Blue Ocean Strategy

BLUE OCEAN STRATEGY

Competing in overcrowded
industries is no way to
sustain high performance.
The real opportunity is to
create BLUE OCEANS of
uncontested market space
 What is a Blue Ocean?
Blue oceans denote all the
industries not in existence today.
This is the unknown market space.
Red oceans represent all the
industries in existence today. This is
the known market space.

3
Red Vs. Blue

4
 LOOK BACK ONE
HUNDRED YEARS AND
ASK YOURSELF
How many of todays
industries were then
unknown?
5
 The Answer
Automobiles
Music recording
Aviation
Internet
Healthcare
6
 30 yrs ago

Mutual Funds cell phones

Only thirty
years ago

biotechnology coffee bars

7
 Now put the clock
forward twenty years
AND ASK YOURSELF
HOW MANY NOW
UNKNOWN INDUSTRIES
WILL LIKELY EXIST
THEN ?
 The reality is that industries never stand still. They
continuously evolve. Operations improve, markets
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.
How can a company break out of the red ocean of bloody competition?

How can it create a blue ocean?

Is there a systematic approach to achieve this and thereby sustain

high performance?
 The Cornerstone
Value innovation

15/01/14 Dept. Of Hospital Administration 10

 Analytical tools
Eliminate-
Four Action Reduce-
Framework Raise-
Create Grid

Strategy
Canvas

11
 Analytical tools and
Framework
Four Action
Framework
Drop Cost
2.
structure

1
.

4.

Lift Buyer
Value/
Create New
15/01/14 Dept. Of Hospital Administration demand 12
3.
Collectively allow :
reconstruct buyer value
elements across
alternative industries to
offer buyers an entirely
new experience

while simultaneously
keeping cost structure
low.

13
 Eliminate Reduce Raise
Create Grid

Ex of Cirque du Soliel (A circus)

14
 Examples
Net Jets : Aviation Industry
Casella (Yellow tail) : Wine Industry
Case study of Novo Nordisk :
Pharma

15
 Casella Wines
CASELLA WINES CREATED YELLOW TAIL, A WINE WHOSE
STRATEGIC PROFILE BROKE FROM THE COMPETITION AND
CREATED A BLUE OCEAN.

Price per bottle of wine

An elite, refined image in packaging
Above-the-line marketing to raise consumer awareness
Aging quality of wine
The prestige of a wines vineyard and its legacy
The complexity and sophistication of a wines taste, ex tannins and
oak
A diverse range of wines to cover all varieties of grapes

16
Grid of Yellow Tail
 Results
Instead of offering wine as wine, Casella created a social
drink accessible to everyone: beer drinkers, cock tail
drinkers, and other drinkers of non-wine beverages.
In the space of two years, the fun, social drink [yellow tail]
emerged as the fastest growing brand in the histories of both
the Australian and the U.S. wine industries and the number
one imported wine into the United States, surpassing the
wines of France and Italy.
By August 2003 it was the number one red wine in a 750-ml
bottle sold in the United States, outstripping California labels.
By mid-2003, [yellow tail]s moving average annual sales
were tracking at 4.5 million cases.
 Case of Novo Nordisk
Historically, the insulin industry, like most of the
pharmaceutical industry, focused its attention on the key
influencers: doctors. The importance of doctors in affecting
the insulin purchasing decision of diabetics made doctors
the target buyer group of the industry.
Industry geared its attention and efforts to produce purer
in- sulin in response to doctors quest for better medication.
Significant challenges in administering : vials left the
patient with the complex and unpleasant task of handling
syringes & needles.
Social stigmatism for patients.
 Novo Nordisk to the blue ocean opportunity of NovoPen,
launched in 1985.
The NovoPen resembled a fountain pen; it contained an insulin
cartridge.
The pen had an integrated click mechanism, making it possible
for even blind patients to control the dosing and administer
insulin.
Inject insulin with ease and convenience without the
embarrassing complexity of syringes.
Later, Innovo was designed to manage the delivery of insulin
through built-in memory and to display the dose, the last dose,
and the elapsed time.

15/01/14 Dept. Of Hospital Administration 20

 Grid of Novo Nordisk
ELIMINATE RAISE

Dependency on doctors/family Administration Risk minimization

Administration Convenience
Self Esteem

REDUCE CREATE
Efficacy Compliance and adherence assistance
Side effects Minimization
Self Tracking Capability
Patient out of pocket minimization
 Draw the SC based on:
Price
Efficacy
Side effects
Admin risk
Convenience
Self esteem
Compliance
Self Tracking

15/01/14 Dept. Of Hospital Administration 23

 Price

Efficacy

Side effects

Convenience

Self esteem
Nordisk

Compliance

Self track
Regular
Strategy Canvas Novo

Novo Nordisk
Visualizing Strategy
The Six Principles
The Four Organizational
Hurdles

27
The Question Remains

Where is Blue Ocean .

 Health Care's Blue Ocean
By Joseph A. Jackson, LICSW
In the coming years we will see:
1) An exponential increase in the number of people
with disabling, chronic health problems,
2) A concomitant decrease in available caregivers,
3) Diminishment in the resources that will support
health care, especially under commercial and
government health insurance, and
4) An inevitable increase in stress on family
caregivers
 Physician, Hospital and Insurance driven Healthcare will give
way to Home based healthcare.
Implementing Telemedicine programs for Home health care
like Cardiocom
Game-changing technology is just around the corner : online
diagnostic and treatment software
Insurance that will best enhance health and cut health care
costs is the one that engages patients as both health care
decision makers and payers, i.e. the one that includes
health savings accounts (HSAs). The reason:
People are more likely to change unhealthy lifestyles if by
doing so they get richer.
15/01/14 Dept. Of Hospital Administration 31
15/01/14 Dept. Of Hospital Administration 32
 References
1. Blue Ocean Strategy How to create uncontested
market space and make the competition irrelevant;
W. Chan Kim, Renee Mauborgne; Harvard Business
Press (2005)
2. Essentials of Management An International
Leadership Perspective; 9th Ed; Mc Graw Hill; Harold
Koontz, Heinz Weihrich
3. Healthcares Blue Ocean; Joseph a. Jackson;
Eldcare Advisors Inc. The care planning company
4. How to find Blue Ocean in Healthcare; Richard
Prest; Finsights; July 17th 2012
15/01/14 Dept. Of Hospital Administration 33
15/01/14 Dept. Of Hospital Administration 34