Creating NEW market spaces © Kim & Mauborgne
Blue Ocean Strategy
Creating New BRANDED Export Market Spaces
Presented by : Ravi Fernando
© Kim & Mauborgne
March 2015
RED OCEAN TRAPS
May 2015
BLUE OCEAN LEADERSHIP
© Kim & Mauborgne
Is Sri Lanka in a RED OCEAN ‘Commodity’ TRAP? Mental Assumption – Export Brand market spaces, NO WAY !!
© Kim & Mauborgne
• 90% + of exports
•TEA
•APPAREL
•CINNAMON
•RUBBER
•COCONUT
•NATURAL RESOUCES
- ILMENITE Titanium
- GRAPHITE
Rewarded Operations
Loadstar
Dilmah
Virtusa Rewarded creativity
Trap 1: Seeing Market-Creating Strategies as Customer-Oriented
Approaches
© Kim & Mauborgne
• A focus on the demands of existing customers tends to drive organizations
to come up with better /lower cost solutions than what competitors
currently offer – but this keeps them moored in Red Oceans
Better!
More!
Existing Customers
© Kim & Mauborgne
Red Ocean of Commodity suppliers
Margins & Share
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
Apparel
Rubber
Cinnamon
Tea
Graphite
Ilmenite
Value add FOR BRANDS!
Close to Consumption
Industrial 3D printers
Amazon
Creating New Market spaces
RED OCEAN TRAPS - Is Sri Lanka in One?
Blue Ocean Strategy and global impact
Blue Ocean Strategy concept & 3 tools
Creating New Market spaces – Cases
Opportunities for SL Export Market spaces !
© Kim & Mauborgne
SL Branded
© Kim & Mauborgne
Sold over 3.5 Million Copies !
BOS in 1,800 universities in over 110 countries
584
North America 584
South America 164
Africa 45
Europe 581
Asia 334
Oceania 32
Middle East 60
© Kim & Mauborgne
Sri Lanka?
© Kim & Mauborgne 2020 Advanced nation
US$ 10,796- 15,000
The Eleventh Malaysia Plan used
Blue Ocean strategy tools & frameworks ..
• 60 NBOS initiatives
• 80 ministries & agencies
• Data: 150 blue ocean Moves , in more than 30 industries, over 100 years (1880-2000)
– Hotel, cinema, retailing, airline, energy, computer, broadcasting, construction,
home, automobile, steel manufacturing, chemicals, cosmetics, software, etc.
• Variables considered: industrial, organizational, strategic
39% 61% Profit Impact
62% 38% Revenue Impact
14% 86% Business Launch
Launches within red oceans Launches into blue oceans
The basis of Blue Ocean Strategy
© Kim & Mauborgne
Red Ocean Approach Blue Ocean Approach
Differentiation
OR
Low Cost
BOS
Low Cost
Differentiation
© Kim & Mauborgne
New Market Spaces & BOS tools
© Kim & Mauborgne
Eliminate Raise
Reduce Create
BOS ERRC GRID 3 TIERS OF NON CUSTOMERS
Astra/ Tea/Coffee Low Cost High Value
Value Innovation in Hospitality
Hyatt – Mkt.cap 8b
-Mkt.cap13b
Low cost, High Value
levering existing rooms!
5y more room nights than
Hilton
Truly global. Present
in 190+ countries
and 30,000 cities
Longer average stay than in hotel (5.5
days vs. 3.5). Higher total spend per trip.
© Kim & Mauborgne
Soon to be non customer &…
• Ownership • Options
• Cost • New Market space
ERRC Grid
ELIMINATE
REDUCE
RAISE
CREATE
blueoceanstrategy.com | @blueoceanstrtgy
© Kim & Mauborgne
© Kim & Mauborgne
Low cost Creating high value
© Kim & Mauborgne
2012
Red Ocean Approach Blue Ocean Approach
Created New Market Spaces Competing in the
Existing Value Space
Competitiveness Creativity
© Kim & Mauborgne
© Kim & Mauborgne
© Kim & Mauborgne
© Kim & Mauborgne
© Kim & Mauborgne
Rev. 38% vs. 22%
Profit 61% vs. 51% with 4% Volume Share
Apple vs Microsoft Huge payoffs of market creation
2015 1998
Market Value (US$)
Year
$244.8 bn
$4.3 bn
iPod
iMac
iPhone
iPad
A series of successful market-creating moves
$742 bn
iTunes
AppStore
Apple Watch
$347 bn
Lack of compelling market-creating moves
© Kim & Mauborgne © Kim & Mauborgne
BOS Six Paths Framework
© Kim & Mauborgne
1 3 2
4 6 5
Alternative industries Strategic groups
within industries
Different chain
of buyers
Complementary
products
Look across functional
and emotional appeal
to buyers
Look across time
Product attributes
Functional benefits
Emotional benefits
Influencers
Costa Rica – World leader in ‘ecotourism’ Created a new Blue Ocean Market space!
Leveraged existing rich biodiversity !
• Government /Private sector jointly created an ‘ECO TOURISM NATION’ to
drive the economy
• New legislation to protect nature and the environment
– 1987 arrivals 329,000 to 2.34 million in 2012, Now 2.5!
– Avg. stay 10-12 days vs. 4-6 days / US $ 250 vs. US $ 80 per night
• Ranks 3rd on Environmental Performance Index out of 163 economies
– Goal to be carbon neutral ,100% Renewable energy by 2021
– Tourism 14 percent of GDP © Kim & Mauborgne
SpaceX
Tesla Motor Tesla Gigafactory
SolarCity
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
© Kim & Mauborgne
70,000 to 500,000 Tesla’s & Power wall units !
Biggest building on Earth? 24 Million Sq.ft
© Kim & Mauborgne
Electric Super Charger station network
ERRC of Tesla Motors
Eliminate Raise 1. Fossil Fuel usage
2. Automotive Carbon emissions
3. Car dealership
1. Driving range of EV’s
2. Car’s design and image
3. Battery Manufacturing capacity
Reduce Create
1. Vehicle options
2. Battery charge time vs old EV’s
1. Sustainable automobiles
2. Supercharger station network
3. Dual Energy Solution – Home & Auto
© Kim & Mauborgne
SL Opportunities to create
branded export market
spaces!
The 3 tiers of Non-customers
3rd Tier: Unexplored
Noncustomers (Applications)
2nd Tier: Refusing
Noncustomers (Application)
1st Tier: Soon-to-be
Noncustomers Retail brands
Existing
Market
© Kim & Mauborgne
Sri Lanka’s Natural Black Gold!
Bulk Exporter -200y @ Peak 32,000mt
99% Pure Vein graphite
Strongest material on the planet
Avg.US $ per ton 300
Export 3-10,000 Mt.
Global Market US $ 2b +
Processed US$ 4 - 20,000
EV Batteries - Space shuttle
Graphene US$ 150 M by 2020 -11y
Monolayer pack on quartz 4” wafer $ 849
SL Graphene brand
Salt water Fresh water
© Kim & Mauborgne
Blue Oceans ‘wash’ it ashore!
Titanium (Ilmenite)
9th largest global resource
75% pure
US $ 300-500 per Mt
60-100,000mt Ilmenite
SL Brand Of Titanium
- Application specific
- Nano Titanium US $ 2,000-20,000 per Mt.
© Kim & Mauborgne
Blue Ocean mind set
JVs’/Collaborations
-Distribution
-Innovation capability
-Technology /R&D
-Marketing
Non Value adding costs
Compete as a ‘supplier’
Global mind set teams
Scale –up
- Processing capability
Take risks & Invest
Can Sri Lanka create NEW export market spaces ?
ELIMINATE
Commodity /Bulk mind set
No we can’t Assumptions!
REDUCE
RAISE
CREATE
blueoceanstrategy.com | @blueoceanstrtgy
© Kim & Mauborgne
© Kim & Mauborgne
Low cost Creating high value
Blue Ocean mind set -Creating vs. Competing
- Non – Customers
- Time –Future
Global mind set - China
© Kim & Mauborgne
© Kim & Mauborgne
Blue Oceans ahead!
Thank you
Creating Blue Ocean Market spaces in Sri Lanka
© Kim & Mauborgne
• Vision• To re-position Sri Lanka as a
‘smart’ nation by developing
Sustainable Nanotechnology solutions to increase the ‘Global Competitiveness of its Strategic industries’
‘
• Economic Sustainability - Differentiation to compete globally
• Environmental Sustainability- Must not impact the ecology
negatively and contribute to ‘more
from less for more’
• Social Sustainability- Minimize risk of negative societal
impact in terms of ‘nano safety’
RAF SEPT 2009
Blue Ocean Strategy
NBOS
To date, more than 60 NBOS initiatives have been formulated and executed successfully by over 80 ministries & agencies
High Value Low Cost
Blue Ocean
Policing
1AMAN Campaig
n
CRP
Military Building Rural
Infrastructure
Health Fairs in Sabah & Sarawak
High-value Farming on
Unused Land
1MWISE Blue Ocean
Communication of GST
1Malaysia Social
Entrepreneurs
VIP VIBE
Tourist First
Repositioning
Teachers
1Malaysia Discount
Card
Certified Security Guards
1MBEON
Military Adventure
World
MICRO PPP
1Malaysia Civil Service Retirement
Support
Military-Police Collaboration
CTC
1Malaysia Youth Cities
1Malaysia Customer Service of Civil Servants 1ASEAN
Entrepreneurship Summit
1Malaysia Support for Housewives
My Beautiful Malaysia Day
Reposition-ing of police
Key NBOS Initiatives
Confidential © Kim & Mauborgne
BOL
© Kim & Mauborgne
mSLNBOS T To Create global Blue Ocean Market
spaces for Sri Lankan branded exports
© Kim & Mauborgne
SLBOSI
T Purpose - To Create global Blue Ocean Market
spaces for Sri Lankan brand exports
How - A SL Private sector driven platform to identify key focus sectors
to drive Sri Lankan brand export growth with public sector
involvement when needed.
Focus sectors
Nanotechnology driven (Tio2/Graphite/Graphene)
Tea / Rubber/Cinnamon
IT
Apparel body fit garments
Process – Select and engage key sector players with established export
business and all relevant and strategic players to ‘identify and create
new blue ocean market spaces’
Can Sri Lanka create new market spaces ?
Top 10 National Geo. Eco –destinations
Dubai /Costa Rica/ Laos
Eco- Tourism –small to medium destination Sustainable Nano Materials - Titanium & Graphite
© Kim & Mauborgne
Sri Lanka can create a New Market space!
Titanium (Ilmenite)
9th Global
75% pure
US $ 2,000 per Mt 150,000Mt
If we CREATE a NEW Market
space….investing in processing!
US $ 25,000 per Mt.
US$ 250,000 per kg!
© Kim & Mauborgne
Sri Lanka can create a New Market space!
© Kim & Mauborgne
Global Competitiveness Index sustainability adjusted
GCI 2012 – 2013 GCI 2012 – 2013
Sustainability adjusted GCI
Country/Economy Rank Score Score
Switzerland 1 5.72 6.85
Germany 6 5.48 6.14
United States 7 5.47 5.31
United Kingdom 8 5.45 5.82
Japan 10 5.40 5.76
Korea Republic 19 5.12 4.89
Australia 20 5.12 5.46
Malaysia 25 5.06 5.14
China 29 4.83 4.44
India 59 4.32 3.73
Sri Lanka 68 +10 = 78 4.19 3.96
Venezuela 126 3.46 3.28 © Kim & Mauborgne
Nations ‘Create Market spaces’
Wine Industry Automobile Industry Electronic Industry
Apparel Industry
Made in France
Made in Australia
Made in Germany
Made in Japan
Made in The England
Made in Korea
Designed in
Italy
Designed in
Spain
Made in
The UK
Made in China
Fashion Industry
© Kim & Mauborgne
50% OF THE WORLDS FORESTS DESTROYED IN THE LAST 30 YEARS!
52% of the Worlds animal species have been destroyed in the past 40years
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
Global carbon emissions & carbon
concentrations 1992-2014
1992 2014 %
• Global Carbon emissions 21 Gt 32 Gt +52
• Global ‘Air Pollution’ PPM 250ppm 400ppm +60
• Its 22y since all World leaders met at the Rio Earth summit!
Many declarations, commitments, agreements, 20 COP meetings later and
after the 20th anniversary ………..
• WHAT HAS THE UN AND ALL WORLD LEADERS ACHIEVED FOR THE PLANET?
R.A. Fernando © RAF SCS 2015
© Kim & Mauborgne
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