Introduction to Blue Ocean Strategy derek hendrikz
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Based on ‘Blue Ocean Strategy’, a book published
in 2005 and written by W. Chan Kim and Renée
Mauborgne, Professors at INSEAD and Co-Directors
of the INSEAD Blue Ocean Strategy Institute
Presented bywww.derekhendrikz.com
BOS defined…
The avoidance of costly competition through innovation with the aim to
create a market where no firms currently operate, leaving the company
to expand without competition.
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BOS & Strategic Positioning
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Viewing the Cost / Value Relationship as Inverse…
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CostReduction
ValueIncrease
• Increase of value implies increase of cost
• Reduction of cost implies decrease in value
Viewing the Cost / Value Relationship as Direct…
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CostReduction
ValueIncrease
• Both cost reduction and value increase are possible…
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Value to Company
Value to Customer
EfficiencyBased
EffectivenessBased
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Profit and Growth Consequence of Creating BOS
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Formulation Principles
•Reconstruct market boundaries•Focus on the big picture, not the numbers•Reach beyond existing demand•Get the strategic sequence right
Execution Principles
•Overcome key organisational hurdles•Build execution into strategy
Six Principles of BOS
1. Reconstruct Market Boundaries…
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2. Focus on the Big Picture, Not the Numbers…
• Which of the factors that the industry takes for granted should be eliminated?
• Which factors should be reduced well below the industry standard?
• Which factors should be created that the industry never offered?
• Which factors should be raised well above the industry standard?
Eliminate Reduce
CreateRaise
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3. Reach Beyond Existing Demand…
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4. Get the
Strategic Sequence
Right…
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5. Overcome Key Organisational Hurdles…
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6. Build Execution into Strategy…
Explanation
Expectation Clarity
Engagement
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BOS Case Studies…
Cirque du Soleil: Blending of opera and ballet with circus format while eliminating star
performer and animals.
Netjets: Fractional jet ownership.
Southwest Airlines: Offering flexibility of bus travel at the speed of air travel using secondary
airports.
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BOS Case Studies (cont)…
Curves: Redefining market boundaries between health clubs and home exercise
programs for women.
Home Depot: Offering the prices and range of lumberyard, while offering consumers
classes to help them with DIY projects.
Dyson: Cyclonic Vacuum Cleaners.
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Working with other BOS Tools…
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The Strategy Canvas:
• Shows the strategic profile of an industry by depicting very clearly the
factors that affect competition among industry players, as well as those
that might in the future.
• Shows the strategic profile of current and potential competitors,
identifying which factors they invest in strategically.
• Draws the company’s strategic profile, or value curve, showing how it
invests in the factors of competition and how it might invest in them in
the future.
• The horizontal axis lists factors of competition for the industry.
• The vertical axis indicates the degree to which industry players and the
providers of alternative services invest in the competitive factors.
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Strategy Canvas for Cirque du Soleil
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The Buyer Experience Cycle / Buyer Utility Map (BEC / BUM) Framework
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Tipping Point Leadership…
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