Conclusion To Blue Ocean Strategy
Ashleigh Wright
Lucas Raney
Marshall Lester
Michael Greene
The People
Proposition
“Incentives put in place for the
people needed to support and
implement the strategy”
Optimally, a People Proposition:
Makes everyone a “winner”
Makes buy-in easy
Is differentiated from the
competition
Is also low cost
Spotify’s People Proposition
● Spotify is in a blue ocean, blending song selection (such as iTunes)
and free music (such as Pandora) into one platform
● Supports users AND contributors--everyone’s a winner:
○ Free/inexpensive music for listeners
○ Revenue for musicians per listen
○ Ad visibility for companies doubles as revenue for Spotify
● Easy to use and runs on all platforms
● Buy-in costs nothing for free users and $9.99 monthly for paid users
Strategy
Misalignment
Value, Profit and People
Propositions must all align for
success!
All angles must be considered:
Strategy must differentiate and be
low-cost
Must consider all stakeholders
People have to want to use your
product
Microsoft Zune: Failure to Differentiate
Microsoft’s answer to Apple’s iPod
Zune HD = iPod Touch
Performed well, fantastic software
Priced similarly to iPod
Why did it fail?
Released in 2006, iPod in 2001--too late to market, big player already established
Very similar to iPod, no highly differentiating features, seen as a “copycat”
“Its design marked it as being different from an iPod, but that was pretty much the only
Renewing Blue
Oceans
“A dynamic process”
All Blue Oceans Become Red
Barriers to Entry
When to find a new ocean
Making the jump repeatable
Barriers to Imitation of a BOS
1.
Value innovation does not make sense to a company’s conventional logic.
2.
Blue ocean strategy may conflict with other companies’ brand image.
3.
Natural monopoly: The market often cannot support a second player.
4.
Patents or legal permits block imitation.
5.
High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market.
6.
Network externalities discourage imitation.
7.
Imitation often requires significant political, operational, and cultural changes.
1.Value Innovation
Value innovation does not make sense
based on conventional strategic logic.
Value innovation takes risk and is often
ridiculed because it doesn’t follow
conventional business logic, and ridicule
doesn’t inspire imitation.
Chart Industries used value innovation for
their venture in LNG for vehicle fueling.
2. Brand Image
Established brand image prevents
companies from imitating a Blue Ocean
Strategy.
Many companies already have a well
established image and don’t want to
damage it by imitating other brands.
For example: Crocs footwear
3. Natural Monopoly
Natural Monopoly blocks imitation when
the size of a market cannot support
another company.
Railways are a good example of Natural
Monopoly.
4. Patents or Legal Permits
Patents or Legal permits prevent imitation.
Chart Industries uses patents to protect
their products and prevent imitation by
competitors.
Cryocooler design patent
5. Cost Advantages
Rapid cost advantages for larger
companies from buying in high volume.
Imitators cannot keep up with production
because volume is not as high.
6. Network Externalities
Innovative companies will have a larger
follower/customer base than an
imitator.
Gives customer no incentive to use
alternatives.
Wickr, Slingshot
7. Politics
Many companies are stuck in their ways
and do not have the resources to
imitate new blue oceans.
Many times the politics of a company
cannot bear the significant changes in
the short term.
8. Brand Buzz
People want the latest products from the actual innovator themselves, not a knock-off.
Brand Buzz can make or break your company.
Important when being a value innovator to get your brand out and make sure your
product/service is being reciprocated well.
All blue oceans tend to
eventually have competition.
When to ValueInnovate Again
Important to monitor value
curve signals.
When converging with
competition, innovation is
necessary.
Most Recent Patents
3 in ‘06
Chart Industries
Patents
1 in ‘07
1 in ‘08
1 in ‘10
References
● Zune Article:
http://www.slate.com/articles/technology/technology/2012/10/microsoft_zune_how_one_of_the_big
gest_flops_in_tech_history_helped_revive.html