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W. Chan Kim
The Boston Consulting Group
Bruce D. Henderson Chair
Professor of Strategy and
International Management
Rene Mauborgne
The INSEAD Distinguished
Fellow and Professor of Strategy
and International Management
Red Ocean
Compete in
crowded
markets
Blue Ocean
Create and
capture new
market space
THE CONTINUING
CREATION OF BLUE
OCEANS
IMPACT OF CREATING
BLUE OCEANS
VALUE INNOVATION:
THE CORNERSTONE OF BLUE
OCEAN STRATEGY
Value innovation:
Price
Cost
Formulation Risks
Search Risk
Planning Risk
Scale Risk
Execution Principles
Execution Risks
Organizational Risk
Management Risk
COST
VI
VI
VALUE
Head-to-Head
Competition
Creating
New Market Space
Scope of Product
and Service
Offerings
Functional-emotional
Orientation of an
Industry
Industry
Strategic Group
Buyer Group
Time/Trends
Reach beyond
existing Demand
go for uncontested
space.
Get the strategic
sequence right
value [innovation] first.
COST
VI
VI
VALUE
Core Customer
Soon-to-be-NC
Noncostumer
Refusing Customer
THREE TIERS OF
There
is a universe of
CUSTOMERS
noncustomers which can be
turned into customers to offer a big
blue ocean market.
3rd
2nd
1st
Three Tiers of
Three tiers of non-customers:
Customers
COST
VI
VI
VALUE
No Rethink
YES
Price
Is your price easily accessible to
the mass of buyers?
YES
No Rethink
Cost
Can you attain your cost target to
profit at your strategic price?
No Rethink
YES
Adoption
What are the adoption hurdles in
actualizing your business idea?
Are you addressing them up
front?
YES
No Rethink
Eliminate
What factors that the
industry has taken for
granted should be
eliminated?
Reduce
What factors should
be reduced well
below the industry
standard?
Creating
new markets:
A new value
curve
Raise
What factors should
be raised well above
the industry
standard?
Create/Add
What factors that the
industry has never
offered should be
created or added?
STRATEGY CANVAS
high
low
Industry Variables
2. Visual
Exploration
3. Visual
Strategy Fair
4. Visual
Communication
Compare your
business with your
competitors by
drawing your as is
canvas
Draw your to be
canvas based on
insights from field
observations
Distribute your
before-and-after
strategic profiles on
one page for easy
comparison
Observe the
distinctive
advantages of
alternative products
and services
Get feedback on
alternative strategy
canvases from
customers,
competitors
customers, and
non-customers
Use feedback to
build the best to
be future strategy
EXAMPLES IN THE
PHILIPPINES: