Focus on the Big Picture, Not the
Numbers
Blue Ocean Strategy
Meghan Davidson
Berklye Dominguez
Justin Pickard
Michael Simpson
Andrew Vargas
The “Typical” strategic plan
• A very long document made up of mishmash
data from different people of lengthy
description of current industry conditions and
competitive situations followed by a
discussion of how to increase market shares,
capture new segments, or cut costs. Then an
outline of goals and budgets with graphs and
spreadsheets
The “Typical” Strategic Plan cont.
• By doing things this way, managers spend the
majority of the time filling in boxes and
running numbers instead of thinking outside
the box to get a clearer picture of how to
break free from the competition
• Most of the time few employees in the
company even know what the strategy is
because it is just a mix match of data that is
collectively don’t add up in a clear defined
direction
Focus on the BIG Picture
• Alternative strategy approach that
consistently produces strategies that open
companies eyes to blue oceans
• By building a companys strategic planning
process around a strategy canvas, the
company focuses their main attention on the
big picture rater than becoming immersed in
numbers and jargon
Drawing Your Strategy Canvas
• Drawing strategy canvas does three things:
– Shows the strategic profile of an industry by
depicting very clearly the factors that affect
competition among industry players
– Shows the strategic profile of current and
potential competitors
– Company’s strategic profile-or value curvedepictiong how it invests
Drawing Your Strategy Canvas
• Drawing your strategy canvas can be tough
because many times very few people can see
the overall dynamics of their industry
• For example: A CIO might prize the company’s
IT system for its data-mining capacity, a
feature that is not really that important to
customers who are more concerned with
speed and ease of use
The Four Steps of Visualizing Strategy
European Financial Services (EFS) developed a
structured process for drawing and discussing
a strategy canvas that pushes a company’s
strategy toward a blue ocean
1. Visual Awakening
2. Visual Exploration
3. Visual Strategy Fair
4. Visual Communication
Step 1: Visual Awakening
• Compare your business with your
competitors’ by drawing your “as is” strategy
canvas.
• See where your strategy needs to change.
Common Mistakes
• Discussing strategy before resolving
differences
• Executives are reluctant to accept change
What prompted a change in strategy?
• A highly determined leader
• Serious Crisis
– Ex: General Motors
• Used a reactive instead of a proactive approach.
European Financial Services (EFS)
• Before implementing a Blue Ocean Strategy:
– Ill-defined and poorly communicated strategy
– Deeply Divided
– corporate culture =“Nuts in the field, brains in the
center”
EFS cont.
• Formed two executive teams from around the
world. (Australia, America, Asia, and Europe)
• Each team produced a value curve relative to
its competition
– Traditional business vs. Emerging Online Business
• Very painful experience!
EFS Strategy Canvas (offline)
EFS Strategy Canvas (online)
Step 2: Visual Exploration
• Send team hands on approach.
– How people use or don’t use products.
• Managers cannot outsource the face to face
interaction.
– Often rely on reports from people who are not
directly impacted.
– “ A company should never outsource its eyes.
There is not substitute for seeing for yourself.” (p.
88).
Michael Bloomberg
• Saw a need for providers of financial
information to have data online.
• Before traders use pencil, paper, and
calculator.
• Strategic insight allowed him to challenge the
boundaries that were created.
Visual Exploration Cont.
• Examine the strategic need first focus on
customers .
• Identify the product or service can lead to
bundling opportunities.
– Ex: AT&T bundling wireless, internet, and cable
• Alternative ways of that carry advantages and
characteristics.
– Ex: Driving is alternative to Flying.
Collecting Data
• EFS sent managers into the field to explore the
paths to create a blue ocean.
• Interviewed people involved with corporate
foreign exchange.
• Involved people and companies who could
benefit from using their services.
• Looked at subordinate products and services
that their customers used.
Evaluations from Fieldwork
• Managers research showed that conclusions
were inaccurate.
– Account relationship managers turned out to be
Achilles’ heel.
– Speedy confirmation of transactions was item that
customers valued most.
Reworking a New Strategy
• Teams sent back to propose strategy with six
new value curves
• Each new value curve tried to stand out
• Demanded six pictures that portrayed their
proposals
Visual Exploration
• For each visual strategy team had to write
compelling tagline.
• Led to competition between the two teams
and process was more enjoyable in developing
blue ocean strategies
Visual Exploration
• Hands on approach with fieldwork is
important for managers.
• “When you keep your hands on the objects in
view, it gives you a far better idea about the
object than if seen otherwise.” Washington
University psychologists
• Great strategic insights come from seeing
what is beyond the boundaries and borders
Step 3: Visual Strategy Fair
•
•
•
•
•
Attendees include:
Senior executives
Noncustomers
Customers of competitors
Demanding customers
EFS example
• 2 groups presented six strategies.
• Each group had 10 minutes
• Pictures of the strategy curves were hung on
the wall for all to see.
EFS ex. Cont.
• After the groups presented, each judge had 5
sticky notes to use to pick their favorites.
• Once they chose their favorites, they had to
explain why they chose favorites.
• They also had to explain why they did not
choose the other strategies.
What they learned
• EFS received a level of feedback they never
expected.
• 1/3 of what they thought were key factors
were in fact marginal to customers
• They learned that they needed to reevaluate
long-held assumptions.
How they changed
• They were able to draw a value curve that was
a truer likeness of the existing strategic profile
than anything they had produced earlier.
• They were in a position to draw a future
distinct strategy.
How they changed cont.
• They were able to shift focus from account
executives to integration with online services.
• They could offer payment tracking similar to
FedEx and UPS do for parcels
• “The FedEx of corporate foreign exchange:
easy, reliable, fast, and trackable.”
Step 4: Visual Communication
• This last step is important because you are to
communicate the future strategy in a way for
all employees to understand.
One-Page Picture
• History has shown it to be very helpful to put
the firm’s new and old strategic profiles on
one page.
• This makes it easier for all employees to see
where their company has been, and where it
needs to go.
European Financial Services
• Used the one-page picture to demonstrate to
all employees
• Employees could see clearly where the
company was and where it needed to focus to
have a promising future.
• Senior managers held meetings discussing the
picture and what needed to be eliminated and
raised to pursue a blue ocean.
European Financial Services
• Employees began a positive chain passing the
senior managers’ messages along.
• By having a clear game plan, employees were
excited and actually hung the picture up in
their cubicles to remind them of new
priorities.
• The one-page picture became a reference
point.
Visual Communication cont.
• This one-page reference point makes it easier
for all companies to continue in the same
direction.
• It reminds employees of the common goals of
the firm and changes bad habits into good
habits.
Visualizing Strategy at the Corporate
Level
• Greatly inform the dialogue among individual
business units and the corporate center in
transforming a company from a red ocean to a
blue ocean player
• Strategy canvases
– The understanding of the other businesses in the
corporate portfolio
Using the Strategy Canvas
• To demonstrate how this works, lets take
Samsung Electronics 2000 corporate
conference
– Attended by more than 70 top managers
– Presented their canvases and lots of heated
discussion between
• Top performers argued that future strategies were
constrained by the degree of competition
• Poor performers felt that they had little choice but to
match their competitors
Using the Strategy Canvas Cont.
• In the end they hypothesis proved to be false
when the mobile phone business presented its
strategy canvas
– The unit not only had a value curve but also faced
the most intense competition
• Now Samsung has institutionalized the
strategy canvas in its key business creations by
establishing Value Innovation Program (VIP)
VIP
• Core cross functional team members of
Samsungs various business units come
together in the VIP to discuss the strategic
projects focusing mainly on strategy canvases
• Assists the units in making their product and
service offering decisions
– For example: The LCD TV (worlds leading 40 inch)
and the mobile phone SGH T-100 (worlds best
selling mobile)
VIP cont.
• There is an annual Value Innovation corporate
conference by all its top executives
• This is one way that Samsung establishes a
common language system, instilling a
corporate culture and strategic norms that
drive its corporate business portfolio from red
to blue
Using the Pioneer-Migrator-Settler
(PMS) Map
• Visualizing strategy can also help managers
responsible for corporate strategy predict and
plan the company’s future growth and profit
• Especially valuable for managers who want to see
beyond today’s performance
• A company’s pioneers:
– (blue ocean strategists) are most powerful sources of
profitable growth that have a mass following of
customers and their value curve diverges from the
competition on the strategy canvas
Pioneer-Migrator-Settler cont.
• On the other hand the company’s Settler:
– Me-Too business-Business whos value curve conform
to the basic shape of the industry’s and will not
contribute much to a company’s future growth (Stuck
within the red ocean)
• The Migrators lie in-between:
– These business extend the industry’s curve by giving
customers more for less, but don’t alter its basic
shape and offer improved value but not innovative
value (fall in between red and blue ocean)
Using PMS
• A useful exercise for corporate management
profitable growth is to plot the company’s
current and planned portfolios on PMS map
– If current and planned portfolios consist mainly of
settlers then:
• (red ocean) and needs to push for value innovation
– If current and planned portfolios consist mainly of
migrators then:
• Reasonable growth can be expected but they are not
exploiting its potential fro growth
– The more industry settlers, the greater
opportunity to value-innovate and create blue
ocean of new market space
Shift the focus toward pioneers
• Executives should shift the their future
portfolio toward pioneer; which is the path to
profitable growth
• Executives should use value and innovation as
important parameters for managing their
portfolio
– Innovation because without it companies are
stuck in the trap of competitive improvements
– Value because innovation ideas will be profitable
Overcoming the Limitations of
Strategic planning
• Basically we need to focus on building the
process around the big picture and eventually
the details will fall into place once we focus on
the big picture it will yield much better results.
As Aristotle pointed out “The soul never
thinks with out an image.”