Blue Ocean Strategy Part 2 Ch 4

Ch 4

- most plans don’t contain a strategy at all but rather a smorgasborg of tactics that individually make sense but collectively don’t add up to a unified, clear direction that sets a company apart – let alone make the competition irrelevant.

- What seems to be a very big difference to the ( ) manager may not be important to customers, who look at the complete offering. Some managers will define the competitive factors according to internal benefits.

- A common mistake is to discuss changes in strategy before resolving differences of opinion about the current state of play. Another problem is execs are often reluctant to accept the need for change; they may have a vested interest in the status quo, or feel time will eventually vindicate their previous choices.

- usually a highly determined leader or crisis prompts execs to seek blue oceans
- asking execs to draw the value curve of their company’s strategy can bring home the need for change – as a wake up call to challenge existing strategies

- send a team to the field to see face-to-face; how people use or don’t use their products
- this is often outsourced – they rely on the reports other people (often at 1 or 2 removes from the world they report on) have put together
- The 1st port of call should be the customers. Do not stop there. Also go after non-customers. When the customer is not the same as the user, extend observations to the users (Bloomberg).
- Not only talk to these people, watch them in action. Identify the array of complementary products & services consumed alongside to give insight into bundling opportunities
- Ex. Parents going to movies need babysitters = cinema + onsite childcare service

- A visual strategy fair was held, including execs but mainly reps the managers had met with: noncustomers, customers of competitors, & some of the most demanding customers
- They were given no more than 10 minutes to present each curve, on the theory that any idea that takes more than 10 min. to communicate is probably too complicated to be any good. Pictures were hung on the walls so the audience could easily see them.
- After 12 strategies presented, each judge (an invited attendee) was given 5 sticky notes & put them next to their favourites.

- Judges could put all 5 on 1 strategy if they wanted. The transparency & immediacy of this approach freed it from the politics that sometimes seem endemic to the strategic planning process. Managers had to rely on the originality and clarity of their curves & their pitches. [example: we’ve got a strategy so cunning you won’t be our customers, you’ll be our fans]

- After notes were posted, judges were asked to explain their picks, adding another level of feedback to the strategy making process. Judges were also asked to explain why they did not vote for the other value curves

- They also learned buyers from all markets had a basic set of needs and expected similar services. If you met those common needs, customers would happily forgo everything else. Regional differences became significant only when there was a problem with the basics. This was news to many people who had claimed their regions were unique.

- Then draw a new strategy canvas


- Relationship Management Raise
- ease of use
- security
- accuracy
- speed
- market commentary
- acct executives
- corporate dealers Create
- confirmation
- tracking

- Once future strategy is set, communicate it in a way that can be easily understood by any employees. A one page picture showing its new & old strategic profiles can be distributed to show every employee where the company stood & where it had to focus its efforts to create a compelling future.

- Senior managers who participated in developing the strategy met with their direct reports to walk them through the picture, explaining what needed to be eliminated, reduced, raised and created to pursue a blue ocean. Those people passed the message on to their direct reports.

- The new picture becomes a reference point for ALL investment decisions. Only those ideas helping move from the old to the new value curve were given the go-ahead.
- The ability of suggested/requested items/ideas to meet the new value curves strategic needs was the chief metric by which it was judged.

- When business units present their strategy canvases to one another, they deepen their understanding of the other businesses in the corporate portfolio and fosters the transfer of strategic best practices across units

- Samsung has established an annual Value Innovation conference presided over by all its top execs. This is one way they establish a common language system, instilling a corporate culture & strategic norms that drive its corporate business portfolio to blue oceans

- Do your business unit heads lack an understanding of the other businesses in your corporate portfolio? Are your strategic best practices poorly communicated across your business units? Are your low performing units quick to blame their competitive situations for their results? If yes to any to these, try drawing & sharing strategy canvasses.

Pioneer-Migrator-Settler (PMS) map

– business offering unprecedented value; blue ocean strategists; most powerful sources of profitable growth – have a mass following of customers; value curve diverges from the competition

- business whose value curve conform to the basic industry shape; me-too business; stuck in a red ocean, will not contribute much to future growth

- somewhere between; extend the industry’s curve by giving more for less but don’t alter its shape; improved value but no innovative value

- Revenue, profitability, market share, and customer satisfaction are all measure of a company’s current position. Contrary to what conventional strategic thinking suggests, those measures cannot point the way to the future; changes in the environment are too rapid. Today’s market share is a reflection of how well a business has performed historically.
- Value & Innovation should be used instead as important parameters for managing businesses

o Innovation gets companies out of the rut of competitive improvements

o Value because innovative ideas will only be profitable if they are linked to what buyers are willing to pay for

- In pushing their businesses toward pioneers, be aware that even though settlers have marginal growth potential, they are frequently today’s cash generators. On the other hand, pioneers have max growth potential but often consume cash at the outset as they grow & expand. Manage your portfolio of businesses wisely to balance between profitable growth and cash flow at a given point in time.