Blue Ocean Strategy

1. Is that you, The Blue Cow?
“ T h e s e c r e t i m p r e s s e s n o o n e .
T h e t r i c k y o u u s e i t f o r i s e v e r y t h i n g . ”

2. R E A L I T Y I N A M I N U S C U L E
C o n s u m e r d o n ’ t c a re a b o u t y o u a t a l l .
T h e y a re s t u p i d .
T h e y h a v e t o o m a ny c h o i c e s a n d t o o l i t t l e t i m e , t h e o b v i o u s
t h i n g t h e y d o i s “ I g n o re s t u f f ”. I f y o u c a n fo o l t h e m e v e n fo r
a s e c o n d , I t w i l l m a ke t h e m w o n d e r.
B y t h e w ay, W h a t i s t h i s B l u e c o w ? S o u n d s f u z z y ?
We ’re d r i v i n g d o w n a c o u n t r y s i d e . We s e e n c o w s b e fo re .
N o b o d y g o i n g t o s t o p o v e r t o s ay, “ O h , w o w ! L o o k , a c o w.”
C o w s a re i n v i s i b l e , c o w s a re b o r i n g . I s n ’ t i t ?
B u t w h a t i f t h e c o w i s B l u e ? I s n ’ t t h a t a s p e c i a l e f fe c t ?
Wo u l d n ’ t w e s t o p b y t o n o t i c e i t ? B u t i f a l l w e re b l u e
p ro b a b l y w e m ay g e t b o re d t o o .

3. A n a l o g y - Re a l i t y
T h e t h i n g t h a t i s g o i n g t o d e c i d e , w h a t g e t s c h a n g e d , w h a t g e t s
p u rc h a s e d , w h a t g e t s d o n e , w h a t g e t s b u i l t i s :
‘ I s i t re m a r k a b l e ? ’
o n e s e l l s t h i n g s t h a t a re s u p e r - e x p e n s i v e i n a b l u e b ox , a n d
o n e s e l l s t h i n g s t h a t a re a s c h e a p a s t h e y c a n m a ke t h e m .
T h e o n l y t h i n g t h e y h a v e i n c o m m o n i s t h a t t h e y ' re d i f fe re n t .
 C o m p e t i n g i n o v e rc ro w d e d i n d u s t r i e s i s n o w ay t o s u s t a i n
p e r fo r m a n c e . T h e re a l o p p o r t u n i t y i s t o c re a t e t h e
u n c o n t e s t e d m a r ke t s p a c e .

4. T I M E M A C H I N E
 B a c k t o 1 0 0 y e a rs : A u t o m o b i l e s , M u s i c
re c o rd i n g , Av i a t i o n , Pe t ro c h e m i c a l s , P h a r m a c e u t i c a l s a n d
M a n a g e m e n t c o n s u l t i n g - b a s i c I n d u s t r i e s – B u t u n k n o w n , u n -
h e a rd a n d U n - e x p l o re d .
 B a c k t o 3 0 y e a rs : M u t u a l f u n d s , C e l l u l a r
t e l e p h o n e s , B i o t e c h n o l o g y, D i s c o u n t re t a i l i n g , E x p re s s
p a c ka g e d e l i v e r y, S n o w b o a rd s , C o f fe e b a rs a n d H o m e v i d e o s
– N o n e o f t h e s e e x i s te d i n a m e a n i n g f u l way.
 F o r w a rd 2 0 y e a rs : H o w m a ny I n d u s t r i e s t h a t a re u n k n o w n
t o d ay w i l l e x i s t t h e n ? I f h i s t o r y i s a ny p re d i c t o r o f
f u t u re , t h e a n s w e r i s M A N Y.

5. Pa ra d ox o f S t ra t e g y : C o m p e t i t i o n o r D i f fe r e n t i a t i o n ?
 I n a s t u d y o f b u s i n e s s l a u n c h e s i n 1 0 8 c o m p a n i e s , w e fo u n d
t h a t 8 6 % o f t h o s e n e w v e n t u re s w e re l i n e e x t e n s i o n s - 1 4 %
a i m e d a t c re a t i n g n e w m a r ke t s / i n d u s t r i e s .
 L i n e s E x t e n s i o n s a c c o u n t e d fo r 6 9 % o f t o t a l re v e n u e s a n d
3 9 % o f t o t a l p ro f i t s .
 B y c o n t ra s t , 1 4 % i n v e s t e d i n c re a t i n g n e w m a r ke t s a n d
i n d u s t r i e s d e l i v e re d 3 8 % o f t h e t o t a l re v e n u e s a n d a s t a r t l i n g
6 1 % o f t o t a l p ro f i t s .
 C o m p e t i t i o n d e r i v e d f ro m M i l i ta r y s t ra te g y - C o n f ro n t i n g a n
o p p o n e n t a n d d r i v i n g h i m o f f t h e b a t t l e f i e l d o f l i m i t e d
t e r r i t o r y.
 D i f fe re n t i a t i o n – N o c o m p e t i t o r. F i n d a n d d e v e l o p m a r ke t s
w h e re t h e re i s l i tt l e / n o c o m p e t i t i o n - E x p l o i t a n d p ro te c t i t .

6.  S o m e t i m e s i n v o l v e d , b u t n o t a d e f i n i n g fe a t u re
I t i s a l l a b o u t l i n k i n g t e c h n o l o g y t o w h a t B u y e r s v a l u e d .
 B e i t C h r y s l e r M i n i v a n / F o rd T m o d e l / G M ’s c a r fo r e v e r y
p u rs e a n d p u r p o s e / J a p a n e s e f u e l e f f i c i e n t a u t o s /A p p l e
Pc s / D e l l c u s t o m i z a t i o n / N i c ke l o d e o n , t h e y a l l l o o ke d
u n a t t ra c t i v e a t t h e c re a t i o n s t a g e a n d d r i v e n b y v a l u e
p i o n e e r i n g w i t h t h e u s e o f e x i s te n t te c h n o l o g i e s .
I s D i f fe r e n t i a t i o n a l l a b o u t t e c h n o l o g y i n n o v a t i o n ?
LOW C O S T
H I G H VA LU E

7. C O M P E T I T I O N
 C o m p e t e i n e x i s t i n g m a r ke t
s p a c e
 B e a t t h e c o m p e t i t i o n
 E x p l o i t e x i s t i n g d e m a n d
 M a ke t h e v a l u e / c o s t t ra d e
o f f
 A l i g n t h e w h o l e sy s t e m o f
c o m p a ny ’s a c t i v i t i e s w i t h
i t s s t ra t e g i c c h o i c e o f
d i f fe re n t i a t i o n O R l o w
c o s t .
D I F F E R E N T I AT I O N
 C re a t e u n c o n t e s t e d m a r ke t
s p a c e
 M a ke t h e c o m p e t i t i o n
i r re l e v a n t
 C re a t e a n d c a p t u re n e w
d e m a n d
 B re a k t h e v a l u e / c o s t t ra d e
o f f
 A l i g n t h e w h o l e sy s t e m o f
c o m p a ny ’s a c t i v i t i e s i n
p u rs u i t o f d i f fe re n t i a t i o n
A N D l o w c o s t .
I n a N u t s h e l l

8. C I R Q U E D U S O L E I L

9. CIRQUEDUSOLEIL-COMPANYREVIEW
• Cirque du Soleil is a Quebec
based company recognized the
world over for high-quality,
artistic entertainment.
• Since its dawn in 1984,
Cirque du Soleil has constantly
sought to evoke the imagination,
invoke the senses and provoke
the emotions of people around
the world.
• In 1984, 73 people worked for
Cirque du Soleil.
• Today, the business has 5,000
employees worldwide, including
more than 1,300 artists with its
headquarters at Montreal.
• More than 100 types of
occupations can be found at
Cirque.
• The company’s employees and
artists represent more than 50
nationalities and speak 25
different languages.
• More than 100 million spectators
have seen a Cirque du Soleil
show since 1984.
• Close to 15 million people will
see a Cirque du Soleil show in
2012.
• Cirque du Soleil hasn’t received
any grants from the public or
private sectors since 1992.

10. W h a t i s s o s p e c i a l a b o u t C i r q u e d u S o l e i l ?
 Cirque staged dozens of productions seen by 40 million people in 90 cities all
over the world.
 In 20 years it has achieved the revenues that Ringling Bros. and Barnum &
Bailey – the world’s leading circus – took more than a century to achieve -in a
period when the circus industry was in decline because of TV, sports, video
games and Play stations.
 Cirque profitable increased its revenues by a factor of 22 in such an
unattractive environment.
“ W E R E I N V E N T T H E C I R C U S ”

11. F a c t s t o p r o v e a s w h y C i r q u e d u S o l e i l i s s o s p e c i a l
 Cirque did not made money by competing within the confines of industry limits
or by stealing customers from Ringling Bros. and others
 It created an uncontested market space that made the competition irrelevant
 It pulled in the whole group of traditionally non-customers towards the
industry
 Customers were Adults and corporate clients who turned to theater, opera or
ballet and therefore prepared to pay more than the price of a conventional
circus ticket for an unprecedented entertainment
 Traditional circuses tried traditional strategies to be different by conducting
Lion tamers, clowns and these efforts raised the cost-structure. As a result of
rising costs without rising revenues, there existed a downward spiral in overall
circus demand
 Rather than a traditional experience Cirque provided the fun and
thrill of circus and the intellectual sophistication & artistic richness of
a theatre

12. I n s i g h t s a n d Ta k e a w a y s f r o m t h e H i s t o r y o f C i r q u e
 If one has to step in the pursuit of differentiation, he has to break the trade off
between cost and differentiation by achieving both differentiation and low cost
with increase in value.
 Proper alignment of cost structure, price, value and utility is the key ingredient
of Success.
 No structuralist/ environmentalist view ( Competition) , base the strategy upon
world view in which market boundaries and industries can be reconstructed by
the actions and beliefs of industry players and call it as ‘Re-constructionist’
view.
 Create a barrier in such a way that nobody can imitate. Since imitation of
differentiation requires companies to make changes to their whole system of
activities , organization politics and a paradigm shift in the ability to imitate a
divergent model.
F I N A L LY, M A K E A D I F F E R E N C E , T H E S T U P I D S C A N ’ T
O B V I O U S LY I G N O R E YO U R S T U F F.

13. S o w h a t d o s t ra t e g i s t s c a l l t h i s b l u e c o w a s a f t e r a l l
w e n e e d n a m e s t o b e c a l l e d b y s o m e o n e ? ? ? ? ?
BLUE OCEAN STRATEGY

14. Re fe r e n c e s
• W.Chan Kim and Renee Mauborgne, Blue Ocean Strategy, Harvard Business review,
October 2004.
• Blalock Agnes, Growth strategy model in a Blue ocean, McKinsey Quarterly Business
Article, March 2012.
• TED talk by Seth Godin on “ Standing Out”, TED 2003 TALKS, Filmed Feb 2003, aired
April, 2007.

15. N o w, A r e y o u l o o k i n g fo r t h e s e c r e t ? Yo u n e v e r f i n d i t
, b e c a u s e y o u ’r e n o t r e a l l y l o o k i n g . Yo u d o n ’ t r e a l l y w a n t t o
k n o w. Yo u w a n t t o b e fo o l e d .
- C h r i s t o p h e r P r i e s t
by
Vidhyalakshmi K