Blue Ocean Strategy
Kim & Mauborgne Kim & Mauborgne
Red Ocean vs Blue Ocean Strategy
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space Beat the competition Exploit existing demand Make the value-cost trade-off Align the whole system of a firms activities with its strategic choice of differentiation or low cost Create uncontested market space Make the competition irrelevant Create and capture new demand Break the value-cost trade-off Align the whole system of a firms activities in pursuit of differentiation and low cost
Kim & Mauborgne
Researching the History of Blue Ocean Creation
Data: 150 blue ocean creations, more than 30 industries, over 100 years (1880-2000)
hotel, cinema, retailing, airline, energy, computer, broadcasting, home construction, automobile, steel manufacturing, chemicals, cosmetics, software, etc.
Variables considered: industrial, organizational, strategic
Kim & Mauborgne
Substantially Higher Returns from Investments in Blue Oceans
Red Oceans Market-Competing Business Launches
Blue Oceans Market-Creating Business Launches
Kim & Mauborgne
How do you create a Blue Ocean in your industry?
Kim & Mauborgne Kim & Mauborgne
The As Is Strategy Canvas for the US Wine Industry
hi Premium
offering level
Budget Wines
lo
Price Use of enological terminology and distinctions Above-theline marketing Aging quality Vineyard prestige and legacy Wine complexity Wine range
Kim & Mauborgne
The To Be Strategy Canvas of [yellow tail]
hi Premium Wines
offering level
[yellow tail]
Budget Wines
lo
Price
Use of enological Use of enological terminology and Above-theterminologyin and distinctions wine line marketing distinctions communication
Aging Aging quality quality
Vineyard Vineyard Wine prestige prestige complexity and legacy legacy and
Wine range
Fun & Easy Ease of drinking selection Adventure
Kim & Mauborgne
The Four Actions Framework
Reduce
Which factors should be reduced well below the industrys standard?
Eliminate
Which of the factors that the industry takes for granted should be eliminated ?
Create
A New Value Curve
Which factors should be created that the industry has never offered?
Raise
Which factors should be raised well above the industrys standard?
Kim & Mauborgne
Eliminate-Reduce-Raise-Create Grid:
The case of [yellow tail]
Eliminate
Enological terminology and distinctions Aging qualities Above-the-line marketing
Raise
Price versus budget wines Retail store involvement
Reduce
Wine complexity Wine range Vineyard prestige
Create
Easy drinking Ease of selection Fun and adventure
Kim & Mauborgne
Value Innovation: the simultaneous pursuit of differentiation and low cost
Eliminate
Cost
Reduce
Blue Ocean
Raise Create
Buyer Value
Kim & Mauborgne
Six Paths to Blue Ocean Strategy
The six conventional boundaries of competition
Industry Strategic group
From Competing Within
Buyer group Scope of product or service offering Functional-emotional orientation of an industry Time
To Creating Across
Kim & Mauborgne
Shifting the Strategic Focus
Conventional Logic
Industry Strategic group
focus on rivals within its industry
Blue Ocean Strategy Logic
looks across alternative industries
focuses on competitive position within strategic group
looks across strategic groups within industry
Buyer group Scope of product or service offering Functional-emotional orientation Time
focuses on better serving the buyer group focuses on maximizing the value of product and service offerings within the bound of its industry focuses on improving priceperformance within the functional -emotional orientation if its industry focuses on adapting to external trends as they occur
redefines the industry buyer group
looks across to complementary product and service offerings
rethinks the functionalemotional orientation of its industry participates in shaping external trends over time Kim & Mauborgne
Pioneer-Migrator-Settler Map
Pioneers
The only ones with a mass following
Migrators
Best in the crowd
Settlers
Me-toos
Today?
Kim & Mauborgne
Pioneer-Migrator-Settler Map
Pioneers
The only ones with a mass following
Migrators
Best in the crowd
Settlers
Me-toos
Today
Tomorrow
Kim & Mauborgne
Minimizing Risks and Maximizing Opportunities in Formulating and Executing Blue Ocean Strategy
Formulation Principles
Reconstruct market boundaries
Focus on the big picture, not the numbers
Formulation Risks
Search Risk Planning Risk Scale Risk Business Model Risk
Reach beyond existing demand Get the strategic sequence right
Execution Principles
Overcome key organizational hurdles Build execution into strategy
Execution Risks
Organizational Risk Management Risk
Kim & Mauborgne
www.blueoceanstrategy.com
Kim & Mauborgne
