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

• Examples of “blue Ocean”– Cirque du Soleil– Apple– Ryan Air (European Low cost airline)

• Value Innovation– “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

Costs

Buyer Value

Value Innovation

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

Make the value cost trade off Break the value cost trade off

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

Maximises value of prod within industryLooks across to complimentary product offerings

Functional / emotional orientation

Focus on improving price performanceRe-thinks the orientation within the industry

Time Focus on adapting to external trends Participates in shaping ext trends

A “fictional” Strategy Map for Psion Teklogix…

A possible Strategy Canvas for Psion and Motorola

0

1

2

3

4

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6

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Motorola

PT today

PT tomorrow

Where would you draw the strategy canvas for Psion Teklogix and our competitors?????

Eliminate - reduce - Raise - Create grid:

Eliminate

Trying to have a complete product for every market (IKON Variants)

Raise

QualityEase to do business withRelationship Management

Reduce

Focus on priceFocus on Ruggedness

Create

OSM & Modularity & commercialize this

Getting the Strategic sequence right

Exceptional utilityExceptional utility

Cost

Adaption

Blue Ocean

Price

Yes

Yes

Yes

Yes

No

No

No

Revenue Focused

Profit Focused

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?????