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Blue Ocean strategy Outguns Red Ocean Strategy - Anshumalii
Blue Ocean StrategyBlue Ocean Strategy
Red Ocean StrategyRed Ocean Strategy
How to Champion Success by CreatingHow to Champion Success by Creating
Uncontested Market OpportunitiesUncontested Market Opportunities
and Making Competition Irrelevantand Making Competition Irrelevant
Anshumali Saxena March 2013Anshumali Saxena March 2013
Marketing Change Agent @ Marketing MessiahsMarketing Change Agent @ Marketing Messiahs
Age of Disruptive Discontinuity
In an “age of disruptive
discontinuity,” as Drucker called
the current era, entrepreneurs can
find significant growth
opportunities to create or
transform organizations if they
were willing to get ahead of
societal changes i.e. lead the
Age of Disrputive DiscontinuityDrucker said that the best way to predict the future is to
Discontinuities provided gaps in society that could be filled
Innovators should be
attuned to unmet needs
that did not yet show up
in market research.
Blue Ocean Strategy
Is about winning without fighting
To fight & conquer in all your battles is not supreme
excellence; supreme excellence consists in breaking
the enemy's resistance without fighting.
A skilful leader subdues enemy's troops without any
fighting; he captures their cities without laying siege to
them; he overthrows their kingdom without lengthy
operations in the field - Sun Tzu in ‘ Art of War’
BLUE OCEAN STRATEGY IS A TIDAL WAVE THAT CHANGES
MARKET DYNAMICS FOREVER & TILTS BALANCE OF MARKET
POWER IN FAVOUR OF VALUE-INNOVATION LED GAME-CHANGER
DIFFERENTIATION OR LOW COST
Blue Ocean talks about Value Innovation driven
DIFFERENTIATION AND LOW COST
A Bolt from the Blue! BLUE OCEANS’ Strategy
success-story- Inspired our Kingdom of Dreams
A one time accordion player, stilt – walker, and
fire – eater, Guy Laliberte is now CEO of
CIRQUE DU SOLEIL, one of Canada’s largest
cultural exports. Created in 1984 by a group of
street performers in less than 20 years.
CIRQUE DU SOLEIL has achieved a level of
revenues that took RINGLING BROS. and
BARNUN & BAILEY – the Global Champion of
the circus industry – more than 100 years to
To achieve stellar success through Blue
Ocean Strategy you don’t need big bang
credentials but an uncommon approach to tap
common sense driven latent customer
aspirations to create the Big Bang a wow-
Remarkable, rapid growth in a Declining
Market given up for Dead
It was not achieved in an attractive industry but rather in a declining industry
in which traditional strategic analysis pointed to limited potential for growth.
Alternative forms of entertainment- ranging from various kinds of urban live
entertainment to sporting events to home entertainment-cast an increasingly
All you need to succeed is a lifelong passion of your parent industry and an
ocean of undiluted and unconquerable optimism that motivates you and your
Another compelling aspect of CIRQUE DU
SOLEIL’s success is it did not win by
taking customers from the already
shrinking circus industry.
Instead it created uncontested new market
space or they called BLUE OCEANS that
made the competition irrelevant. One of
the 1st CIRQUE Productions was titled
“We reinvent the circus”.
“The only way to beat the competition is to
stop trying to beat the competition.”
Blue Ocean Strategy’ Success Mantra: Nothing’s
Impossible in front of Human Ingenuity
2 Players of Market Universe_ Red Ocean Practioners &
Blue Ocean Innovators:
1. Red Oceans
all the industries in the known market space.
industry boundaries are defined and accepted.
companies try to outperform their rivals to grab a
greater share of existing demand.
market space gets crowded, prospects for profits
and growth are reduced.
products become ordinary commodities with
cutthroat competition turning red oceans bloody.
Example: PC industry prior to iPADs
2. Blue Oceans
untapped market space
demand creation and
opportunity for highly
competition is irrelevant
Blue Oceans - a feature of Business life, past & present
100 years ago
Organised Health care
MFOs for HNI Wealth
Penny auction sites
Industries never stand still. They continuously evolve. Operations
improve, market expand and players come and go.
History teaches us that we have a hugely underestimated capacity
to create new industries and re-create existing ones.
Yet the overriding focus of strategic thinking has been on
competition-based tried markets & existing business strategies.
Corporate strategy is heavily influenced by its roots in military
Strategy is about confronting an opponent and fighting over a
given piece of land that is both limited and constant.
The Business Landscape Change Is A Global Reality
Accelerated technological advances have substantially
improved industrial productivity and have allowed suppliers
to produce an unprecedented array of innovative products &
The result is that in many industries, supply exceeds demand.
The trend toward globalization compounds the situation.
Trade barriers between nations ®ions are dismantled as
information on products and prices becomes instantly &
globally available, niche markets and havens for monopoly
continue to disappear.
Blue Ocean Imperative For Creating Wow-Successes
Blue Ocean strategy driven Theory of Increasing
Returns increasingly replacing Theory of Diminishing
No permanent winners who can monopolize success
despite their massive economic muscle and
seemingly invincible status.
Google upstaging Microsoft, Facebook upstaging
Game-changers Create Great Value in Business Eco-System
it shows that the strategic move and not the company of the industry, is the
right unit of analysis for explaining the creation of blue oceans and sustained
Strategic move is the set of managerial actions and decisions involved in
making a major market – creating business offering.
Compaq, for example was acquired by Hewlett – Packard in 2001 and ceased
to be an independent company. As a result, many people might judge the
company as unsuccessful. This does not, however, invalidate the blue ocean
strategic moves that Compaq made in creating the server industry.
Human enterprise & not business segment
characteristics that drive breakthrough successes
Industry ranged from hotels, cinema, retail, airlines, energy,
computers, broadcasting and construction to automobiles and steel.
We analyzed not only winning business players who created blue
oceans but also their less successful competitors.
The creators of blue oceans, surprisingly didn’t use competition as
their benchmark. Instead they followed a different strategic logic
-value innovation. Value innovation is the cornerstone of blue
ocean strategy. We call it value innovation because instead of
focusing on beating the competition, you focus on marking the
competition irrelevant by creating a new benchmark n value for
buyers and your own company.
Value innovation: Cornerstone of Blue Ocean Strategy
Value innovation is created in the region where a company’s actions favorably
affect both its cost structure and its value proposition to buyers.
Cost savings are made by eliminating and reducing the factors an industry
Buyer value is lifted by raising and creating elements the industry has never
offered. Overtime, costs are reduced further as scale economies kick in due to
the high sales volumes that superior value generates.
New market disruption
SHAPING IDEAS TO
(HOW TO BEAT OUR
Explore whether the idea can
become a new market disruption
• Is there a large population of people who
historically have not had the money,
equipment, or skill to do this thing for
• as a result have gone without it altogether
or have needed to pay someone with more
expertise to do it for them?
Explores the potential for a low-
• Are there customers at the low end of the
market who would be happy to purchase a
product with less (but good enough)
performance if they could get it at a lower
• Can we create a business model that enables
us to earn attractive profits at the discount
prices required to win the business of these
over-served customers at the low end?
Is the innovation disruptive to all of the
significant incumbent firms in the industry?
If it (the innovation) appears to be sustaining to one or more
significant players in the industry, then the odds will be
stacked in that firm’s favor, and the entrant is unlikely to
Competing Against Non-
The logic of competing against non-consumption
as the means for creating new-growth markets
Despite this, established companies repeatedly do
just the opposite.
What Makes Competing Against
Non-consumption So Hard?
Not see disruption coming in. Even if,
Threat rigidity - Threat elicits more intense and
energetic response than opportunity, and then
focus on countering the threat to survive.
How to Avoid Hard Non-
First, get top-level commitment by framing a threat
as an innovation during the resource allocation
ex. Newspapers embraced online editions to give
existing customers additional choice
How to Avoid Hard Non-
Later, shift responsibility for the project to an
autonomous organization that can frame it as an
ex. Place the responsibility to commercialize the
disruption in an independent unit for which the
innovation represents pure opportunity –
newspaper’s online group
Immelt’s CEO GE approach
Shift power to where the growth is.
Build new offerings from the ground up.
Customize objectives, targets, and metrics.
Build the DI unit from the ground up, like new
Have the DI unit report to someone high in the
Whole system approach makes success of blue oceans
In contrast, innovations such as production innovation can be
achieved at the subsystem level without impacting company’s
Monitor competitors but do not use them as
Do not focus on competing
Do not offer certain product and services features just
because that is what their rivals are doing
Must not be constrained by what it already has. It
must ask, what would we do if we were starting
Think in terms of the total solution customer’s
sought, even if that is beyond industry’s traditional
Red Ocean StrategyRed Ocean Strategy Blue Ocean StrategyBlue Ocean Strategy
Value innovation is based on the view that market boundaries &
industry structure are not fixed and can be reconstructed by the
actions and beliefs of industry players.
This is RECONSTRUCTIONIST VIEW STRATEGY as it always
involve both opportunity and risk, be it a red ocean or a blue ocean
initiative. The playing field is dramatically imbalanced in favor of tools
and analytical frameworks to succeed in red oceans.
Red Oceans will continue to dominate company’s strategic agenda
even as the business imperative for creating blue oceans takes on
Value Innovation- Making Business Breakthroughs
Successful & Repeatable
Impact of Creating Blue OceansImpact of Creating Blue Oceans
ANALYTICAL TOOLS & FRAMEWORKS
Effective blue ocean strategy should be about risk
minimization and not risk taking.
The value curve is the basic component of the strategy
canvas, is a graphic depiction of a company’s relative
performance across its industry’s factors of competition.
To reconstruct buyer value elements in crafting a new
value curve, they developed the four actions framework.
CIRQUE DU SOLEIL, provides insights into delivering
breakthrough innovation for superior outcomes
- star performers
- animal shows
- aisle concession sales
- multiple show arenas
- fun & humor
- thrill & danger
- unique venue
- refined environment
- multiple productions
- artistic music & dance
3 Complementary qualities for Effective Blue Oceans
FOCUS – every great strategy has focus, and a company’s strategic
profile of value curve, should clearly show it.
DIVERGENCE – when a company’s strategy is formed reactively as it tries
to keep up with the competition, it loses its uniqueness.
COMPELLING TAGLINE – a good strategy has a clear – cut and
compelling tagline. A good tagline must not only deliver a clear message
but also advertise an offering.
principle is to RECONSTRUCT
6 basic approaches to remaking market boundaries called SIX
PATH 1: LOOK ACROSS ALTERNATIVE INDUSTRIES
Alternatives – products or services that have different functions and
forms but the same value-innovation purpose.
Colgate offers the expertise of Dentists for Free Oral Healthcare
PATH 2: LOOK ACROSS STRATEGIC GROUPS WITHIN
Strategic groups are a group of companies within an industry that
pursue a similar strategy.
Ex: Shantanu & Nikhil created the blue ocean of “high sportswear
fashion where non existed”.
PATH 3: LOOK ACROSS THE VALUECHAIN OF BUYERS
Purchasers who pay for the product or service may differ from the
actual users, and in some cases there are important influences.
Ex: Bloomberg became one of the largest & most profitable
business information providers in the world.
PATH 4: LOOK ACROSS COMPLEMENTARY PRODUCTS AND
Analyse what happens before, during and after the product is used.
e.g. Secure B2B e-sourcing for SMEs from China with drop-
shipping services by Alibaba.com.
PATH 5: LOOK ACROSS FUNCTIONAL OR EMOTIONAL APPEAL
2 possible bases if appeal:
Rational – e.g. branded, authentic Jewelry by Tanishq
Emotional – e.g. T20 carnival IPL from BCCI
PATH 6: LOOK ACROSS TIME
Managers can actively shape their future and lay claim to a new
Blue Ocean e.g. Magi Noodles strategy with 8 years of business losses
inbuilt at the start
3 PRINCIPLES - CRITICAL TO ASSESSING TRENDS
1. Must be decisive to your business
2. They must be irreversible
3. They must have a clear growth trajectory
Example: Apple Inc
FOCUS ON THE BIG PICTURE, NOT THE NUMBERS
Focus on Big picture, not the numbers is a principle that is
key to mitigating the planning risk of investing lots of time but
delivering only tactical red ocean moves.
Develop alternative approach to existing strategic planning
process that is based not on preparing a document but on
drawing a breakthrough strategic canvas.
4 STEPS OF VISUALIZING STRATEGY
3. VISUAL STRATEGY
4. VISUAL COMMUNICATION
business with your
drawing “as is”
-see where your
strategy needs to
-go into the field to
explore the six paths
to creating blue
create or change.
-draw your “to be”
strategy canvass based
on insights from the
-get feedback on
-use feedback to build
the “to be” future
-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
REACH BEYOND EXISTING DEMAND
2 Conventional Strategy Practices:
1. Focus on existing customers
2. Drive for fines segmentation to accommodate buyer differences
3 TIERS OF NON-CUSTOMERS
tier – “soon-to-be” noncustomers
who are on the edge of your market,
waiting to jump ship.
tier – “refusing” noncustomers who
consciously choose against your market.
tier – “unexplored” noncustomers
who are in the markets distant from yours
GET THE STRATEGIC SEQUENCE RIGHT
Is there exceptional buyer
utility in your business idea?
Is your price easily accessible to
the mass of buyers?
Can you attain your cost target
to profit at your strategic price?
What are the adoption hurdles in
actualizing your business idea?
Are you addressing them up
steps address the
revenue side of a
A commercially viable BOS idea
Overcome key organizational hurdles
Cognitive, limited resources, motivation and political hurdles
- Hot spots, cold spots and horse trading
Build execution into strategy
Fair process is a key variable that distinguishes successful
blue ocean strategic moves from those that failed
1. IPL 3. Maggi Noodles
2. Cirque du Soleil 4. iPAD/iPhone
BUILD EXECUTION INTO STRATEGY
3Es of Strategic Fair Process
Engagement – means involving individual in the strategic
decisions that affect them by asking for their input and
allowing them to refute the merits of one another’s ideas and
Explanation – means that everyone involved and affected
should understand why final strategic decisions are made
as they are.
Expectation clarity – requires that after a strategy is set,
managers state clearly the new rules of the game.
SUSTAINABILITY & RENEWAL OF BLUE OCEANS
• Value innovation does not make sense to a company’s conventional logic
• Blue Ocean Strategy may conflict with other company’s brand image
• Natural Monopoly: The market often cannot support a second player
• Patents or legal permits block imitation
•High volume leads to rapid cost advantage for the value innovator,
discouraging followers from entering the market.
• Network externalities discourage imitation
• Imitation often requires significant political, operational, &cultural changes.
• Companies that value – innovate earn brand buzz and a loyal customer
following that lends to shun imitators.
Inculcating an intrapreneurship
work culture, enterprise-wide
Intrapreneurship is entrepreneurship that takes place within an
Entrepreneurship is the contribution of an innovation or added
Intrapreneurship is similar to entrepreneurship
Intrapreneurial practice is similar to entrepreneurial practice
Intrapreneurship is a miniature version of entrepreneurship: same
flavour, same substance, similar activities but less risky
What are intrapreneurs?
People who are dedicated to what they do
People who do not like routine
Focus on novelty and innovation
People who regard boundaries differently from other people
Agents of change
Characteristics of intrapreneurs
(2) ☺ Sensitive to environments
☻ Want to do more
Able to live with risk and
Able to manage risk
Balanced relations system
Differences between entrepreneurs and
Knows all the firm’s operations
Not much control over resources
Not much power
Knows the activities in his or her
Development of something new
Observation of needs
What does intrapreneurial activity
¤ Presence of a need
¤ Opportunity detection and creation
¤ Design and development of innovative projects
¤ Risk management
¤ Resource use
¤ Political skills
¤ Support system, usually informal
¤ Innovative activities
¤ Added value
Why behave and act like an
Need to advance or progress
Intrapreneurs are committed to what they do, like to go
further, and are perfectionists
Intrapreneurs behave as though the business belongs to
Intrapreneurs seek performance, both for themselves and for
Creative and Action-oriented
☻It’s not hard to understand
the intra-preneurial profile.
Intra-preneurs are passionate
about new ideas and want to
learn. Unlike managers, they
become bored and are
uncomfortable with repetitive
How do intrapreneurs think?
Knowledge of the sector
What should be
Five Precepts for Intrapreneurs
Set goals that include precise targets
Decide how to go about achieving those goals (including
Select the right time for action
Make sure people are aware of achievements
Garner support and acknowledge supporters after the fact
Fighting Organization’s Immune System
Understand the DNA of the organization
Identify elements of resistance to change
Identify communication taboos
Identify the aspects that prevent people from taking action
Identify progressive elements that can be relied on for support
Build a highway to action
Overcome the Morphine Effect
Look carefully to develop the people and resources within
the organizational environment that are no longer seen or
used to their full potential and value
Identify attitudes from the past that prevent people from
seeing changes in the environment
Identify things that have become routine, but that could be
Do not be afraid of rattling the cage and proposing
Elements of an Intrapreneurial Activity
Implementation of innovative
Intrapreneurial Culture (1)
¤ Values innovation, especially new methods
¤ High level of staff accountability
¤ Activities focused on clients and users, both internal and
¤ Importance of individual and collective, learning, both formal
Intrapreneurial Culture (2)
¤ Support for people who do and achieve things – “doers”
¤ Tolerance for mistakes but not for stupidity
¤ Innovative people are valued
¤ Acknowledgment and rewarding of success
¤ Sharing of profits or revenues generated by intrapreneurial
How do intrapreneurs act?
Listen to their own intuition
Are always testing something
Prefer a gradual approach
Are well informed; they know up to where they can stretch
the boundaries of what is possible
Listen, observe, question, think, learn, communicate and
choose the right time to take action
Managing Intrapreneurial Projects
Understanding of consumer
needs and trends
Design of the vision
Design of projects
Some Characteristics of Intrapreneurs
The same as those of entrepreneurs, except more so
Some characteristics of
Sensitive to environmental
Know their sector
Some characteristics of intrapreneurs
Conservative risk takers
Have good relations networks both
inside and outside the organization
Know the limits of what is acceptable
Use resources wisely
Focused on results
G.Pinchot & R. Pellman
Make your mistakes faster and cheaper
Bet on people not just ideas
Recognize real intrapreneurs from promoters
Don’t filter out the truth
Treat the team as single entity
Don’t trigger corporate immune system with “Grandiosity”
Live with your customers
Build financial models but don’t believe them
Sponsors must move closer to a peer relationship with the team
Reach out across corporate boundaries
The Intrapreneur’s 10 commandments
1) It is easier to ask for forgiveness than for permission
2) Do any job needed to make the project work regardless of your job
3) Come to work each day willing to be fired
4) Recruit a strong team
5) Ask for advice before asking for resources
6) Spread credit wide and celebrate victories
7) When you bend the rules always keep the best interest of the company and
customers in mind
8) Recognize and honor your sponsors
9) Underpromise and overdeliver
10) Be true to your goals but realistic about ways to achieve them
What to do to prepare for
Enter into contact with an entrepreneurial culture,
intrapreneurs and entrepreneurial actors
Read biographies (case studies) of entrepreneurs and
Work with internal and external mentors
Become a mentor for young, innovative entrepreneurs
Think about, describe and perfect one’s own intrapreneurial
What can be done to improve the probability
of intrapreneurial success?
Use mentors and coaches
Set up an innovation support advisory board for every project
Set up a club for intrapreneurs or “innovation enthusiasts”
Introduce a formal support policy for innovative expression
Introduce a program to acknowledge innovative
Intrapreneurship and Mentors
Importance of the role played by mentors in every
Excellent evaluation of entrepreneurship mentoring programs
Mentors need some basic training
Often, different forms of dual mentoring can be used: e.g.
technical mentor and managerial mentor
Mentoring activities should be completed by coaching
What impacts do intrapreneurial activities
have on organizations?
A society without entrepreneurs will eventually die, as will an
organization without innovation
Development of a culture based on excellence, leadership
and success (Jack Welch, Japanese firms)
Internal stimulation beyond the stage where “other people”
Intrapreneurship leads to innovative practices that catapult
the organization into a leadership position in its sector
Intrapreneurship involves risk and requires above-average
levels of effort and skill, but it brings a great deal of
satisfaction to the people who practise it
Intrapreneurship is a win-win process