3. The Tao of Change Management
“The Future is coming so
fast we can’t possibly
predict it. We can only
learn to respond quickly.”
Steven Kerr
“The best way to predict
the future is to invent it.”
Alan Kim
3
4. Red Ocean vs. Blue Ocean Strategies
Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market
Compete in existing market
space
space
Create uncontested market
Create uncontested market
space
space
Beat the competition
Beat the competition
Exploit existing demand
Exploit existing demand
Make the competition irrelevant
Make the competition irrelevant
Create and capture new demand
Create and capture new demand
Make the value-cost trade off
Make the value-cost trade off
Align the whole system of a
Align the whole system of a
Break the value- cost trade off
Break the value- cost trade off
Align the whole system of a firm’s
Align the whole system of a firm’s
firm’s activities with its
firm’s activities with its
strategic choice of
strategic choice of
activities with its strategic choice
activities with its strategic choice
of differentiation and low cost
of differentiation and low cost
differentiation or 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
Disengaged
Conductor’s Personality
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
Which of the factors
that the industry
takes for granted
should be
eliminated?
Create
A New
Value
Curve
Which factors
should be created
that the industry
has never offered?
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
atmosphere
Local focus
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
Price
Use enological
terminology
and distinctions
in wine
communication
Abovethe-line
marketing
Aging
Quality
Vineyard
Prestige
and
Legacy
Wine
Complexity
Wine
Range
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
Enological terminology and
distinctions
Raise
Price versus budget wines
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
Price
Use of
Enological
Distinctions
Above-theline
Aging
Marketing Quality
Vineyard
Prestige
Wine
Complexity
Wine
Range
Easy
Drinking
Ease of
Selection
Fun and
Adventure
26
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
High
RRC/ Microsun/
Nexergy
ICC/ Totex
Nexergy
ICC
Varta
Microsun
Totex
M-Power Varta
Varta
ICC/Microsun
Nexergy
RRC
Totex
ICC
Totex
Microsun
RRC
M-Power
Totex
Medium
Nexergy
Microsun
Totex
M-Power
M-Power/Varta
M-Power
Nexergy
Nexergy
M-Power
RRC
RRC
ICC
Low
Technical
Expertise
Vertical
Integration
On-time
Delivery
Varta
M-Power/
Microsun
ICC
Battery
Expertise/
Experience
Charger
Expertise
Global
Manufacturing
RRX
Flexibility
Quality
Cost
Reduction
Quality
Customer
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
batteries
Integrated Power Solutions
Acting like an order taker
Competitive Advantage
Speed
Technical Advantage
Proactive leadership and
consultative services
Reduce
Create
Concern with pricing
Charger Capabilities
Concern with reactive customer
service
Innovation
Branding
Focus on Vertical Integration
38
39. Now they Visualized a Blue Ocean
Summary Strategic Canvas
5-High
tg/am
Customer
sb/jd
3-Medium
jr
am
tg/ am/ jr/jd
1- Low
tg/jd
tg/am/jr tg/am/jr
am/jr
sb/jd
Needs/Desires
sb/jd
tg/jr/sb/jd
jr
sb
tg/am/jr/sb jr
sb
jd
tg/am/jd tg/am/sb/jd
Wholly
needs
Owned
Battery
help
Global
Supplier
CM
Vertical
Expertise/
Charger
Manufactur Customer Relationship
Financial
Integration
Experience
Expertise
Service
Stability
state of
them be
Branding
innovative
needs
speed to
relationship
cutting
(game
Customer- technical information
market
edge
boy)
centric
the art
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
ages
Lots of options
Yellow Tail
Wine for non-wine drinkers
Lots of options
EAC/Integrated
Power Solutions
Integrated Power Solutions
Companies assembling
options themselves
TelerX
Under 40 year olds and social
media customer care solutions
Ignoring the telephone call
center
Laclede
Easier solutions for chain; One
stop for all your chain needs
Shopping for solutions
Elkay Hydration
Stations
Sustainability Directors,
Universities, Green Companies
and Green Communities
Not many to fill the bottle
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
We don’t
We don’t
We don’t
We don’t
We don’t
New Element
More ideas the better
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
Low
Industry Attributes
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
Red Ocean
Within Each
Strategic group
Blue Ocean
Creating
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
Which of the factors
that the industry
takes for granted
should be
eliminated?
Create
A New
Value
Curve
Which factors
should be created
that the industry
has never offered?
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,
and nonusers.
Use feedback to build the
best “to be” future
strategy.
Strategy Canvas -- Your Company
High
Low
Current Industry Attributes
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
Low
Industry Attributes
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
The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who are only raising and creating thereby raising costs; makes it easier for managers to understand and comply; and it drives companies to scrutinize every factor the industry competes on.
This might seem commercial but it has lots of applications for a non profit focused on doing well and doing good.
About 6,500 wine brands compete in the US alone, the largest wine market in the world
All the most aggressive wine-producing countries are well represented: France, Italy, Australia, Chile, and Spain, besides the American wines and the all powerful Californians in particular.
Ninety-six percent of those wine brands sold less than 100,000 cases in 2002, according to Impact Databank.
Only 23 wine brands sold at least 2 million cases each, accounting for 40 percent of a growing market of 245 million cases.
John Souter expected to sell 25,000 cases in 2001, the first year Yellow Tail would hit the market.
Cautious but lucky, he got all his projections wrong as the wine sold 9 times as much!
With its bold branding, a good product and a very affordable price, the bottles with the fancy kangaroo leapt off the shelf.
The first batches sold out so quickly that extra cases had to be shipped by plane, at considerable expense.
Production could not follow either. Not only was the equipment insufficient but additional quantities of wine had to be bought on the bulk market, further cutting into Casella's thin margins, estimated at 75 cents per bottle.
Nonetheless, Casella Wines sold 200,000 cases of Yellow Tail wines in 2001, and 2.2 million the following year. They have now invested in a $2.5 million bottling line to reach their goal of 4 million cases for 2003.
Pause: Where could you look?
The eliminate-reduce-raise-create grid pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve. By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: it pushes them to simultaneously pursue differentiation and low costs; identifies companies who are only raising and creating thereby raising costs; makes it easier for managers to understand and comply; and it drives companies to scrutinize every factor the industry competes on.