Saturday, March 24, 2012

Five Take Away: Treasure Hunting in Blue Ocean

“In Blue Oceans, demand is created rather than fought over. There is ample opportunity for both growth and profit.”  W. Chan Kim & Renee Mauborgne

Blue Ocean Strategy written by W. Chan Kim & Renee Mauborgne is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000), 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.
As an integrated approach to strategy at the system level, 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., etc. Here are five takeaway:

1.     Six Path Framework


Path 1: Looks across alternative industries

Path 2: Looks across strategic groups within industry

Path 3: Redefines the industry buyer group

Path 4: Looks across complementary product and service offerings

Path 5: Rethinks the functional –emotional orientation of its industry

Path 6: Participates in shaping external trends over time

2.     Three Building blocks,  Four Actions Framework


A: The three key conceptual building blocks of BOS are:

1)      Value innovation

2)      Tipping point leadership

3)      And fair process

          B: Four Actions Framework + Eliminate/Reduce/Raise/Create Grid

The four actions framework offers a technique that breaks the trade-off between differentiation and low cost and to create a new value curve.  It answers the four key questions of:

1)      What industry takes for granted and needs to be eliminated;

2)      What factors need to be reduced below industry standards;

3)      What factors need to be raised above industry standards;

4)      And what should be created that the industry has never offered


3.  PMS Map, Three Tiers of Noncustomers



A.  Pioneer-migrator-settler (PMS) map
Corporate management team pursuing profitable growth can plot the company’s current and planned portfolios on a pioneer-migrator-settler (PMS) map.  This strategy can help a company determine which businesses experience the highest and lowest growth and cash flow.  These are classified accordingly with the highest growth potential being pioneers, then to migrators, then to the lowest rung, settlers

B.     Three Tiers of Noncustomers

There are three tiers of noncustomers that can be transformed into customers.  They differ in their relative distance from your market.

1)       The first tier of customers minimally buys an industry’s offering out of necessity. 

2)      The second tier of noncustomers refuses to use your industries offerings. 

3)      The third tier is noncustomers who have never thought of your market’s offerings as an option


4.   Three Strategy Propositions, Four Organizational Hurdles:


A: Align the three strategy propositions:

1)        Value proposition,

2)        Profit proposition

3)        People proposition

B: Four Organizational Hurdles to Strategy Execution

1)      Resource Hurdle: Redirect resources from hot spots and cold spots.

2)      Cognitive Hurdle: Meet with the customers. get involved

3)      Political Hurdle: Secure a consigliore on your top management team.  Leverage your Angels  and silence your Devils

4)      Motivational Hurdle: Zoom in on Kingpins. Place Kingpins in a fish bowl. Atomize to get the organization to change itself

 

5.     The Six Principles of Blue Ocean Strategy


1)      Reconstruct market boundaries

2)      Focus on the big picture, not the numbers

3)      Reach beyond existing demand

4)      Get the strategic sequence right

5)      Overcome key organizational hurdles

6)      Build execution into strategy






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