Blue ocean strategy

NBos

1. Blue Ocean Strategy was developed by W. Chan Kim and Renée Mauborgne. They
observed that companies tend to engage in head-to-head competition in search of sustained
profitable growth. Yet in today’s overcrowded industries competing head-on results in
nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Lasting success
increasingly comes, not from battling competitors, but from creating blue oceans of untapped
new market spaces ripe for growth.

8 KEY POINTS OF BLUE OCEAN STRATEGY
1. It’s grounded in data
Blue ocean strategy, developed by W. Chan Kim and Renée Mauborgne, is based on
a decade-long study of more than 150 strategic moves spanning more than 30
industries over 100 years
2. It pursues differentiation and low cost

Blue ocean strategy is based on the simultaneous pursuit of differentiation and low
cost. It is an ‘and-and,’ not an ‘either-or’ strategy

3. It creates uncontested market space
Blue ocean strategy doesn’t aim to out-perform the competition. It aims to make the
competition irrelevant by reconstructing industry boundaries
4. It empowers you through tools and frameworks
Blue ocean strategy offers systematic tools and frameworks to break away from the
competition and create a blue ocean of uncontested market space
5. It provides a step-by-step process
From assessing the current state of play in an industry, to exploring the six paths to
new market space, to understanding how to convert noncustomers into customers.
Blue ocean strategy provides a clear four-step process to create your to-be blue
ocean strategy.
6. It maximizes opportunity while minimizing risk
The blue ocean idea index allows you to test the commercial viability of your ideas
and shows you how to refine your ideas to maximize your upside while minimizing
downside risk
7. It builds execution into strategy
The process and tools are inclusive, easy to understand and communicate, and
visual – all of which makes the process non-intimidating and an effective path to
building execution into strategy and the collective wisdom of a company
8. It shows you how to create a win-win outcome
As an integrated approach to strategy, blue ocean strategy shows how to align the
three strategy propositions – value, profit, and people – to ensure your organization
is aligned around your new strategy and that it creates a win for buyers, the
company, and for employees and stakeholders

2. BLUE OCEAN STRATEGY TOOLS

1. Red Ocean vs. Blue Ocean Strategy







2. Value Innovation







3. Visualizing Strategy

3. 4. Strategy Canvas









5. Four Actions Framework

4. 6. ERRC Grid











7. Six Paths

5. 8. Pioneer Migrator Settler Map










9. 3 Tiers of Noncustomers

6. 10. Sequence of BOS













11. The Buyer Utility Map

7. 12. The Price Corridor of the Mass










13. Four Hurdles to Execution

8. 14. Tipping Point Leadership










15. Fair Process

9. Here are a few examples of blue ocean strategic moves from a variety of different
industries and sectors. Select from the icons below to learn more.
CANON







Canon’s strategic move, which created the personal desktop copier industry, is a classic
example of blue ocean strategy. Traditional copy machine manufacturers targeted office
purchasing managers, who wanted machines that were large, durable, fast, and required
minimal maintenance.
Defying the industry logic, the Japanese company Canon created a blue ocean of new
market space by shifting the target customer of the copier industry from corporate
purchasers to users. With their small, easy-to-use desktop copiers and printers Canon
created new market space by focusing on the key competitive factors that the mass of
noncustomers – the secretaries that used copiers – wanted.
By questioning conventional definitions of who can and should be the target buyer,
companies can often see fundamentally new ways to unlock value. Path three of blue ocean
strategy’s six paths framework pushes companies to look across the chain of buyers in their
industry. By shifting focus to a previously overlooked set of buyers, companies can unlock
new value and create uncontested market space.

10. RALPH LAUREN




Ralph Lauren, the U.S. designer, created a blue ocean of “high fashion with no fashion” by
understanding the factors that determine buyers’ decisions to trade up or down from one
strategic group to another.
In creating Polo, Ralph Lauren combined the most attractive features of two strategic groups
in fashion: haute couture and classical lines. Its designer name, the elegance of its stores,
and the luxury of its materials capture what most customers value in haute couture. At the
same time, its updated classical look and price capture the best of the classical lines such as
Brooks Brothers and Burberry. By combining the decisive factors of both groups and
eliminating or reducing everything else, Polo Ralph Lauren not only captured share from
both strategic groups, but also drew many new customers into the market.
Polo Ralph Lauren’s blue ocean strategic move illustrates the potential to create new market
space by looking across strategic groups in an industry, path two in blue ocean strategy’s six
paths framework.

PHILIPS







Philips’ blue ocean strategic move in the teakettle industry is an example of looking across
complementary product and service offerings, path four in the six paths framework.
Despite its importance to British culture, the British teakettle industry had flat sales and
shrinking profit margins until Philips Electronics, the Dutch consumer electronics company,
came along with a teakettle that turned the red ocean blue.
By thinking in terms of complementary products and services, Philips saw that the biggest
issue the British had in brewing tea was not in the kettle itself but in the complementary
product of water, which had to be boiled in the kettle. The issue was the limescale found in
tap water. The limescale accumulated in kettles as the water was boiled, and later found its
way into the freshly brewed tea. The phlegmatic British typically took a teaspoon and went
fishing to capture the off-putting limescale before drinking home-brewed tea. To the kettle
industry, the water issue was not its problem. It was the problem of another industry—the
public water supply.

11. By thinking in terms of solving the major pain points in customers’ total solution, Philips saw
the water problem as its opportunity. The result: Philips created a kettle with a mouth filter
that effectively captured the limescale as the water was poured. Limescale would never
again be found swimming in British home-brewed tea. The industry was kick-started on a
strong growth trajectory as people began replacing their old kettles with the new filtered
kettles.
To reconstruct market boundaries and create new market space, think about applying path
four of blue ocean strategy’s six paths framework. It drives you to look across
complementary products and service offerings to discover ways to create a leap in value.

The Blue Ocean Strategy Network (BOSN), created by W. Chan Kim and Renée
Mauborgne, is a global community of practitioners. They work with corporations,
national governments, non-profit organizations to formulate and execute blue ocean
strategies through keynote speeches, client consulting projects, workshops, and
training programs.
INDIVIDUAL TRAINING
The BOS Deep Dive Webinar Series offers a simple and convenient way to deepen
your understanding of blue ocean strategy. During these live five webinar sessions
you will:

learn about the strategic logic, concepts and key principles of blue ocean strategy;
dive deep into blue ocean strategy analytics and tools;
learn about the systematic process of creating blue oceans;
explore how to build execution into blue ocean strategy;
get your questions personally answered by a blue ocean strategy practitioner
The webinars are hosted by senior BOS practitioners with experience working on
blue ocean strategies across many geographies and industries in public and private
institutions. The live sessions consist of both a tutorial and question & answer
session and provide participants an opportunity to submit their specific questions
about blue ocean strategy in advance via email or ask live during the webinar
sessions.

In case a live session is missed, an audio-visual recording will be available for
participants to view for up to 5 days after each webinar session.

12. Training or Consulting for your Organization
To determine whether your company needs a Blue Ocean Strategy Expert, ask whether any
of the following conditions corresponds with the situation your organization is up against:
 Your organization increasingly finds itself stuck in a red ocean of bloody competition
characterized by commoditization of offerings, declining price points, and market share
battles.
 Your organization invests significantly in R&D, but often fails to translate R&D investments
into large commercial opportunities.
 Your organization would like to enhance the quality of organizational members’ strategic
thinking and action in a setting that encourages leading-edge learning on how to make the
competition irrelevant in your industry setting.
If you can identify with any of the above situations, then Blue Ocean Strategy is right for you.


The Theory of Blue Ocean Leadership
The insight for Blue Ocean Leadership, created by W. Chan Kim and Renée Mauborgne, is
that leadership, in essence, can be thought of as a service that people in an organization
either ‘buy’ or ‘don’t buy’.
 Kim and Mauborgne observe that every leader has customers: bosses to whom the
leader must deliver performance and followers who need the leader’s guidance and
support to achieve.
 When people value your leadership practices, they in effect buy your leadership and are
inspired to excel and act with commitment. But when employees don’t buy your
leadership, they disengage, becoming noncustomers of your leadership.
 Once we started thinking about leadership in this way, we saw that the concepts and
frameworks we were developing to create new demand in the field of strategy could be
adapted to help leaders convert disengaged employees into engaged ones.

13. WHY BLUE OCEAN LEADE RSHIP

Most leadership development programs and leadership strategies are designed to hone the
cognitive and behavioral skills of leaders with the implicit assumption that this would
ultimately translate into high performance. Blue ocean leadership, in contrast, taps into the
field of strategy by focusing on actions tied to market realities to rapidly bring about a step
change in leadership strength. It’s distinct from traditional leadership development
approaches in several overarching ways. Here W. Chan Kim and Renée Mauborgne outline
the most salient ones:










Conventional Leadership
Development Approaches
Blue Ocean Leadership
Focus on the values, qualities and
behavioural styles that make for
good leadership under the
assumption that these ultimately
translate into high performance.
Focus on what acts and activities
leaders need to undertake to boost
their teams’ motivation and business
results, not on who leaders need to
be.
Tend to be quite generic and are
often detached from what
organizations stand for in the eyes
of their customers and the market
results their people are expected to
achieve.
Connect leaders’ actions closely to
market realities by having the people
who face market realities define what
leadership practices hold them back
and what leadership actions would
enable them to thrive and best serve
customers and other key
stakeholders.

14. Focus mostly on the executive and
senior levels of organizations.
Distribute leadership across all
three management levels because
outstanding organizational
performance often comes down to the
motivation and actions
of middle and frontline leaders who
are in closer contact with the
market.
Invest extra time for leadership
practices added on to people’s
regular work.
Pursue high impact leadership acts
and activities at low cost by
focusing as much on what leaders
need to eliminate and reduce in what
they do as on what they need
to raise and create.
© Kim & Mauborgne. All rights reserved.




A British Retail Group (BRG) applied Blue Ocean Leadership, as developed by W. Chan Kim
and Renée Mauborgne, to redefine what effectiveness meant for frontline, midlevel and
senior leaders.
By getting everyone involved in redefining what leaders should be doing the results were
rapid and significant. In the space of the first year in the frontline alone:
 Employee turnover of its 10,000 plus frontline employees dropped from about 40% to 11%
 Recruitment and training costs reduced by 50%
 Customer satisfaction rose by over 30%
 And the group saved more than $50 million
For leaders it was a real ‘win’ since they eliminated and reduced acts and activities which
they found tedious and draining. And employees re-engaged because they were led to do
what they needed to do to succeed.
The group’s as-is Leadership Canvases revealed how disengaged their people were. They
gave each canvas a summary tagline. The tagline for frontline leaders was ‘Please the
Boss’, for middle managers it was ‘Control and Play Safe’ and for senior managers it was
‘Focus on the Day-to-Day’.
In contrast, the to-be Leader Profiles are shown below in three separate canvases with each
juxtaposing the as-is Leadership Profile of each level with their new to-be Leadership Profile.

17. SERVING UP QUALITY SERVICE

The New Straits Times, Malaysia.

May 18, 2015
In the past, the quality of service provided at government agencies to the general
public was notoriously poor. However an initiative under National Blue Ocean
Strategy, ‘1Malaysia Customer Service of Civil Service’ (1Serve) has focused on
transforming the quality of service and increasing customer satisfaction. Malaysians
can visit 1Serve counters to access multiple government agencies. The civil servants
who staff these counters have been given more training, and improvements have
been made to amenities to make the experience of visiting 1Serve counters more
pleasant. The implementation of this initiative was possible by strategic collaboration
among a number of different government ministries and agencies.

BLUE OCEAN WAY TO RESOLVING WELFARE WOES
Daily Express, Malaysia.

March 5, 2015
Government agencies need to enhance cooperation with other sectors to tackle
welfare issues through the implementation of the National Blue Ocean Strategy
(NBOS), according to the Community Development and Consumer Affairs Minister.
Datuk Jainab Ahmad Ayid said that the efficiency of all parties in responding to
recent floods in the Terengganu region showed that NBOS was a successful and
effective approach.