Driving is alternative to Flying. Involve ppl and companies who could benefit from usage of services For each visual strategy team had to write compelling tagline. Led to competition between the two teams and process was more enjoyable in developing blue ocean strategies Hands on approach with fieldwork is important for managers. “When you keep your hands on the objects in view, it gives you a far better idea about the object than if seen otherwise.” Washington University psychologists Great strategic insights come from seeing what is beyond the boundaries and borders 3. VISUAL STRATEGY FAIR: Attendees include: Senior executives Noncustomers Customers of competitors Demanding customers TWO groups presented six strategies. Each group had 10 minutes Pictures of the strategy curves were hung on the wall for all to see. After the groups presented, each judge had 5 sticky notes to use to pick their favorites. Once they chose their favorites, they had to explain why they chose favorites. They also had to explain why they did not choose the other strategies. 4. VISUAL COMMUNICATION: This last step is important because you are to communicate the future strategy in a way for all employees to understand. ONE PAGE PICTURE: History has shown it to be very helpful to put the firm’s new and old strategic profiles on one page. This makes it easier for all employees to see where their company has been, and where it needs to go. This one-page reference point makes it easier for all companies to continue in the same direction. It reminds employees of the common goals of the firm and changes bad habits into good habits.

STRATEGY CANVAS The strategy canvas is a central diagnostic tool and an action framework developed by W. Chan Kim and Renée Mauborgne for building a compelling blue ocean strategy. It graphically captures, in one simple picture, the current strategic landscape and the future prospects for a company.

PMS (Pioneers-migrator-settlers)

Using the Pioneer-Migrator-Settler (PMS) Map
Visualizing strategy can make managers become responsible for corporate strategy for predicting and planning the company’s future growth and profit Especially valuable for managers who want to see beyond today’s performance A company’s pioneers The Migrators lie in-between Company’s Settler Visualizing strategy can also help managers responsible for corporate strategy predict and plan the company’s future growth and profit Especially valuable for managers who want to see beyond today’s performance 1. A company’s pioneers: (blue ocean strategists) are most powerful sources of profitable growth that have a mass following of customers and their value curve diverges from the competition on the strategy canvas 2. The Migrators lie in-between: These business extend the industry’s curve by giving customers more for less, but don’t alter its basic shape and offer improved value but not innovative value (fall in between red and blue ocean) 3. Company’s Settler: Me-Too business-Business whose value curve conform to the basic shape of the industry’s and will not contribute much to a company’s future growth (Stuck within the red ocean)

PIONEER-MIGRATOR-SETTLER (PMS) MAP
A useful exercise for a corporate management team pursuing profitable growth is to plot the company’s current and planned portfolios on the Pioneer-Migrator-Settler Map created by W. Chan Kim and Renée Mauborgne.

THREE TIERS OF NONCUSTOMERS
W. Chan Kim and Renée Mauborgne created the three tiers of noncustomers. Typically, to grow their share of a market, companies strive to retain and expand their existing customer base. This often leads to finer segmentation and greater tailoring of offerings to better meet customer preferences. The more intense the competition is, the greater, on average, the resulting customization of offerings. As companies compete to embrace customer preferences through finer segmentation, they often risk creating too-small target markets. To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look to noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value. This reorientation allows companies to reach beyond existing demand to unlock a new mass of customers that did not exist before.

Using PMS: A useful exercise for corporate management profitable growth is to plot the company’s current and planned portfolios on PMS map If current and planned portfolios consist mainly of settlers then: (red ocean) and needs to push for value innovation If current and planned portfolios consist mainly of migrators then: Reasonable growth can be expected but they are not exploiting its potential fro growth The more industry settlers, the greater opportunity to value-innovate and create blue ocean of new market space

Shift the focus toward pioneers
Executives should shift the their future portfolio toward … Executives should use value and innovation Executives should shift the their future portfolio toward pioneer; which is the path to profitable growth Executives should use value and innovation as important parameters for managing their portfolio Innovation because without it companies are stuck in the trap of competitive improvements Value because innovation ideas will be profitable

Six Risks at strategic planning initiative
The six defining principles of Blue Ocean Strategy. These principles train executives to systematically identify and address six risks inherent to every strategic planning initiative. These are : Planning Risk, Search Risk, Scale Risk, Business Model Risk, Organizational Risk Management Risks.

1. Minimizing Planning Risk by Focusing on the Big Picture
This session focuses on identifying and minimizing the planning risk by introducing visual big-picture tools of Blue Ocean Strategy. Learn to; Draw the As-Is Strategy Canvas to understand the current strategic landscape Use the Pioneers- Migrators- Settlers Map to identify where to start applying Blue Ocean Strategy Understand the 4-Step Visualization Process to formulate Blue Ocean Strategy Understand Four Actions Framework and Eliminate-Reduce-Raise-Create Grid to plot the to-be strategy canvases

2. Minimizing Search Risk by Reconstructing Market Boundaries
Learning to address the Search Risk many companies struggle with is very imp. The challenge is to successfully identify, out of the haystack of possibilities that exist, commercially compelling blue ocean opportunities. By applying the Six Paths Framework, they learn to reconstruct conventional boundaries of competition by systematically looking across; Alternative Industries Strategic groups Buyer groups Complementary product and service offerings Functional-emotional orientations Time

3. Minimizing Scale Risk by Reaching Beyond Existing Demand
To aggregate the greatest demand for their new offering , learn to attenuate scale risk by; Understanding customers, noncustomers and buyers Identifying the three tiers of noncustomers and their characteristics Focusing on commonalities among buyers instead of differences in specific needs Achieving de-segmentation instead of pursuing segmentation

4. Minimize Business Model Risk—Getting the Sequence Right
Learn to build a robust business model to ensure the commercial viability of blue ocean ideas. Understanding the right strategic sequence of creating Blue Oceans we learn to assess blue ocean ideas along the key criteria in that sequence. We learn to apply; The buyer utility Map Price Corridor of the Mass Profit Model of Blue Ocean Strategy Blue Ocean Idea Index

5 & 6. Minimizing Organizational & Management Risks by Building Execution into Strategy
In Strategy implementation and execution, there are lots of challenges. A well formulated strategy if not executed properly is not good. We learn ; How to identify the four major organizational hurdles i.e. cognitive, resource, motivational and political hurdles. Applying Tipping Point Leadership to systematically address the organizational hurdles Applying the three E -Principles of Fair Process to inspire voluntary participation among the team members

Value innovation is the “new” strategic logic behind Blue Ocean Strategy.
Instead of focussing on beating the competition, you focus on making it irrelevant by creating a leap in value for buyers and creating uncontested market space. Value innovation only occurs when organizations have aligned innovation with utility, price and costs. The market must be ready to accept the product, meaning that timing is key. The focus is on both differentiation and low cost to provide value to both customers and the organization.

Graph of Value Innovation
What to reduce ? And how ? What to increase ? And how ?

What to reduce ? And how ? What to increase ? And how ?

The Strategy Canvas Each factor is plotted on the canvas, with a high score reflecting the level of investment a specific company makes in that factor (for example a high score on price means that the price per bottle is high) When you plot the features, the show similarity To differentiate yourself in the market place, you must focus on alternatives and non-customers to re-define the marketplace Each factor is plotted on the canvas, with a high score reflecting the level of investment a specific company makes in that factor (for example a high score on price means that the price per bottle is high) When you plot all US wineries, they score remarkably similarly To differentiate yourself in the market place, you must focus on alternatives and non-customers to re-define the marketplace For example, Casella Wines looked at the strategy canvas and redefined the question: How do you make a fun and non traditional wine that is easy for everyone to drink?

Four Actions: Eliminate/Reduce/Raise/Create
Which of the factors that the industry takes for granted should be eliminated? Which should be reduced? Which should be raised well above standard? Which factors should be created that have not existed before? ERRC Grid

Your Strategy Canvas At your table, choose an industry one (or more) of you belong to. What industry are you in? What factors does it traditionally compete on? (i.e. price, amenities, etc.) Are there any factors that set you apart? Are there any factors that do not add any value and could be dropped? What could be created to add value? involve the people because ……. “Nobody is as smart as everybody”

Four Steps of Visualizing
1. Visual Awakening 2. Visual Exploration 3. Visual Strategy Fair 4. Visual Communication Compare your business with your competitors’ by drawing your “as is” canvas See where your strategy needs to change Go into the field to explore the six paths to creating blue oceans Observe the distinctive advantages of alternative products and services See which factors you should eliminate, create or change Draw your “to be” canvas based on insights from field observations Get feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers Use feedback to build the best “to be” future strategy Distribute your before-and-after strategic profiles on one page for easy comparison Support only those projects and operational moves that allow your company to close gaps and actualize the new strategy 31

Four Actions to create a Blue Ocean
What factors should be raised well beyond the industry standard? Raise What factors should be eliminated that the industry has taken for granted? Eliminate What factors should be created that the industry has never offered? Create ERRC Grid involve the people because ……. “Nobody is as smart as everybody” What factors should be reduced well below the industry standard? Reduce

Activity 1 Focus group session – selecting the product and analysis – finally on ERRIC grid worksheet

Exercise 1. List Factors of Competition
2. Top 2 or 3 in ERRC Grid Quadrants 3. Clearly define the group of “non-customer” that you are going after. Activity 1: selecting the product – may be the cell phone(do it in groups)- no two groups same product : Please think of yourselves and your colleagues as our target market. What is the most common phone in use among us? Let’s agree that this will represent the competition for today. (As Is) ERRC: What features do you really like on your phone? ERRC: What features do you really dislike on your phone? ERRC: What features would you really like in your next phone? What are our top choices for: Eliminate, Reduce, Raise, and Create? Record these choices in the lower part of the ERRC Grid worksheet. 34

Examples They are offered ways to swim out of the red ocean filled with sharks Red bull Apple Sony n microsoft… in red ocean but wii nintendo play station came in blue (they added simplicity n for adults n children even) Similarly online training sessions Red is known but blue is unknown TREAT EVERYONE LIKE CEO ACTIVITYIES: Blue ocean mindset How blue are you: Yes no questionnaie How blue u r 35

Activity 2 Strategy Canvas

Write on Worksheet Draw “As Is” Draw “To Be”
Exercise Write on Worksheet Draw “As Is” Draw “To Be” 37

Examples ACTIVITY 2: Drawing the Strategic canvas
Here is an example for the second activity 38

Copyright ® Prof. Dr. M. Zia-ur-Rehman
By: Prof. Dr. M. Zia-ur-Rehman, By: Prof. Dr. M. Zia-ur-Rehman, By: Prof. Dr. M. Zia-ur-Rehman, Copyright ® Prof. Dr. M. Zia-ur-Rehman By: Prof. Dr. M. Zia-ur-Rehman,

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