Blueoceanstrategy Benny Hersanto

BLUE OCEAN STRATEGYby

Prof. W. Chan Kim, Prof. Renee Mauborgne

Cirque’s productions have been Cirque’s productions have been

seen by almost seen by almost 40 mn40 mn people people

in in 90 cities90 cities around the world around the world

In less than 20 years Cirque du soleil has achieved a level of revenues that took Ringling Bros. and Barnum & Bailey - the global champion of the circus

industry- more than 100 years to attain

Declining industry & limited potential for

growth

Strong supplier power

on the part of star

performers and buyer power

Steadily decreasing audiences

Increasing sentiments against the use

of animals

It created It created uncontested new uncontested new market space that market space that made the competition made the competition irrelevantirrelevant

Cirque du soleil Cirque du soleil DID NOTDID NOT compete compete with Ringling Bros. and Barnum & with Ringling Bros. and Barnum &

BaileyBailey

MARKET SPACEMARKET SPACE

Industries in existence Industries in existence todaytoday

Known market spaceKnown market space Industry boundaries Industry boundaries

are defined and are defined and acceptedaccepted

Competitive rules of Competitive rules of the games are knownthe games are known

Reduced profit and Reduced profit and growthgrowth

Industries Industries NOTNOT in in existence todayexistence today

UNKNOWNUNKNOWN and and untapped market untapped market spacespace

Rules of the game are Rules of the game are WAITINGWAITING to be set to be set

Opportunity for highly Opportunity for highly profitable growthprofitable growth

RED OCEAN BLUE OCEAN

PROfiT & GROwTh PROfiT & GROwTh CONSEqUENCES Of CREATiNG CONSEqUENCES Of CREATiNG BLUE OCEANSBLUE OCEANS

39% 61%

38%62%

14%86%

PROFIT IMPACT

REVENUE IMPACT

BUSINESS LAUNCH

Launches within red ocean launches for creating blue oceans

BLUEBLUE OCEANOCEAN STRATEGYSTRATEGY

• Accelerated technological advancement• Rising imperative


• Accelerated technological advancement•Accelerated technological advancement


• Accelerated technological advancement• Accelerated technological advancement• Trend towards globalization

BLUE OCEAN BLUE OCEAN STRATEGYSTRATEGY

• Accelerated technological advancement• Unit of analysis


• Accelerated technological advancement• Company


• Accelerated technological advancement• Company • Industry


• Accelerated technological advancement• Company• Industry • Strategic move Set of managerial actions

and decisions involved in making a major market-creating business offering

VALUEVALUE iNNOVATiONiNNOVATiON

BUYER VALUE

COSTS

VALUE INNOVATION

STRATEGYSTRATEGY

Compete in existing Compete in existing market spacemarket space

Beat the competitionBeat the competition Exploit existing demandExploit existing demand Make the value-cost Make the value-cost

trade-offtrade-off Align the system with Align the system with

differentiation differentiation OROR low low costcost

Create uncontested Create uncontested market spacemarket space

Make the competition Make the competition irrelevantirrelevant

Create and capture new Create and capture new demanddemand

Break the value-cost Break the value-cost trade-offtrade-off

Align the system in Align the system in pursuit of differentiation pursuit of differentiation ANDAND low cost low cost

Blue oceanRed ocean


• Accelerated technological advancement• Formulation principles


• Accelerated technological advancement• Reconstruct market boundaries search


• Accelerated technological advancement• Reconstruct market boundaries search • Focus on the big picture, not numbers planning


• Accelerated technological advancement• Reconstruct market boundaries search • Focus on the big picture, not numbers planning• Reach beyond existing demand scale


• Accelerated technological advancement• Reconstruct market boundaries search • Focus on the big picture, not number planning• Reach beyond existing demand scale• Get strategic sequence right business model


• Accelerated technological advancement• Execution principles


• Accelerated technological advancement• Overcome key organizational hurdles organizational


• Accelerated technological advancement• Overcome key organizational hurdles organizational

• Build execution into strategy management


• Accelerated technological advancement• Analytical tools and frameworks


• Accelerated technological advancement• Strategy canvas Captures current state of play

Value curve of competitors

Company’s strategic profile

STRATEGY CANVAS Of ThE U.S. STRATEGY CANVAS Of ThE U.S. wiNE iNdUSTRY iN ThE LATE 1990SwiNE iNdUSTRY iN ThE LATE 1990S

priceUse of enological terminology and distinction in wine communication

Above-the-line marketing

Aging quality

Vineyard prestige and legacy

Wine range

Wine complexity

High

Low

Premium wines

Budget wines


• Accelerated technological advancement• Strategy canvas• The four actions framework

ThE fOUR ACTiONS ThE fOUR ACTiONS fRAMEwORKfRAMEwORK

Eliminate Factors to eliminate

that industry has taken

For granted

Raise Factors to raise

well Above industry standard

Reduce Factors to reduce

well below industry standards

Create Factors to create that Industry has

never offered

A new value curve


• Accelerated technological advancement• Strategy canvas• The four actions framework The eliminate-Reduce-Raise-Create Grid

ThE ELiMiNATE-REdUCE-RAiSE-ThE ELiMiNATE-REdUCE-RAiSE-CREATE GRidCREATE GRid

EliminateEnological terminology and distinctions

Aging qualities

Above-the-line-marketing

RaisePrice versus budget wines

Retail store involvement

ReduceWine complexity

Wine range

Vineyard prestige

Create Easy drinking

Ease of selection

Fun and adventure


• Accelerated technological advancement• Three characteristics of a good strategy


• Accelerated technological advancement• Focus


• Accelerated technological advancement• Focus• Divergent


• Accelerated technological advancement• Focus• Divergent • Tagline


• Accelerated technological advancement• Reading value curves


• Accelerated technological advancement• A blue ocean strategy


• Accelerated technological advancement• A blue ocean strategy• Company caught in the red ocean


• Accelerated technological advancement• A blue ocean strategy• Company caught in the red ocean• Overdelivery without payback


• Accelerated technological advancement• A blue ocean strategy• Company caught in the red ocean• Overdelivery without payback• An incoherent strategy


• Accelerated technological advancement• A blue ocean strategy• Company caught in the red ocean• Overdelivery without payback• An incoherent strategy• Strategic contradiction


• Accelerated technological advancement• A blue ocean strategy• Company caught in the red ocean• Overdelivery without payback• An incoherent strategy• Strategic contradiction• An internally driven company


• Accelerated technological advancement1. Reconstruct market boundaries


• Accelerated technological advancement• Look across alternative industries


• Accelerated technological advancement• Look across alternative industries• Look across strategic groups within industries


• Accelerated technological advancement• Look across alternative industries• Look across strategic groups within industries• Look across chain of buyers


• Accelerated technological advancement• Look across alternative industries• Look across strategic groups within industries• Look across chain of buyers• Look across complementary product and service offerings


• Accelerated technological advancement• Look across alternative industries• Look across strategic groups within industries• Look across chain of buyers• Look across complementary product and service offerings• Look across functional or emotional appeal


• Accelerated technological advancement• Look across alternative industries• Look across strategic groups within industries• Look across chain of buyers• Look across complementary product and service offerings• Look across functional or emotional appeal• Look across time


• Accelerated technological advancement1. Focus on the big picture, not the

numbers

STEPS Of ViSUALiziNG STEPS Of ViSUALiziNG STRATEGYSTRATEGY

1. Visual awakening

2. Visual exploration

3. Visual strategy fair

4. Visual communication

compare with “as is” business areas needed for change

field exploration advantages of alternate products and all eliminate, create, or change

draw “to be” canvas get feedback on alternative strategy canvas use feedback to get “to be”

compare before and after strategies Support moves that close the gaps to actualize new strategy


• Accelerated technological advancement• visualizing strategy at the corporate level


• Accelerated technological advancement• using strategy canvas


• Accelerated technological advancement• using strategy canvas• using pioneer - migrator – settler (PMS) map

GROwTh POTENTiAL Of GROwTh POTENTiAL Of PORTfOLiOS Of PORTfOLiOS Of BUSiNESSESBUSiNESSES

pioneers

migrators

settlers

today tomorrow


• Accelerated technological advancement1.Reach beyond existing demand


• Accelerated technological advancement• first tier non-customer


• Accelerated technological advancement• first tier non-customer• second tier non-customer


• Accelerated technological advancement• first tier non-customer• second tier non-customer• third tier non-customer


• Accelerated technological advancement1.Get the strategic sequence right

SEqUENCE Of BLUE OCEAN SEqUENCE Of BLUE OCEAN STRATEGYSTRATEGY

Buyer utility

price

cost

adoption

Commercially Viable BOI

YES

YES

YES

YES

NO - RETHINK

NO - RETHINK

NO - RETHINK

NO - RETHINK

BLUE OCEAN idEA BLUE OCEAN idEA (BOi) iNdEx(BOi) iNdEx

- - +

- - +

- - +

- +/- +

Philips CD-iMotorola

iridiumDoCoMo

i-Mode Japan

Utility

Price

Cost

Adoption


• Accelerated technological advancement1.Overcome key organizational

hurdles

fOUR ORGANizATiONAL fOUR ORGANizATiONAL hURdLEShURdLES

COGNITIVEHURDLE

RESOURCEHURDLE

MOTIVATIONALHURDLE

POLITICALHURDLE


• Accelerated technological advancement• Cognitive hurdles Ride the “electric sewer”

Meet the disgruntled customer


• Accelerated technological advancement• Resource hurdles Redistribute resources to your hot spots

Redirect resources from your cold spots


• Accelerated technological advancement• Motivational hurdles Zoom in on kingpins

Place kingpins in a fishbowl

Atomize to get the organization to change itself


• Accelerated technological advancement• Political hurdles Select a consigliere on your top management team

Leverage your angels and silence your devils


• Accelerated technological advancement1.Build execution into strategy

ThE ThREE E ThE ThREE E PRiNCiPLES Of fAiR PRiNCiPLES Of fAiR PROCESSPROCESS

ENGAGEMENT

EXPLANATION EXPECTATIONCLARITY

hOw fAiR PROCESS AffECTS hOw fAiR PROCESS AffECTS PEOPLE’S ATTiTUdE ANd PEOPLE’S ATTiTUdE ANd BEhAViORBEhAViOR

FAIR PROCESS

TRUST &

COMMITMENT

VOLUNTARY COOPERATION

EXCEEDS EXPECTATIONS

STRATEGY FORMULATION PROCESS

ATTITUDES

BEHAVIOR

STRATEGY EXECUTION

ThANK YOUThANK YOU

For your patience throughout the presentation

iNSPiREd BYiNSPiREd BY

• Accelerated technological advancement

HersantoR. Benny Wahyuadi

http://benny69b.multiply.com/http://benny69b.multiply.com/

Prepared by:

Blueoceanstrategy Benny Hersanto

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