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Blue Ocean Strategy
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Blue Ocean Strategy
2
Academic JourneyE-Business MBA Program – ISC Paris
University College Cork
Course of Blue Ocean StrategyFebruary 21st , 2012Professor François Cazals
3
AgendaISC Paris School of
ManagementThe ProfessorCompetition-based
strategyA little filmBlue Ocean Strategy
4
ISC Paris group
Business School MBA
Executive
Education
1800 students « grande école »
250 students MBA’s
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François CazalsCEO DistriforceISC Paris
Affiliate ProfessorHead
ISC Executive Education E-Business MBA
Program
SpeakerHEC Paris Executive
EducationESSEC Paris
Executive Education
[email protected]: @distriforce
Blog: cazals.fr
Blue Ocean Strategy
Creating new market space
Competition-based strategy
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Subtle War Brutal War
“ War is an act of violence intended to compel our opponent
to fulfill our will”. Clausewitz (1780-
1831)
“To subdue the enemy without fighting is the
acme of skill”. Sun Tzu (544-496 BC
J.-C.)
Blue
Red
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A founding principle“Competition is at the core of the success or failure of firms”.1st sentence of Michael Porter’s most important book
Michael PORTER
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Two generic strategiesLow Cost Differentiation
Paris-DublinRyanair 55 €Air France 286 €
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A little film
http://distriforce.net/insead.wmv
The Book and the Authors
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Prof Chan Kim
Prof Renée Mauborgne
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Strategy Canvas
Comp Fact 1 Comp Fact 2 Comp Fact 3 Comp Fact 4 Comp Fact 5 Comp Fact 6 Comp Fact 7 Comp Fact 80
1
2
3
4
5
6
7
8
9
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Firm Competitor
The value curve, the basic component of the strategy canvas, is a graphic depiction of a company’s relative performance across its industries factors of competition.
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Strategic corridor
Var 1 Var 2 Var 3 Var 4 Var 5 Var 6 Var 7 Var 80
1
2
3
4
5
6
7
8
9
10
Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Comp 6
DIFFERENCIATION
LOW COST
Corr
idor
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Industry CycleIn
nova
tio
n
Growth Maturity DeclineStart
BLU
E O
CEA
N
RED OCEAN
Con
ques
t
Segm
enta
tion
Diff
eren
tiat
ion
LoyaltyOne to OneLow Cost R
ED
OC
EA
N
?
Red Ocean Vs. Blue Ocean Compete in existing market
space Beat the competition Exploit existing demand Make the value-cost trade-
off Align the whole system of a
firm’s 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 firm’s activities in pursuit of differentiation and low cost
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4 actions framework
Create a new value curve
Reduce
Create
Raise
Eliminate
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
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6 Paths Framework Head-to-head competition Blue Ocean Creation
Industry Focuses on rivals within its industry
Looks across alternative industries
Strategic GroupFocuses on competitive position within strategic
group
Looks across strategic groups within industry
Buyer Group Focuses on better serving the buyer group
Redefines the industry buyer group
Scope of product or service offering
Focuses on maximizing the value of product and service offerings within the bounds
of its industry
Looks across to complementary product
and service offerings
Functional-Emotional orientation
Focuses on improving price performance within the
functional-emotional orientation of its industry
Rethinks the functional-emotional orientation of its
industry
TimeFocuses on adapting to external trends as they
occur
Participates in shaping external trends over time
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Look across alternative industries
Rent a apartment
+
=
Go to the hotel
Corporate Apartements= apart-hotel concept
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Look across strategic groups within industry
+
=
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Redefine the industry buyer group
Look across to complementary product and service offerings
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Rethink the functional-emotional orientation of its industry
EmotionalFunctional
Fonctionnel
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Participate in shaping external trends over time
3D TV
Ultra Flat TV
Connected TV
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Blue ocean?
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3 Tiers of Non-customers
The Gamers• Men• Under 35• Sports,
Fights, Cars,…
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3 Tiers of Non-customers« Soon-to-be » non-
customersMen aged over 35
« Refusing » non-costumers
Old people, parents, women
« Unexplored » non-customers
Families
Business CaseHow Apple has created a new market space with the iPad
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3 examples
SAMSUNG NetbookN145Plus
Sony Vaio VPC-SB3L9EW 13,3" LED USB 3.0
iPad 2 64Go Wi-Fi
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Red OceanVariables Sony Samsung
Price 899 € 239 €
Weight 1,720 kg 1,240 kg
Screen 13,3 inches 10,1 inches
Hard Drive 500 Go 250 Go
Connectivity
10/10 7/10
Keyboard Yes Yes
Design 7/10 5/10
Market Laptops Netbooks
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Strategy canvas
Differentiation
Low Cost
Price Weight Screen Hard Drive Connectivity Keyboard Design
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Blue oceanVariables iPad
Price 489 €
Weight 0,613 kg
Screen 9,7 inches
Hard Drive 64 Go
Connectivity
3/10
Keyboard No
Design 9/10
Touch interface
New
iCloud New
AppStore New
Market Touch Pads
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Blue Ocean vs. Laptops
E R R C
Keyboa
rd
Connec
tivity
Hard d
rive
Wei
ght
Scree
nPric
e
Desig
n
iClo
ud
Appstor
e
Touch
inte
rface
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Blue Ocean vs. Laptops
E R R C
Keyboa
rd
Connec
tivity
Hard d
rive
Wei
ght
Scree
nPric
e
Desig
n
iClo
ud
Appstor
e
Touch
inte
rface
Three Tests of a Blue Ocean Strategy:
1) Focussed2) Divergent3) Compelling Tagline
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Blue ocean vs. Netbooks
E R R C
Keyboa
rd
Connec
tivity
Hard d
rive
Wei
ght
Scree
nPric
e
Desig
n
iClo
ud
Appstor
e
Touch
inte
rface
“If you dream it, you can do it”.
Walt Disney
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Annex
Exercise• 1. List Factors of
Competition
• 2. Top 2 or 3 in ERRC Grid Quadrants
• Clearly define the group of “non-customer” that you are going after.
Examples
Exercise3. Write on
Worksheet: E left, C right
4. Draw “As Is”
5. Draw “To Be”
Examples
ExerciseDemonstrate that iphone is a blue ocean strategy compared to blackberry (at the beginning)
