IS3320 Developing and Using Management Information SystemsLecture 5: Blue Ocean Thinking in the development and use of MIS

Rob Gleasure

R.Gleasure@ucc.iewww.robgleasure.com

IS3320

Today’s lecture Blue Ocean Thinking Exercise

What is Strategy?

What’s the difference between strategy and tactics?

Strategy means competition?

Image from http://www.equinoxap.com/services/strategy/

Blue Ocean Strategy

Last week we spoke about developing and using MIS to pre-empt and exploit technological evolution in markets

When a market becomes ‘pure competition’ (price-based), it may not be appealing for new entrants

When this is the case, we may need to introduce some new factors to effectively create a new market This has been described as adopting a Blue Ocean Strategy

(Kim & Mauborgne 2008)

Red Ocean vs. Blue Ocean

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the value‐cost trade‐off Break the value‐cost trade‐off

Align the whole system of a company’s activities with its strategicchoice of differentiation or low cost

Align the whole system of a company’s activities in pursuit ofdifferentiation and low cost

From Kim & Mauborgne @ http://www.blueoceanstrategy.com/downloads/bos_web.pdf

What is Blue Ocean Strategy? 'The supreme art of war is to subdue the enemy without fighting‘

(Sun Tzu)*

The basic idea is very simple We list out each competitive factor in our industry We gauge each of these ideas according to customer needs and

the capacity of existing competitors to meet those needs Then we ask ourselves four questions…

*With apologies for Sun Tzu quote cliché

What is Blue Ocean Strategy? What competitive factors can we reduce?

What competitive factors can we eliminate?

What competitive factors can we raise?

What competitive factors can we create?

What is Blue Ocean Strategy?

From http://www.blueoceanstrategy.com/about/concepts/4-actions-framework/

Example of a Blue Ocean Value Curve for Yellow Tail

From http://www.blueoceanstrategy.com/downloads/bos_web.pdf/

Example of a Blue Ocean Value Curve for The Nintendo Wii

From http://www.slideshare.net/ymike27/blue-ocean-strategy-3626410

We’re all rational people, right?

Explain this…

Example of a Blue Ocean Strategy in Other Contexts

From http://www.everywhereist.com/the-donald-trump-republican-presidential-debate-drinking-game/

Adopting a Blue Ocean Strategy for an eBusiness We can view this as resetting the market lifecycle described by

Christensen We’re looking for new functionalities

Instead of asking if IT capabilities can improve upon a key dimension for competition, we ask

1. What functionalities are made possible by new IT capabilities?

2. Do people want this enough to justify changing their behaviour?

Exercise

Blockbuster have decided they’ve had enough! They want to instigate a complete re-think of their IT capabilities and the home entertainments market to try and find a new value proposition

What competitive factors in that market should they reduce?

What competitive factors in that market should they eliminate?

What competitive factors in that market should they raise?

What competitive factors in that market should they create?

Want to read more?

Links and references http://books.google.ie/books?

id=SZQnfdM9O7wC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false

Kim, W.C., Mauborgne, R. 2005. Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Harvard Business Press, Cambridge MA.

Porter, M.E. 1980. Competitive Strategy, Free Press, NY, 1980. Porter, M.E. (2008) The Five Competitive Forces That Shape Strategy,

Harvard business Review, January 2008.