What Color is your Business Strategy?

Iyad Mourtada

BLUE OCEAN

STRATEGY

Renée Mauborgne W. Chan Kim

Harvard Business School Press

Red Ocean StrategyCompete 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 choice of differentiation or low cost.

Blue Ocean StrategyCreate uncontested market space.

Make the competition irrelevant.

Create and capture new demand.

Break the value-cost trade-off.

Align the whole system of a firm’s activities in pursuit of differentiation and low cost.

Analytical Tools

Frameworks

Jackson Pollock No.5, 1948 = $156.8

Margin

Value--- Benefit = $20

--- Price = $15

--- Cost = $5

Buyer

Seller

The Value of a buying the BookShopping

Margin

Value

--- Benefit = $20

--- Price = $10

--- Cost = $2

Buyer

Seller

Discount the Price

Margin

Value

--- Benefit = $25

--- Price = $18

--- Cost = $8

Buyer

Seller

Enhance the Offer

- Free WIFI

- Better Service

- Relaxing Music

- No Waiting lines

- Cost

Value Innovation

+ Value

--- Benefit = $35

--- Price = $15

--- Cost = $3

Margin

Value

Bu

sin

ess M

od

el

Can

vas

Bu

sin

ess M

od

el

Can

vas +

Value

Value Innovation

- Cost

Pioneers

Migrators

Settlers

Today Tomorrow

Pioneer, Settler, Migrator Map

Diagram courtesy of http://softwarecreation.org/2008/ideas-in-software-development-revolution-vs-evolution-part-1/

Disruptive Innovation

"We were naive to think that the best technology would prevail" - Steve Wozniak, Founder of Apple

(Time, Quality, Utility)

© 2004-2012, Kim & Mauborgne.

Strategy Map

Strategy CanvasHigh

Low

Price

Indu

stry

In

vesti

ng F

acto

rsWhat the Buyer Receives

How attractive is your industry?

It is not about how big your ship is

It is not who will do it first

How do you do strategic Planning?

Blue Ocean Strategy

Evolution of Video Games

Four Steps of Visualizing Strategy1. Visual Awakening

2. Visual Exploration

3. Visual Strategy Fair

4. Visual Communication

Buyer utility Is there exceptional buyer utility in your business idea?

No-- RethinkYes

Sequence of Blue Ocean Strategy

Price Is your price easily accessible to the mass of buyers?

Cost Can you attain your cost target to profit at your strategic price?

Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

No-- RethinkYes

No-- RethinkYes

No-- RethinkYes

A blue ocean strategic move is achieved by developing and aligning the three strategy propositions :

Value Proposition Profit proposition People proposition

Integrate Online, Mobile, and Social Media Channels with your

existing retail channels to

create value

Don't just build a mobile app. Build a business model

around

What is your business model?

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