Blue ocean strategy presentation
Post on 21-Jan-2015
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A wake up Call!!!!
Between 1975 and 1995, 60 percent of Fortune 500 companies were replaced on the list.
Markets are opening
Competitors are agile
Competitors can pick and choose where to compete
In 10 years time will your market place still be populated by the same dominant industry players????
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The Lessons we all need to learn
Industries and companies continuously rise and fall.
Therefore, there are no permanently great industries or companies
Instead, there are strategic moves that propel companies and continuously create new industries.
Example: Nokia
137 year old company, leading mobile manufacturer with USD 31 Billion in sales in 130 countries
Has practiced renewal for a lifetime, starting out making paper, then boots, rain coats, hunting rifles, consumer electronics and now mobile phones.
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Staying at the top is not about having a great new technology to deploy
In strategy formation, innovation is often equated with technology requiring sizable development and investment.
In contrast, Value Inn0vation aims to substantially raise the value proposition towards customers (Hence “Innovation in Value”).
The question is: “How can we best identify and serve their overall needs and offer them unparalleled value?”
Example: IBM
Between 1991-1993, $16B in losses
In ‘93 first non-IT CEO switches co. focus from ‘technology driven’ to ‘customer solutions driven’, creating new “Global Services Group”
By 2001 the Global Services Group represents $35B of $86B in total sales.
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When should a company consider using value innovation
Highly competitive industry
Few differentiators
Low entry barriers
Downward margin pressures
Limited opportunity for new customers
Struggling to compete
Leadership position stagnant
Forced into acquisition model to sustain growth expectations.
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The Commerce Bank Experience – Blue Ocean Strategy in Financial Services
The Commerce Model
Growth Retailers Not Bankers
FANS Not Customers
Unique Deposit Driven/Retail Focus
Service Not Rate Drives Growth
Growth is Essential to Success and Value
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How Commerce Bank changed the paradigm
Key Elements of Product, Service and Delivery 7
What did Commerce Bank do?
Moving to a convenience retailer
Assessing what’s really important to customers
Convenience (62%)
Convenience (29%), Checking account (16%), Personal/Friendly/Nice, Treated well (9%), Good Service (8%)
Good Rates/Returns (3%)
The Philosophy of Commerce Bank is ‘dare to be different’
Bankers Hours – Open 7 days
Need a pen
Paint your vans
Dogs rule!
Coins!
Results are impressive: •Consistently winning consumer awards •Annual growth of 19%
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Comparing Conventional Thinking with Value Innovation approaches
Conventional Value Innovation Industry Assumption
Industry conditions are given Industry conditions can be shaped
Strategic Focus
Build competitive advantages to beat the competition
Create a quantum leap in buyer value to dominate the market
Customer Retain and expand the customer base through further segmentation and customisation. Think in terms of embracing customer differences
Go for the mass of buyers and willingly let some existing customers go. Think in terms of embracing key customer value commonalities.
Assets & Capabilities
Think in terms of a company’s existing assets and capabilities. Build on what it has.
Think free from a company’s existing assets and capabilities. Ask, what if we start anew?
Product/ Service offerings
Think in terms of products/ services offered by the industry. Seek to maximise the value of these offerings.
Think in terms of buyer’s solution even if that transcends the industry. Seek to solve buyer’s major bottlenecks/ chief compromises in using the products/services of the industry.
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What are the characteristics of Blue and Red Oceans
Market space is in existence today
Boundaries are defined
Competitive rules are known
Companies compete fiercely
Market space (Ocean) is crowded
Market share / profit share
Competition is cut –throat
Market space (ocean) ‘bloody’
Untapped Markets
Products / Services not in existence
Demand is yet to be created
Non-customers
Opportunity to earn high profits
No competition
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Value Innovation encourages organisations to seek strategies in ‘Blue’ rather than ‘Red’ oceans
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 demand
Make the value cost trade-off Break the value-cost trade off
Align the whole system of a firm’s activities with its strategic choice of differentiation
Align the whole system of a firm’s activities in pursuit of differentiation and low cost.
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Tier 3 Tier 2 Tier 1
Blue ocean strategy is all about customers and non-customers.
Tier 1 ‘soon to be’ Tier 2 ‘refusing’ Tier 3 ‘unexplored
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Cirque du Soliel – Revolutionising a dying industry
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Cirque du Soliel
Traditional circus
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Cirque du Soliel – Revolutionising a dying industry
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Cirque du Soliel
Traditional circus
REDUCED OR
ELIMINATED
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Cirque du Soliel – Revolutionising a dying industry
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Cirque du Soliel
Traditional circus
REDUCED OR
ELIMINATED RAISED
& CREATED
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Cirque du Soliel – Revolutionising a dying industry
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Cirque du Soliel
Traditional circus
REDUCED OR
ELIMINATED RAISED
& CREATED
Sales Increase X22 in 10 years
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Understanding where the value innovation took place at Cirque de Soleil
Across Industries
Across Strategic Groups
Across Buyers
Across Complementary
Offerings
Across Emotional/ Functional
Appeal
Across Time/ Trends
New Value Curve
Focus on Adults
•Opera •Theatre •Rock Music •Ballet
Reduces Animal Acts
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Eliminate-Reduce-Raise-Create Grid: Cirque du Soleil
Eliminate
Star performers Animal Shows Aisle concession sales Multiples show arenas
Raise
Unique venue
Reduce
Fun and Humor Thrill and danger
Creates
Theme Redefined environment Multiple productions Artistic music and dance
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Steps in Value Innovation
Drawing the existing Value Curve
Creating a new ‘Value Curve’ (‘to-be’) that fundamentally differentiates your offering
In creating our ‘to-be’ value curves we seek to address four elements – eliminate, reduce, raise, create.
This allows us to address the leap in value at the same time as reducing the cost structure
PUSHING FOR A QUANTUN LEAP IN BUYER VALUE
WHILE:
PUSHING FOR A SHARP DROP IN THE INDUSTRY COST STRUCTURE
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Six Pathways Across Industries
Across Strategic Groups
Across Buyers
Across Complementary Offerings
Across Emotional/Functional
Appeal
Across Time/ Trends
New Value Curve
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Six Pathways Across Industries
Across Strategic Groups
Across Buyers
Across Complementary Offerings
Across Emotional/Functional
Appeal
Across Time/ Trends
New Value Curve
Reduce Factors well below the
industry standard
Reduce Factors well beyond the
industry standard
Create Factors that the
industry has never offered
Eliminate Factors that the
industry has taken for granted
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The Four steps of Value innovation
VISUAL AWAKENING Compare your “as is” strategy canvas with your ‘competitors’ See where your strategy needs to change
VISUAL EXPLORATION
Go into the field to see how people use or not use your products Discover adoption hurdles and advantages of alternative offerings Review both customers and non-customers
VISUAL STRATEGY FAIR
Draw several “to be” strategy canvases based on field insights Get feedback form customers, lost customers, competitors’
customers and non-customers to build best “to be” strategy.
VISUAL COMMUNICATION Distribute old and new strategic profiles Support only initiatives that meet new strategic needs
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Typical stages of a Value Innovation project
Phase 1: Visual Awakening
Phase 2: Visual Exploration
Phase 3: Visual Strategy Fair
Phase 4: Visual Commn.
1a. See the Need for Change 1b. Start the conversation
2a. Broadening Perspectives 2b. Sourcing for Feedback
4a. Awareness & Internalisation of strategy & Initiatives
3a. Determining “to be” strategy Programmes and initiatives O
bje
ctiv
es
1c. “As is” Curves based on current strategy blueprints
2c. Alternative “to be” strategy canvas
4b. Effective commn. of strategy canvas & initiatives
3b. Teams “to be” Value Curves 3c. Proposed Programmes & initiatives D
eliv
erab
les
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Typical stages of a Value Innovation project
Phase 1: Visual Awakening
Phase 2: Visual Exploration
Phase 3: Visual Strategy Fair
Phase 4: Visual Commn.
1a. See the Need for Change 1b. Start the conversation
Ob
ject
ives
1c. “As is” Curves based on current strategy blueprints D
eliv
erab
les
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Activity Team led by Date
Kick off training for team
Create “as is” Value curve
Present “as is” Value curve and finalise
15/Dec 7/Feb
Typical stages of a Value Innovation project
Phase 1: Visual Awakening
Phase 2: Visual Exploration
Phase 3: Visual Strategy Fair
Phase 4: Visual Commn.
Ob
ject
ives
D
eliv
erab
les
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Activity Team led by
Date
Study Customers, non-Customers, competitors customers, placement clients, Tech partners, BPs,
Each team prepares six value curves each
23/Dec 7/Feb
2a. Broadening Perspectives 2b. Sourcing for Feedback
2c. Alternative “to be” strategy canvas
31/Apr
Typical stages of a Value Innovation project
Phase 1: Visual Awakening
Phase 2: Visual Exploration
Phase 3: Visual Strategy Fair
Phase 4: Visual Commn.
Ob
ject
ives
D
eliv
erab
les
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Activity Team led by
Date
Strategy Fair at 4 Zones
Refinement of 6 value curves by each team
Strategy Fair at Delhi & Finalisation of “to be” value curve
Development of Proposed programmes & initiatives, communication plan and action plan
1/5Dec 25/Jan 31/Apr 7/Jun
3a. Determining “to be” strategy Programmes and initiatives
3b. Teams “to be” Value Curves 3c. Proposed Programmes & initiatives
Typical stages of a Value Innovation project
Phase 1: Visual Awakening
Phase 2: Visual Exploration
Phase 3: Visual Strategy Fair
Phase 4: Visual Commn.
Ob
ject
ives
D
eliv
erab
les
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Activity Resp: Date
Implementation of action plan & communication
Review implementation
1/Dec 7/Jan 28-Feb 9-Apr
4a. Awareness & Internalisation of strategy & Initiatives
4b. Effective commn. of strategy canvas & initiatives
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