Transcript 2010 Management Conference

Blue Ocean Strategy
What’s it all about?
•
•
•
•
- Blue Oceans – definitions and examples
- Formulating Blue Ocean strategies
- Executing Blue Ocean strategies
- key take aways
Blue Oceans – definitions and examples
Red Ocean
Blue Ocean
Compete in existing mtks
Create uncontested mkt space
Beat the competition
Make the comp irrelevant
Exploit existing demand
Create and capture new demand
Costs
Make the value cost trade off
Break the value cost trade off
•
Examples of “blue Ocean”
•
– Cirque du Soleil
– Apple
– Ryan Air (European Low cost airline)
Value Innovation
–
–
•
Value
Innovation
Buyer Value
“instead of focusing on beating the competition focus on making the competition irrelevant by creating a
leap in value for the customer
“must align innovation to utility, price and cost and must time entry accordingly”
Of all business launches in 108 companies studied
–
–
86% line extensions (red ocean) – 62% total revenue and only 39% profit
14% - “blue ocean” releases – 38% revenue and 61% profit
Formulating Blue Ocean Strategy
•
Formulation Principles
•
•
•
•
•
•
•
Reconstruct Market Boundaries
Focus on big picture, not the numbers
Reach beyond existing demand
Get the strategic sequence right
Overcome key org hurdles
Build execution into the strategy
Choosing which “factors” to attack (industry specific – eg airline – price, meals, lounges,
seating class choices, hub connectivity, service, speed, frequency point to point flights etc
etc) – and using this to create a “strategy canvas”
–
–
BA – focus on lounges, meals, seating class, hub connectivity
Ryan air – focus in price, cost, point to point
Red Ocean
Blue Ocean
Industry
Focuses on rivals within industry
Looks across alternative industries
Strategic Group
Focus on strategic position within group
Looks across strategic groups in industry
Buyer power
Focus on better serving buyer group
Redefines the industry buyer group
Scope of product
offering
Functional /
emotional orientation
Time
Maximises value of prod within industry
Focus on improving price performance
Focus on adapting to external trends
Looks across to complimentary product
offerings
Re-thinks the orientation within the
industry
Participates in shaping ext trends
Factors
completeness
of service
offering
Modularity &
OSM
ease to do
business with
relationship
management
Quality
specialist
knowledge in
vertical mkts
geographic
foot print of
Subsidiaries
Ruggedness
completeness
of product
range
price
importance (investment in
achieving)
A “fictional” Strategy Map for
Psion Teklogix…
Where would you draw the strategy canvas for Psion Teklogix and our
competitors?????
A possible Strategy Canvas for Psion and Motorola
6
5
4
Motorola
3
PT today
2
PT tomorrow
1
0
Eliminate - reduce - Raise - Create grid:
Eliminate
Raise
Trying to have a complete product for every market
(IKON Variants)
Quality
Ease to do business with
Relationship Management
Reduce
Create
Focus on price
Focus on Ruggedness
OSM & Modularity & commercialize this
Getting the Strategic sequence right
Revenue
Focused
Exceptional utility
Yes
No
Price
Yes
No
Cost
Profit
Focused
Yes
No
Adaption
Yes
Blue Ocean
Sustain, re –
value innovate
(protected by
barriers to entry)
Key Take-away’s
• Look outside “the box” and beyond the competition to
generate “value innovation”
• Strategy maps can be used to show the strategic path
• Make decisions on “features” to eliminate, start, enhance
or reduce
• Blue Oceans are usually “self protecting for a number of
years” but will turn red over time – so continually look for
fresh blue Oceans…..
Where is Psion Teklogix next Blue Ocean?????