1. Recent Trends in
Business Strategy
By
Dr. Kabaly P Subramanian
Department of Business Studies
Arab Open University
Sultanate of Oman

2. Words of wisdom
“The competitor to be feared is one who never
bothers about you at all, but goes on making
his own business all the time”
Henry Ford

3. Words of wisdom
“It is not the strongest of the species that
survive, or the most intelligent, but it is the
one most capable of change”
Charles Darwin

4. Words of wisdom
“The reasonable man adapts himself to the
conditions that surround him. The
unreasonable man adapts surroundings to
himself. All progress depends on the
unreasonable man”
George Bernard Shaw

5. Why do you need to sit
through this presentation?
 Today’s Challenge : Building organizations
that can grow in the world of relentless
change and ferocious competition
 Survival vs Growth
 New thinking in strategy helps you to grow
 Easy to understand and apply
 Organizations, Nations and Individuals

6. Multiplicity of explanations
 The multiplicity of explanations and
prescriptions only shows the complexity of
strategic management.
 These explanations and prescriptions are not
always mutually exclusive
 The Manager’s task is to find how these
insights combined to build a multidimensional
and flexible strategy that is robust to the
different assumptions and explanations

7. Multiplicity of explanations
 These explanations and prescriptions can
sensitize managers to the different factors
they must consider, but cannot provide
ready-made and standardized solutions for
them to adopt.

8. BOS
 This is a program for managers in search of a
practical roadmap to tackle strategic
innovation in a systematic and systemic way.

9. Structure of this presentation
 Common understanding on Business
Strategy
 Video case : 1 To understand the traditional
approach to strategy.
 Video case : 2 To understand the new
approach to strategy
 Explanation of this new thinking using Blue
Ocean Strategy ( BOS ) principles ,tools and
frameworks

10. Strategy
 Sustainable Competitive Advantage
 Strategy is about organizational change
“A set of decisions and actions leading to
sustainable competitive advantage of
organizations/firms/businesses”.

11. Traditional approach to
Strategy making
 analyzing the industry or environmental conditions in which they
operate.
 assess the strengths and weaknesses of the players they are up
against.
 With these industry and competitive analyses in mind, they set out to
carve a distinctive strategic position where they can outperform their
rivals by building a competitive advantage
 chooses either to differentiate itself from the competition for a
premium price or to pursue low costs
 aligns its value chain accordingly, creating manufacturing,
marketing, and human resource strategies in the process.
 On the basis of these strategies, financial targets and budget
allocations are set.

12. Logic behind this traditional
approach
 company’s strategic options are bounded by
the environment
 Structure shapes strategy
 This “structuralist” approach, which has its
roots in the structure-conduct -performance
paradigm of industrial organization
economics .
(See Industrial Market Structure and Economic Performance, F. M.
Sherer ,Chicago:Rand McNally, 1970)

13. Essence of Traditional approach to strategy
Compete in existing market space.
Beat the competition.
Exploit existing demand.
Make the value-cost trade-off.
Align the whole system of a firm’s activities with its strategic
choice of differentiation or low cost.

14. Result
 Stiff Competition
 Thin Margin
 Low growth
 Surviving

15. 15
Red Ocean markets....
Blue Ocean Strategy Regional Centre 15

16. Business History
 Business history reveals plenty of cases in
which firms’ strategies shaped industry
structure, from Ford’s Model T to Nintendo’s
Wii.
 Blue ocean strategy (a new theory of
strategy) reflects the fact that a company’s
performance is not necessarily determined by
an industry’s competitive environment.

17. Roots of Blue Ocean Strategy
 The Blue ocean strategy framework can help companies
systematically reconstruct their industries and reverse
the structure-strategy sequence in their favor.
 Blue ocean strategy has its roots in the emerging school
of economics called endogenous growth whose central
paradigm posits that the ideas and actions of individual
players can shape the economic and industrial
landscape. In other words, strategy can shape structure
 We call this approach “reconstructionist.”

18. Reconstructionist approach
 Reconstructionist : based on endogenous growth, which
traces back to Joseph A Schumpeter's initial observation
that the forces that change economic structure and
industry landscapes can come from within the system.
 Schumpeter argues that innovation can happen
endogenously and the main source is the creative
entrepreneur. (Steve Jobs, Karsanbhai Patel,
C.K.Rajkumar, Jeff Bezos, Mark Zuckerberg, Henry
Ford, Herb Kelleher, Anita Roddick, Akio
Morito,Mohammed Yunus,…)

19. Red Ocean markets.... Blue Ocean markets....
19
Blue Ocean Strategy Regional Centre

20. Structuralist vs
Reconstructionist
 While the structuralist approach is valuable
and relevant, the reconstructionist approach
is more appropriate in certain economic and
industry settings.
 today’s economic difficulties have heightened
the need for a reconstructionist alternative.

21. How to approach?
 The first task of an organization’s leadership,
therefore, is to choose the appropriate
strategic approach in light of the challenges
the organization faces.
 need to make sure that their organizations
are aligned behind it to produce sustainable
performance

22. What is the right approach for
you?
There are three factors that determine the right
approach:
 structural conditions in which an organization
operates,
 its resources and capabilities,
 and its strategic mind-set.

23. Choosing the right approach
A structuralist
approach is a good
fit when
A reconstructionist
approach is a
good fit when
Structural conditions
are attractive and the
organization has the
resources and capabilities
to build a distinctive
position
Structural conditions are
attractive but players are
well-entrenched and the
organization lacks the
resources or capabilities
to outperform them
Structural conditions are
less than attractive but
the organization has the
resources and capabilities
to outperform
competitors
Structural conditions
are unattractive and
they work against an
organization irrespective
of its resources and
capabilities
The organization has a
bias toward defending
current strategic positions
and a reluctance to
venture into unfamiliar
territory
The organization has
an orientation toward
innovation and a willingness
to pursue new
opportunities

24. Why should we consider “Blue
Ocean Strategy”?
 Many companies finds it useful (Samsung)
 Countries like Malaysia, Singapore uses this approach
for planning their future.
 Many strategy experts accepts BOS as an innovative
approach (Walter Kiechel ,2010)
 Blue-ocean strategy ,work of Kim and Mauborgne is
probably the leading contender for Biggest New Idea in
Strategy (Walter Kiechel,2010).
 The Authors figure in the 2nd place : 2011 Thinkers 50
 Research evidence

25. Origin of Blue Ocean Strategy
 15 years of research, 150 strategic moves
spanning 100 years, thirty industries
(Kim and Mauborgne,2005)

26.  ENTERTAINMENT SECTOR

27. Entertainment Sector (1984)
CIRCUS VIDEO
GAMES
THEATRE
TELEVISION BEACHES PARKS
LIVE BANDS MUSIC
SHOWS
GAMES
BALLET MOVIES ?
THEME
PARKS
SHOPPING
MALLS
?

28. Circus Industry (1980’s)
Ringling
Brothers
Barnum and
Bailey
Small time circus-
3
Small time circus-
1
Small time circus-
2
?

29. Small time circus

30. Big time circus ( Ringling
Brothers)

31. Video:1

32. Is it easy?
 Is it easy to achieve sustainable high
performance?

33. It is not…
 Stiff competition
 Costs escalates
 Thin profit margin
 Low growth

34. Capturing existing strategy of
competitors
Ringling Brothers
Smaller Regional Circus
hi
offering level
lo
Price
Multiple Show
Animal Shows Thrills & Danger
Arenas
Aisle Concessions Fun & Humor Unique Venue
Star Performers
© Kim & Mauborgne 2006

35.  What is the approach behind this strategy?

36. It is all in “Thinking” or “Mental
Models” (Industry Mindset)
 Circus is for Children
 Circus should offer animal act
 Increase the value (more animal shows, more
popular performers,..)
 Decrease the value (less animal shows, less
popular perfomers)

37. Cirque Du Soleil (CDS)

38. Cirque Du Soleil (CDS)
 Started in 1984 by a group of street
performers.
 40 million people,90 countries
 In less than 20 years CDS has achieved a
level of revenues that took Ringling brothers
(the global champion of circus industry) more
than one hundred years to attain.

39. Cirque Du Soleil’s (CDS)
offering (Video 2)

40. How CDS identified
and captured Blue
Ocean?

41. Deciding to Move from Known
to Unknown market space
Known Market Space : Circus
( 1984 )
Unknown Market Space : To be
named ( 1984 )
Ringling
Brothers
Barnum and
Bailey
Small time
circus-3
Small time
circus-1
Small time
circus-2
?
Cirque Du Soleil (CDS)

42. Capturing the existing strategy of
competitors
Ringling Brothers
Smaller Regional Circus
hi
offering level
lo
Price
Multiple Show
Animal Shows Thrills & Danger
Arenas
Aisle Concessions Fun & Humor Unique Venue
Star Performers
© Kim & Mauborgne 2006

43. Looking across alternative industries
 Theatre
 Ballet
 Music

44. Looking across the Customer
to Non-Customers
 From children to adults to corporate
customers
 Segmentation to counter segmentation

45. Value Innovation
Eliminate
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
Raise
Unique venue
Reduce
Fun and humor
Thrill and danger
Create
Theme
Refined environment
Multiple productions
Artistic music and dance

46. Strategy of CDS
Ringling Brothers
Smaller Regional Circus
hi
offering level
lo
Price
Multiple Show
Animal Shows Thrills & Danger
Arenas
Aisle Concessions Fun & Humor Unique Venue
Star Performers
Theme
Cirque du Soleil
Multiple
Productions
Refined Viewing
Environment
Artistic Music
& Dance
© Kim & Mauborgne 2006

47. Finally, Innovated for Value

48. How to move into uncontested
market space systematically?
 Stage 0 : Deciding to move into the
uncontested market space
 Stage 1 : Visual Awakening
 Stage 2 : Visual Exploration
 Stage 3 : Visual Strategizing
 Stage 4 : Visual Communication

49. Stage 0 : Deciding to Move from
Known to Unknown market space
Known Market Space : Circus
( 1984 )
Unknown Market Space : To be
named ( 1984 )
Ringling
Brothers
Barnum and
Bailey
Small time
circus-3
Small time
circus-1
Small time
circus-2
?
Cirque Du Soleil (CDS)

50. Stage:1 Visual awakening
 Compare your business with your
competitors by drawing your “as is” strategy
canvas.
 See where your strategy needs to change

51. Stage : 1 Visual Awakening ( As is
Strategy Canvas )
Ringling Brothers
Smaller Regional Circus
hi
offering level
lo
Price
Multiple Show
Animal Shows Thrills & Danger
Arenas
Aisle Concessions Fun & Humor Unique Venue
Star Performers
© Kim & Mauborgne 2006

52. Stage : 2 Visual exploration
 Go into the field to explore the six paths to
create blue oceans
 Observe the distinctive advantages of
alternative products and services.
 See which factors you should
eliminate,create,reduce or raise

53. Stage : 2 Visual Exploration
challenge the boundaries of your industry using
the “Six Paths” framework
The “Six Paths” show six systematic patterns for reconstructing market
boundaries that have general applicability across industry sectors
To
Creating
Across
From
Competing
Within
Industry
Strategic group
Buyer group
Scope of product or service offering
Functional-emotional
orientation of an industry
Time
2
11
© Kim & Mauborgne; © UCSI Blue Ocean Strategy Regional Centre. All Rights Reserved.

54. Four Actions framework
Which factors should be
reduced well below the industry
standard
Which of the factors that
the industry takes for
granted should be
eliminated?
Which factors should be
raised well above the
industry’s standard?
Which factors should be
created that the industry
has never offered
A new value

55. ERRC Grid (example)
Eliminate
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
Raise
Unique venue
Reduce
Fun and humor
Thrill and danger
Create
Theme
Refined environment
Multiple productions
Artistic music and dance

56. 3.Innovated for Value

57. Stage : 3 Visual Strategizing
 Draw your “to be strategy canvas based on
insights from field observations
 Get feedback on alternative strategy
canvases from customers,competitiors’
customers and non customers.
 Use feedback to build the best “to be” future
strategy

58. The Strategy Canvas
of Cirque du Soleil (To be)
Ringling Brothers
Smaller Regional Circus
hi
offering level
lo
Price
Multiple Show
Animal Shows Thrills & Danger
Arenas
Aisle Concessions Fun & Humor Unique Venue
Star Performers
Theme
Cirque du Soleil
Multiple
Productions
Refined Viewing
Environment
Artistic Music
& Dance
© Kim & Mauborgne 2006

59. Reaching beyond existing demand is key
to create new market space
• To generate the greatest demand, companies should
challenge two conventional company practices: the focus
on existing customers and the drive for finer
segmentation.
• To maximize the size of their blue oceans, companies
need to take a reverse course: instead of concentrating on
customers, they need to look to noncustomers and
instead of focusing on customer differences, they need to
build on powerful commonalities in what buyers value.
• Although the universe of noncustomers typically offers big
blue ocean opportunities, few companies have good
insight into who noncustomers are and how to unlock
them.
• To convert this latent demand into a real one, companies
need to deepen their understanding of the universe of
noncustomers.
10
The Three Tiers of
Noncustomers
© Kim & Mauborgne; © UCSI Blue Ocean Strategy Regional Centre. All Rights Reserved.

60. Stage 4 : Visual
Communication
 Distribute your before-and-after strategic
profiles on one page for easy comparison
 Support only those projects and operational
moves that allow your company to close the
gaps to actualize the new strategy

61. How can we be sure of the existence
of a Blue Ocean (uncontested market
space)?
 History
 Blue ocean opportunities have been out
there.
 As they are explored, market universe has
been expanding.

62. Blue Oceans have continuously been
created over time…
Palace Theatre (NY 1920)
62
1920s 1980s 2000s 2010
Blue Ocean Strategy Regional Centre
Cirque du soleil Wii (Nintendo)
Samsung 3D TV
Model T (Ford)
[Yellow Tail]
Southwest Airlines NTT DoCoMo’i-mode
Real-time news (CNN)
Curves
Computing Tabulating
Recording Corporation
iPad (Apple)

63. §
There is no such thing as a permanently
great company, nor a permanently great
industry.
But there are permanently great
strategic moves…
63
Blue Ocean Strategy Regional Centre

64. Red Ocean based logic vs. Blue Ocean based
logic
Red Ocean approach Blue Ocean approach
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 firm’s
activities with its strategic choice of
differentiation or low cost.
Align the whole system of a firm’s
activities in pursuit of differentiation
and low cost.

65. Launches with Red versus Blue oceans
86%
14%
Business
Launch
Revenue
Impact
Profit
Impact
62%
38%
39%
61%

66. BOS Tools
 Strategy Canvas
 Four actions framework
 ERRC grid

67. Benefits of strategy canvas
 Capture self and competitors strategy
 Identify value innovation opportunities
 Communicate your strategy to your
stakeholders.

68. Benefits of Four actions framework
 Guiding framework which forces you to
determine the value adding and non-value
adding activities. Also to help you question
the industry assumptions.
It provides a compelling reason to innovate.

69. Benefits of ERRC grid
 Pushes you to simultaneously pursue
differentiation and low costs.
 Helps in avoiding over engineering products
and services.

70. BOS tool set
 Value Innovation
 Strategy Canvas
 Four Actions framework
 ERRC Grid
 Three Characteristics of a good strategy
 Six paths framework to reconstruct market boundaries
 Four steps of visualizing strategy
 PMS Map
 Three tiers of Noncustomers
 Buyer utility map
 Blue Ocean Idea index
 Tipping point leadership
 Three E principles of Fair process.

71. Reference
 Understanding Strategic Management (2nd
edition),Anthony E Henry, Oxford University
Press,2011.
 Blue Ocean Strategy
W.Chan Kim and Renee Mauborgne
Harvard Business School Press (2005)
 world wide web

72. Reference
 Blue Ocean Strategy
W.Chan Kim and Renee Mauborgne
 world wide web

73. kabaly@aou.edu.om