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Prof. Santanu Ray Chief Mentor, Bengal Institute of Business Studies E-mail: santanu.ray@bibs.co.in
A New Approach to Strategy and Innovation with its Logic & Key Principles
A Process Methodology
Value Innovation
Fair Process
Know market space of existing industries Industry boundaries and competitive rules are defined and accepted Search for competitive advantage in head-to-head competition Fight for market share from existing demand Products becoming commodities Low growth and over-crowded industries Shrinking profit pool
Many companies are stuck here, as the primary focus of strategy work has been on competition-based, red ocean strategies
Found new space to work in Challenged traditional, accepted views of their industries Focused on understanding non-customers:
Identified commonalities across customers and non customers
Looked for new, or expand existing demand Buyers perceived big increases in value Companies achieved dramatic reductions in costs Substantially higher growth and expanding profit pool
marketCreate space
Beat the competition Exploit existing demand Make the value/cost trade-off
Make the competition irrelevant Create and capture new demand Break the value/cost trade-off a of
Align the whole system of aAlign the whole system of companys activities with itscompanys activities in pursuit strategic choice of differentiationdifferentiation and low cost or low cost
Value Innovation
Buyer value
Defies the most commonly-accepted dogma of competition-based strategy the value-cost trade-off
Pioneers
Value Innovators
10%
Migrator
Value Improvements
30%
Settler
Me-too Businesses
60%
Current Portfolio Planned Portfolio
Raise
What factors should be raised well beyond the industry standard?
Eliminate
What factors should be eliminated that the industry has taken for granted?
New Value curve
Create
What factors should be created that the industry has never offered?
Reduce
What factors should be reduced well below the industry standard?
ERRC GRID
Eliminate
What factors should be eliminated that the industry has taken for granted?
Raise
What factors should be raised well beyond the industry standard?
Reduce
What factors should be reduced well below the industry standard?
Create
What factors should be created that the industry has never offered?
FOCUS:
If everything is high, there is no focus
DIVERGENCE:
Different from competition
Your Market
How long How long Does the product does it take does it take require training to find the to get the or expert product you product assistance? need? delivered? Is the product Is the place How difficult easy to store of purchase is it to when not in use? attractive unpack and How effective and install the are the products accessible? new product? features and How secure Do buyers functions? is the have to Does the product transaction arrange or service environment? delivery deliver far more themselves? How rapidly power or options If yes, how can you than required by costly and make a the average difficult is purchase? user? Is it this? overcharged with bells and whistles?
Do you need Does this other product products and require services to external make this maintenance? product How easy is work? it to maintain If so, how and upgrade costly are the product? they? How costly is How much the time do they maintenance? take? How much pain do they cause? How easy are they to obtain?
Does the use of the product create waste items? How easy is it to dispose of the waste product? Are legal there or
environmental
3.
4. Looking across complementary product and service offerings 5. Looking across functional or emotional appeal to buyers 6. Looking across time
Go to the filed to explore the six paths to creating blue oceans Observe distinct advantages alternative products services
Draw to-be strategy canvas based on insights from filed observations Get feedback from customers, competitors customers and non-customers Use feedback to build the best future strategy
of &
Price
Cost
Can you attain your cost target to profit at your strategic price?
Adoption
What are the adoption hurdles in actualising your idea? Are you addressing them upfront?
Resource Hurdle
Limited resources
Political Hurdle
Opposition from powerful vested interests
Blue Ocean Strategy does not appear to make logical sense Need to unlearn and discard entrenched ideas and viewpoints Different people, skills, tools, and processes High expectations for success
Engagement
Explanation
Expectation Clarity
Attitudes
Behaviour
Voluntary Cooperation
Strategy Execution
Exceeds Expectation
Self-initiated
Execution Principles
Overcome key organisational hurdles Build execution into strategy
Systematically maximising the opportunities, while simultaneously minimising the risks of Blue Ocean Strategies
Strategic Logic
Red Ocean Blue Ocean
Visual Comm
External Validation BOI Validation workshop
Make the competition irrelevant Reach beyond existing demand Deliver superior value and low cost simultaneously
PMS
Tools, frameworks and principles
Internal &
Impact
Fair Process
A companys conventional, Red Ocean logic Brand image conflict High volume leads to rapid cost advantage Network externalities Transformation challenges Brand buzz and loyalty
Key Takeaways
1. Blue oceans will remain the dominant engine of sustained, profitable growth 2. Key principles for Blue Ocean Innovation :
Reconstruct market boundaries Expand beyond existing demand Break the value-cost trade-off Focus on disproportionate influence factors Build execution into strategy
1. With the easily-accessible Blue Ocean Strategy approach, key principles, tools and process, most organizations and executives can innovate and create Blue Oceans