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Blue ocean strategy

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How to make your competitors irrelevant by adopting a Blue Oceans Strategy

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Blue ocean strategy

  1. 1. BLUE OCEANS STRATEGY Concepts and Ideas By John IBEBUNJO
  2. 2. • Lead Consultant/ Principal; TRG & DEV Int’l Associates Ltd – a consultancy firm that exists to bridge the knowing -doing – gap in client organizations. • Professional: OD Consultant & Trainer/ Facilitator • SHRM (Certified member) • Consultant: HCD, ODP, Change Manager, Program Manager, Strategy & Planning Expert and Monitoring & Evaluation Consultant ABOUT JOHN IBEBUNJO B.TECH., MSC., MBA (IN VIEW) • Project Lead: Federal Govt. projects, State-wide audit and verification; monitoring & evaluation programs in Nigeria. • Passion: Helping ORG. & Individuals develop and implement STRATEGIC PLANS & Facilitating TRAINING. • Convener: Periodic Training Programs in Abuja. • Experience: 18+ years
  3. 3. INTRODUCTIONS • Your Name • Your Professional Background • Your Role in your org • Something personal about you • Something you did recently that you are proud of • Your Hopes and Aspirations
  4. 4. RULES OF ENGAGEMENT • Participate to the best of my ability • Be mindful of my use of air-time • Be authentic in my sharing • Be present in mind and body • Respect other views, even if I disagree • Silence all phones • ______________________________ • ______________________________
  5. 5. SESSION LEARNING GOALS • Introduction to Blue Oceans Strategy • Understanding when your Organization needs Blue Ocean Strategy • Understanding how to break away from the Red Ocean • Defining the central features of Blue Ocean Strategy • Engaging Blue Ocean Thinking, Shifting and Leadership
  6. 6. 7 WHAT IS BLUE OCEAN! RED OCEAN! RED OCEAN FOCUSES ON KNOWN MARKET SPACE BLUE OCEAN FOCUSES ON UNKNOWN MARKET SPACE
  7. 7. RED OCEAN DEFINED Industry boundaries are defined and accepted, Competitive rules of the game are known. Companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody.
  8. 8. BLUE OCEAN DEFINED Blue oceans are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. Blue oceans are created well beyond existing industry boundaries. Blue oceans are created from within red oceans by expanding existing industry boundaries, e.g. UBER. Blue oceans, competition is irrelevant because the rules of the game are waiting to be set.
  9. 9. 8 BLUE OCEANVS RED OCEAN Red Ocean Strategy Blue Ocean Strategy Compete in existing market Create uncontested market space Beat the competition Make the competition irrelevant Exploit existing demand Create and capture new demand Make the value-cost trade-off Break the value-cost trade-offs Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Align the whole system of a firm’s activities in pursuit of differentiation and low cost. (e.g. 5 star accommodation for 3 star price)
  10. 10. WHY BLUE OCEAN? RED OCEAN success is attained by how well you can swim to out-compete your rivals. Forces of SUPPLY and DEMAND playing out. (Supply Demand) Organizations need to go beyond “competing” To Seize new profit and growth opportunities, they have to create blue oceans.
  11. 11. MILITARY SENSE OF STRATEGY? Strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant
  12. 12. BLUE OCEAN STRATEGY? BLUE OCEAN Strategy is defined as how to succeed in business/ career/ life by creating instead of competing. BLUE OCEAN Strategy is about innovative creations leveraging on opportunities. BLUE OCEAN Strategy creates a different approach and competes by creating a new market.
  13. 13. BLUE OCEAN INNOVATIONS DISRUPTIVE CREATIONS; Requires changing an existing product into a brand new product. e.g. Uber NON-DISRUPTIVE CREATIONS; Requires creating a new opportunity from an old/ existing product -e.g. the filling station that owns a restaurant, becoming a famous restaurant that has a filling station.
  14. 14. OPTIONSTO LAUNCH A BLUE OCEAN STRATEGY Launching a completely new industry, like eBay did it with online auctions … Create a Blue Ocean inside of a Red Ocean … when a venture enlarge the borders of an existing industry… more common approach… easier …(Cirque du Soleil).
  15. 15. HOWTO USE BLUE OCEAN STRATEGY (METHODOLOGY) Understand Blue Ocean Strategy principle Define the competition’s factors Analyze the curve Design your own curve; reduce, delete, increase, create Does it make sense for the customer
  16. 16. BLUE OCEAN SHIFT The concept of Blue Ocean Shift answers the question; How do we shift ourselves our teams and our organizations from competing to creating and from cut-throat market to wide open new market? E.g. Facebook, Uber, Amazon etc.
  17. 17. BLUE OCEAN SHIFT Value for the customer Value Innovation Cost for the Venture
  18. 18. BLUE OCEAN SHIFT CONCEPT Create new markets and leave the competition. Stop making competing your number one priority, make creating your number one priority Shift your organization from competing in cut- throat arena to creating new opportunities in the wide open space without limiting boundaries. E.g. (5-star comfort, 3-star price)
  19. 19. 7 BLUE OCEANS SHIFT “FIVE STEPSTO SUCCESS” Choose the right place to start and build the right team. Get super clear on the current state of play in your industry. Discover hidden pain points that limits the size of your industry and discover non-customers. Rebuild market boundaries systematically. Conduct rapid market tests, finalizing and launching your blue ocean move.
  20. 20. 7 HOWTO CREATE BLUE OCEAN STRATEGY Successful Blue Ocean shifts are purely hinged and analyzed based on the strategic move made by the company? A strategic move is the set of managerial actions and decisions involved in making a major market- creating business offering. What is your organization’s Strategic Move?
  21. 21. 8 THE SIX PRINCIPLES APPROACHTO BLUE OCEAN STRATEGY (BOS) Formulation Principles 1. Reconstruct market boundaries 2. Focus on the big picture, not the numbers 3. Reach beyond existing demand 4. Get the strategic sequence right Evaluation principles 5. Overcome key organizational hurdles 6. Build execution into strategy
  22. 22. 8 THE SIX PRINCIPLES APPROACH – REDUCE RISK Formulation Principles 1. Reconstruct market boundaries Search risk 2. Focus on the big picture, not the numbers Planning risk 3. Reach beyond existing demand Scale risk 4. Get the strategic sequence right Business model risk Evaluation principles 5. Overcome key organizational hurdles Organizational risk 6. Build execution into strategy Management risk
  23. 23. APPLYING (BOS)TO AN EXISTING COMPANY Strategy : Result : Quality War Price, Red Ocean 1 2 3 4 5 6 High Low Competitive Factors : Those on which the quality of the product / service is built on Search for quality in all All the companies the competitive factors develop the same factors
  24. 24. BLUE OCEAN STRATEGY Breaks the trade--‐off between differentiation and low cost and creates a new value curve
  25. 25. 9 FOUR ACTION FRAMEWORK OF BOS • The four actions framework offers a technique that breaks the trade-off between differentiation and low cost and intend to create a new value curve. • It answers four key questions: • 1. What industry takes for granted and needs to be eliminated; • 2. What factors need to be reduced below industry standards; • 3. What factors need to be raised above industry standards; • 4. What should be created that the industry has never offered.
  26. 26. 3 CHARACTERISTICS OF A GOOD STRATEGY 1. FOCUS 2. DIVERGENCE 3. COMPELLINGTAGLINE
  27. 27. FINAL WORDS ON BOS The real objective of BOS is to act on all four to create a new value curve. • By driving companies to fill in the grid with the actions of eliminating, reducing, raising, and creating, the grid provides four immediate benefits: 1. It pushes them to simultaneously pursue differentiation and low costs; 2. Identifies companies who are only raising and creating thereby raising costs; 3. Makes it easier for managers to understand and comply; 4. Drives companies to scrutinize every factor the industry competes on.
  28. 28. QUESTIONTIME
  29. 29. THANKYOU

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