Team 4:
Brent Hare
Ty Parasiliti
Josh Fernino
Vincent Ukwu
Lance Hollister
Chris Kerschen
Victor Hemmati
Value Innovation
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“The Cornerstone of the Blue Ocean Strategy”
Blue Oceans
◦ Make the competition irrelevant
◦ Create and captures new demand
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Red Oceans
◦ Compete in existing market space
◦ Beat the competition
Value Innovation
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Cirque Du Soleil
Is it circus, theater, ballet, or a Broadway
show?
Creates value while at the same time it is very
innovative
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Strategy Canvas
◦ Captures the current conditions of competitors in
an industry
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4 Actions Framework
◦ Helps companies break away from the traditional
value curve and create a new one
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Eliminate/Reduce/Raise/Create Grid
◦ Helps companies to act on the 4 questions
presented in the framework to create the new value
curve
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3 Characteristics of a good strategy
◦ Focus : A company’s value curve should show that
its efforts are not scattered across all key factors of
competition
◦ Divergence : Blue ocean value curves always stand
apart from competitors
◦ Compelling Tagline : Must deliver a clear message
to customers that compels them to use the product
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Understanding Value Curves
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Six Paths Framework:
Path 1: Look Across
Path 2: Look Across
Industries
Path 3: Look Across
Path 4: Look Across
Service Offerings
Path 5: Look Across
Appeal to Buyers
Path 6: Look Across
Alternative Industries
Strategic Groups Within
the Chain of Buyers
Complementary Product and
Functional or Emotional
Time
Path 1: Look Across Alternative Industries
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Alternatives VS. Substitutes
◦ Substitutes: products in different forms that have
the same functionality
◦ Alternatives: products with different functions that
serve the same purpose
Path 2: Look Across Strategic Groups Within
Industries
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Companies in a particular industry that
pursue a similar strategy
Based on two dimensions
◦ Price
◦ Performance
Key to creating blue oceans is to break out of this
narrow tunnel vision
Path 3: Look Across the Chain of Buyers
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There is a chain of “buyers” who are directly
or indirectly involved in the buying decision
◦ Purchasers: pay for the product or service
◦ Users: people who use the product or service
◦ Influencers: influence a decision one way or the
other
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These groups may overlap, but often differ
Path 4: Look Across Complementary Product and
Service Offerings
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The key is to define the total solution buyers
seek when they choose a product or service.
Way to do this is by thinking about what happens
before, during, and after your product is used.
e.g. Babysitting and parking, operating and
application software, airline ground
transportation
Path 5: Look Across Functional or Emotional
Appeal to Buyers
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Path 5 looks at the competition in an industry not
just in the scope of its products and services but
also on two possible bases of appeal.
Functional Appeal
◦ Some industries compete based on price and function
largely on calculations of utility, their appeal is rational.
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Emotional Appeal
◦ Other industries compete largely on feelings: their
appeal is emotional, more personal.
Path 6: Look Across Time
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All industries are subject to external trends
that affect their businesses over time
Rapid rise of the internet
Global movement toward protecting the
environment
These trends can help create blue ocean
opportunities
Focusing on the Big Picture
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BOS develops alternative approach of drawing
strategic canvas
Find new opportunities and break away from
existing red oceans
Focus on the big picture and not just
numbers and operational procedures
Strategy Canvas
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Four steps of visualizing strategy:
◦ Visual Awakening
 Compare with competitor’s businesses by creating an
“as is” strategy canvas
 Discuss what changes should be made
◦ Visual Exploration
 Decide where to implement six paths of Blue Oceans
 Decide what factors to keep, eliminate, or modify
Strategy Canvas Cont.
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Visual Strategy Fair
◦ Get feedback on alternative strategy canvases from
customers, competitor’s customers, and noncustomers
◦ Use feedback to build the best “to be” future strategy
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Visual Communication
◦ Compare before and after strategic profiles
◦ Support only those projects that allow your company to
close the gaps to actualize the new strategy
Pioneer-Migrator-Settler (PMS) Map
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Identifies strengths and weaknesses
Pioneers: Blue Ocean Businesses
Migrators: Improved value, but not innovative
value
Settlers: Stuck in red ocean and do not
contribute to future growth
Ultimately helps visualize, plan, and predict a
company’s future growth and profit
Maximizing the Blue Ocean
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To maximize the size of their Blue Ocean
companies need to reverse course and
consider:
◦ Looking to Non-Customers
◦ Building powerful commonalities on what customers
buy
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Doing this will allow companies to reach
beyond existing demand to unlock a new mass
of customers
From Exceptional Utility to Strategic Pricing
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To secure a strong revenue stream for your
offering, you have to set the right strategic price.
Many companies may take the reverse course and
test the product in different situations before
deciding to lower their prices.
It is crucial to know how the company will set its
pricing strategy from the start.
Tipping point leadership & conventional wisdom
• Conventional wisdom asserts that the greater the
change, the greater the resources and time you will
need to bring about results.
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Transforming the extremes will transform the masses.
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Leveraging tipping point leadership.
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Focus on acts of disproportionate influence.
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Align employees’ actions with the new strategy.
Fair process and blue ocean strategy
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Commitment, trust, and voluntary
cooperation are not merely attitudes or
behaviors; they are intangible capital
Trust brings heightened confidence in one
another’s intentions and actions
Commitment enables people to override
personal self-interest in the interest of the
company
Fair process and blue ocean strategy
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Commitment, trust, and voluntary
cooperation allow companies to stand apart
in the speed, quality, and consistency of their
execution and to implement strategic shifts
fast at low cost
The question raised by management is how
to create trust, voluntary cooperation, and
commitment deep within the organization