This document discusses strategies for creating new market spaces, or "blue oceans", through innovation. It provides examples of companies that successfully opened blue oceans, such as Andre Rieu creating a new market for classical music and Barefoot Wine opening a new market for casual wine drinkers. The document outlines the blue ocean strategy process, which involves visualizing your current market position, exploring new opportunities through the eyes of non-customers, and creating a new strategic canvas focused on uncontested market space rather than competition. It emphasizes the importance of seeing, feeling and thinking differently to invent new market opportunities rather than compete head-to-head in existing red oceans.
3. The Tao of Change Management
―The Future is coming so ―The best way to predict
fast we can‘t possibly the future is to invent it.‖
predict it. We can only Alan Kim
learn to respond quickly.‖
Steven Kerr
3
4. Red Ocean vs. Blue Ocean Strategies
Red Ocean Strategy Blue Ocean Strategy
Compete in existing market Create uncontested market
space 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 Align the whole system of a firm‘s
firm‘s activities with its activities with its strategic choice
strategic choice of of differentiation and low cost
differentiation or low cost
4
11. What Did He Do?
Classical Music Pop Music
Traditional Setting Untraditional setting
Dress in classic form Colors, fashion
Conductor‘s back Conductor‘s Personality
Disengaged Face First
Focused on adults Totally engaged
Funeral Young and Old
Party
11
12. Results? ―A Maestro for the Masses‖
WSJ: Friday, June 11, 2010
Dutch conductor and violinist André
Rieu is the king of 'crossover'
classical music.
At concerts Mr. Rieu grossed about $96
million on tour in 2009.
500,000 people attending 94 shows.
That haul landed him at No. 6 among
the world's top touring acts, according to
Billboard's 2009 tally—ranked just below
U2, Madonna and Bruce Springsteen,
and above Britney Spears, Coldplay and
Metallica.
12
13. The Four Actions Framework -- ERRC
Reduce
Which factors
should be reduced
well below the
industry’s standards
Eliminate Create
Which of the factors A New Which factors
that the industry Value should be created
takes for granted
Curve that the industry
should be has never offered?
eliminated?
Raise
Which factors should
be raised well
above the
industry’s standard?
13
14. Four Actions
How did André Rieu shift his focus?
Eliminate Raise
Serious Classical Music Audience engagement
Stodgy performance hall Conductors engagement
Disengaged conductor Community of fans
For the ―serious music lover‖ Use of social media
Fun
Reduce Create
Formality Party atmosphere
Lack of community Totally engaged; Face first
Quiet in the music hall Local focus
atmosphere Big Box Arena
―Non-classical‖ classical
concert (modern one)
14
15. Blue Ocean Strategies
Change Scope of Operations
Seek to enlarge a company‘s scope of
operations into markets that are so
different from its current markets that they
must be addressed as entirely new entities.
Often, the future of the company is outside its
current competencies today
Repackaging, repurposing, reimagining
16. What is a Blue Ocean?
Blue Oceans are creating and pushing into
new market space, seeing things in ways
not there before.
17. It is all about You!
All about the Strategic
Moves people made to
solve problems
differently.
They saw solutions in
different ways.
And then made them
happen.
17
20. Interesting industry to tackle
About 6,500 wine brands in US.
Ninety-six percent of those wine brands sold
less than 100,000 cases in 2002
Only 23 wine brands sold at least 2 million
cases each, accounting for 40 percent of a
growing market of 245 million cases.
First time they tried to tackle the market
(yellow tails)® predecessor, the Carramar
Estate Label, failed for the Cassella Wine
Company
20
21. What to do?
John Souter and the Cassella
family, rethought the industry
established keys to the
promotion of wine as:
a unique beverage
for the informed wine drinker
worthy of special occasions
21
22. Wine Red Ocean Strategic Canvas
High
Premium Wines
Budget Wines
Low
Use enological
terminology Above- Vineyard
the-line Aging Wine Wine
Price and distinctions Prestige
marketing Quality Complexity Range
in wine and
communication Legacy
How to make fun and nontraditional wine that’s easy to
drink for everyone—particularly non-wine drinkers?
22
23. Went looking for a Blue Ocean
Reconstructed its
market strategy to
Turn non-drinkers
into frequent
enjoyers.
Only 15% of
Americans drank
wine-Red Ocean
85% drank other
things-Blue Ocean
waiting for them
23
24. For (yellow tail)®…
Eliminate Raise
Enological terminology and Price versus budget wines
distinctions Retail store involvement
Aging qualities
Above-the-line marketing
Reduce Create
Wine complexity Easy drinking
Wine range Ease of selection
Vineyard prestige Fun and adventure
24
25. Results
John Souter expected to sell
25,000 cases in 2001, the first
year (yellow tail)® would hit the
market.
Cautious but lucky--the wine sold
9 times as much!
Bold branding
Good product
Very affordable price
Bottles with the fancy kangaroo
leapt off the shelf.
25
26. Strategic Canvas (yellow tail)® wines
Strategy Canvas (yellow tail)
High
Premium Wines
(yellow tail)
Focus
Diversification
Tag Line
Budget Wines
Low
Use of Above-the-
Enological line Aging Vineyard Wine Wine Easy Ease of Fun and
Price Distinctions Marketing Quality Prestige Complexity Range Drinking Selection Adventure
26
27. Execution helped
Retailers received the brightly colored
branded displays on time and were clearly
built into the entire process
27
28. Today, Dominates the American Market
« Dominating the overseas export
market, [yellow tail]® is the fastest growing
imported wine in US market history.
The Shiraz is currently ranked as the No.1
selling 750ml red wine in the USA.
The [yellow tail]® Merlot being the No. 1
selling Merlot in the USA.
Selling more than 300,000 bottles a
day, [yellow tail]® is now regarded as a
global phenomenon. »
28
29. Blue Ocean Strategy
What are we looking for?
New market space
Create demand
Find new ‗non-users‘
29
30. How do you do that?
Make the competition irrelevant
Change the Value/Cost trade-off
Align the entire organization
30
32. EAC/Integrated Power Solutions
A Battery Design and
Manufacturing
Company
―We were OEM‘s–
Original Equipment
Manufacturer in the
battery creation
business‖
32
33. Strategic Canvas Process
Beginning of the process they thought
what mattered to the customer was:
Vertically Integrated
Battery design experts
Global Manufacturer
Good Customer Service, responsive to
solving problems
Good supplier relationships
33
34. Not of much importance
Branding
Financial stability
Charger capabilities
34
36. How they saw their competitors
Competition Strategic Canvas
RRC/ Microsun/
High Nexergy ICC/ Totex Nexergy ICC ICC/Microsun Nexergy
Varta Microsun RRC ICC
Totex Totex Totex Microsun Varta
M-Power/
M-Power Varta Varta RRC M-Power Totex Microsun
Totex M-Power
Medium Nexergy M-Power/Varta Nexergy Nexergy
Microsun M-Power M-Power
RRC RRC
ICC RRX
Low ICC
Battery
Technical Vertical On-time Expertise/ Charger Global Cost Quality Customer
Expertise Integration Delivery Experience Expertise Manufacturing Flexibility Quality Reduction Customer Service
What they thought about their competition along the same
attributes that they thought were important to their own
customers.
36
37. Took them out to do Culture Probes
Found a whole different set of issues for their
customers and nonusers among their customers
Speed to market
Innovative ideas about mobile power solutions
Ways to be ahead of the competition
Stay on top of the battery power industry—what was
happening that could help them? Teach them about
rechargeable power.
Give them a competitive edge
Help them help their customers
Lower costs—good value, give me innovative ideas at
a price
Longer, stronger, lighter power solutions.
37
38. For EAC…
Eliminate Raise
Focus on only disposable Integrated Power Solutions
batteries Speed
Acting like an order taker Competitive Advantage
Technical Advantage
Proactive leadership and
consultative services
Reduce Create
Concern with pricing Charger Capabilities
Concern with reactive customer Innovation
service Branding
Focus on Vertical Integration
38
39. Now they Visualized a Blue Ocean
Summary Strategic Canvas
5-High tg/am
Customer
Needs/Desires
sb/jd tg/jd tg/am/jr tg/am/jr jr
3-Medium jr am am/jr sb/jd sb/jd sb
tg/ am/ jr/jd tg/jr/sb/jd tg/am/jr/sb jr
1- Low sb jd tg/am/jd tg/am/sb/jd
Wholly needs
Owned help state of
Battery Global Supplier CM them be innovative needs the art
Vertical Expertise/ Charger Manufactur Customer Relationship Financial relationship speed to cutting (game Customer- technical information
Integration Experience Expertise Service Stability Branding market edge boy) centric talent
Focus on Chargers and Rechargeable batteries
Integrated power solutions
Become more innovative—add value in innovative ways
Fast—speed to market really mattered, but how?
Brand EAC/Integrated Power Solutions—reduce risk
39
43. ―Kill the Bottle‖
Hydration is essential for good health.
Introducing Elkay's EZH2OTM bottle filling station
43
44. Nonusers
Challenge Solutions for nonusers Alternatives
Andre Rieu Cross over classical music for all Lots of options
ages
Yellow Tail Wine for non-wine drinkers Lots of options
EAC/Integrated Integrated Power Solutions Companies assembling
Power Solutions options themselves
TelerX Under 40 year olds and social Ignoring the telephone call
media customer care solutions center
Laclede Easier solutions for chain; One Shopping for solutions
stop for all your chain needs
Elkay Hydration Sustainability Directors, Not many to fill the bottle
Stations Universities, Green Companies
and Green Communities
How about you? Who needs a new solution? What are their
alternatives?
44
46. Why is it so hard to imagine?
Brain has a mind map that helps to organize
reality
There is no reality—perceptions
What you BELIEVE is what you SEE!
Expectations lead you to select what you will
see
Have to push beyond or you will see, feel
and think that everything is more of the
same.
So, let‘s reverse everything. Innovation
Games are fun.
46
47. Reverse Assumptions for a Restaurant
Today Opposite
Menus No Menus
Serve food Don‘t serve food
Pay for food Don‘t pay for food
Sit at tables Don‘t sit at tables
48. A new kind of restaurant
Today Opposite New Element
Menus No Menus Owner comes out and tells us
what he found at the market today
for our meal
Serve food Don‘t serve food Bring your own food and we
entertain you—picnic style
Pay for food Don‘t pay for food Rent the space for a period of time
and we give you free food
Sit at tables Don‘t sit at tables Chairs set up like a stadium and
you watch oversized TV‘s with
exclusive entertainment on them
49. Let‘s Deconstruct your Business
Today Opposite New Element
We don‘t More ideas the better
We don‘t
We don‘t
We don‘t
We don‘t
51. Visual Awakening: Strategic Canvas
Strategy Canvas -- Your Company
High
Low
Current Industry Attributes
Let’s try to build your Strategic Canvas today
• You
• Your Competition
51
52. What do we see?
Do we look like our competition? Or?
Are we investing in all the same things?
How are we different? Focused?
Are we in too many places?
Is there a strategy?
How are we adding value in innovative
ways?
Are we targeting a mass market with
problems that overlap or a niche market?
52
54. Blue Ocean Strategy Process
Strategy Canvas -- Your Company
High
Visual • Deconstruct You
• Draw As-is
Awakening Strategic Canvas
Low
Industry Attributes
• Go Exploring
Visual • See, Feel, Think
Exploring • Non Users
• Unmet Needs
Visual • Draw To-Be Strategic
Strategy Canvas
Fair
Visual
Communication
54
55. 1. Visual Awakening
We started your Visual
Awakening
See yourself more
clearly on a picture—
visualize your business
Where are you focused
and why?
Strategy Canvas -- Your Company
High
Low
Current Industry Attributes
55
56. 2. Visual Exploration
Go Exploring
Look at the nonuser
to see pent-up
demand
Look at the current
customer to see new
ways to solve old
problems
Observe and
participate
56
57. Cannot easily ask people
Henry Ford…
“If I had asked people how I could
improve their transportation they
would have told me to make their
horses go faster.”
57
58. Try to make it…
Easy for people to use you
More productive for them
More fun and adventure
Simpler
Environmentally friendly
These are key levers to open new
market space
58
59. Where are you looking? Six Paths
Industry
Strategic group Blue Ocean
Red Ocean
Creating
Within Each
Across
Buyer group
Scope of product or
service offering
Functional-emotional
orientation of an industry
Time
Kim & Mauborgne 2005
59
60. Four Action Framework to Reallocate Your
Assets -- ERRC
Reduce
Which factors
should be reduced
well below the
industry’s standards
Eliminate Create
Which of the factors A New Which factors
that the industry Value should be created
takes for granted
Curve that the industry
should be has never offered?
eliminated?
Raise
Which factors should
be raised well
above the
industry’s standard?
60
61. 3. Visual Strategy Fair
Draw your ―To Be‖
Canvas
Visualize some ideas
about new solutions
Get feedback on
alternative strategy
canvases from
customers, competitors, a Strategy Canvas -- Your Company
nd nonusers. High
Use feedback to build the Low
best ―to be‖ future Current Industry Attributes
strategy.
61
62. 4. Visual Communications
Build a story to tell to
your team and to the
outside world
Support only those
projects and
operational moves
that allow your
company to close the
gaps to actualize the
new strategy.
Test, test, test.
62
63. Blue Ocean Strategy Process
Strategy Canvas -- Your Company
High
Visual • Deconstruct You
• Draw as-is
Awakening Strategic Canvas
Low
Industry Attributes
• Go Exploring
Visual • See, Feel, Think
Exploring • Non Users
• Unmet Needs
Visual • Draw To-Be Strategic
Strategy Canvas
Fair
Visual
Communication
63
64. There are Blue Oceans Out There
FINAL THOUGHTS TO SHARE
64
65. What is a Blue Ocean Strategy?
Pushes into new market space
Creates demand
Sees things in ways not there before
W. Chan Kim and
Renee Mauborgné
2011 Ranking: #2
Winner of 2011 “Thinkers50” Strategy Award for Blue
Ocean Strategy Research and Impact
65
66. It is all about You!
All about the Strategic
Moves people made to
solve problems
differently.
They saw solutions in
different ways.
And then made them
happen.
66
67. Who can you look for?
Meet unmet needs
Among nonusers
Who have alternatives
See things in new ways
Repackage, repurpose, reimagine
67
68. Why Should I Find My Blue Ocean?
Because it could open up an entirely
new opportunity for you!
68
Notes de l'éditeur
18. Andre Rieu $19,468,768The Dutch violinist and PBS pledge-drive mainstay sold only 59,000 albums but was No. 6 on Billboard's list of top tours last year; his 30th-anniversary trek earned him more than $19 million and brought in nearly 500,000 people to 94 shows in Europe, Japan, North America, Australia and New Zealand in 2009. Rieu has logged 22 releases on Billboard's Top Traditional Classical Albums chart, with three of them in the top 10 last year. Rieu was No. 4 on Billboard's Top Traditional Classical Artists chart for 2009. —ABY