Team 6
Andrew Etlinger
Ashley Harris
Blake Green
David Styers
Carolynn Schnaubelt
Analytical Tools and Frameworks
 Objectives
 Developing practical tools and frameworks to achieve a Blue Ocean
with an explanation of a Strategy Canvas
 Making Blue Ocean strategy systematic and actionable as easy as
possible by implementing the value curve
 Using Strategic Profiles to utilize market share
The Strategy Canvas
 Strategy Canvas- An analytic framework that is central to value
innovation and the creation of blue oceans..
 A diagnostic and an action framework that helps create an effective
BOS
 Acknowledge where the market stands and what companies are doing
in it.
 What the prices of certain materials are at a certain period of time
 How companies are presenting their goods/services to the common consumer
 Company and product awareness
 Quality the product or service portrays
Reputation that the company is known for
 Amount of density the product or service has on the consumer
 The diverse range of the company’s products

The Strategy Canvas
 Value Curve- A basic component of the strategy canvas, is a graphic
depiction of a company’s relative performance across its industry’s
factors of competition.
 Strategic profiles- used to distinguish between one tier against another
tier of competitors
 Both high and low strategic profiles share the same essential shape in its respective
market place
 Minimize benchmarking and extensive customer research
 Trying to out perform your competitor will hardly help a company reach an
uncontested market
 Instead focus on alternatives and noncustomers
 In the path to a BOS , competitors and customers should be in the company’s
peripheral
The Strategy Canvas
http://philiphallenborg.files.wordpress.com/2008/02/strategy-canvas.jpg
The Four Actions Framework
 The authors developed the four actions framework in order to
reconstruct buyer value elements while crafting a new value
curve.
 In order to create a new value curve, four questions must be
answered:
 Which factors that the industry takes for granted should be eliminated?
 Which factors can be reduced well below industry standards?
 Which factors should be raised well above the industry standards?
 Which factors should be created that the industry has never offered?
The Four Actions Framework
http://www.aspire.com.my/002%20SA/Figure%202.png
The Four Actions Framework
 Eliminate
 Often the factors that need to be cut out are ones that
the companies have always competed on within the
industry
 Some of these factors no longer have any real value or
may even detract value
 Buyers values tend to change overtime and companies
how are focused on Red Sea tactics of benchmarking fail
to act on or even perceive these changes
 Ex: Cirque de Soleil eliminated star performers, animal
shows, aisle concessions, and multiple show rings from
the circus industry.
The Four Actions Framework
 Reduce
 Companies need to figure out which products or service
have been “overdesigned” in the race to keep up with the
competition
 Example: Gillette Fusion v. Schick Quattro
 In these situations, companies over serve their
customers, resulting in an increase in cost structure with
no gain in return
The Four Actions Framework
 Raise
 Factor that need to be raised are those that the industry
forces the consumers to compromise
 Example:


Southwest Airlines raised the level of customer service
They also increased speed by creating frequent point-to-point
departures and connecting midsized cities rather than having
flight converge in a hub.
The Four Actions Framework
 Create
 By creating new factors in a industry, companies
discover new sources of value for buyers and create new
demand while shifting the strategic pricing of the
industry.
 Example:


[yellowtail] created wines than were less complex and
therefore appealed to a broader cross section of alcohol
beverage consumers
Wii Gaming system
The Four Actions Framework
 The first two questions (eliminating and reducing)
give companies the knowledge of how to lower prices
compared to the competition
 The last two questions (raising and creating) give
companies insight into how to create demand and
increase buyer value
The Eliminate-Reduce-RaiseCreate Grid
 This is the third and final tool that is a key for
creating blue oceans.
 It not only has companies push to ask the
questions of what to eliminate, reduce, raise,
create, but also to act on them as well.
 By acting on these questions, it allows the
companies to create a new value curve.
Benefits from the EliminateReduce-Raise-Create Grid
 First of all, it pushes the company to simultaneously
pursue differentiation and low cost to break the cost
value trade off.
 Second, it flags the company that they are only
focused on raising and creating, which often leads to a
higher cost structure and over engineering
products/services.
 Third, it is easily understood by all levels of
management.
 Finally, the grid cause management to scrutinize the
company more, ensuring that they will no longer make
assumptions when competing.
The Eliminate-Reduce-RaiseCreate Grid
 This is the last tool that is key in creating blue oceans
 Example: Yellow Tail Wine
Eliminate
Enological terminology and
distinctions
Raise
Price versus budget wines
Retail store involvement
Aging qualities
Above-the-line marketing
Reduce
Wine complexity
Create
Easy drinking
Wine range
Ease of selection
Vineyard prestige
Fun and adventure
Three Characteristics of a Good
Strategy
 Focus
 The company does not diffuse its efforts across all key
factors
 Divergence
 It looks across alternatives instead of benchmarking
competitors
 Compelling Tagline
 Clear-cut and truthful
 [yellow tail], Cirque du Soleil, and Southwest Airlines
created blue oceans by having these three
characteristics in their strategic profiles
Focus
 The company’s strategic profile or value curve should
clearly show the focus.
 Southwest Airlines only emphasizes three factors:
friendly service, speed, and frequent point-to-point
departures and by doing this it has been able to price
against car transportation.
 Southwest’s competitors cannot match this because
they invest in all the industry’s factors.
Divergence
 You want your value curve to be different than your
competitors on the strategy canvas.
 To create a different value curve apply the four actions
of eliminating, reducing, raising, and creating.
 Southwest was the first to have point-to-point travel
between midsize cities unlike their competitors who
just went to large cities.
Compelling Tagline
 A good tagline gives a clear message and is truthful
otherwise customers will lose trust and interest.
 A way to test the effectiveness and strength of a
strategy is to see if it contains a strong and authentic
tagline.
 [yellow tail]’s strategic profile is clear by using the
tagline: a fun and simple wine to be enjoyed every day.
Reading the Value Curves
 Overall, the strategy canvas allows companies to
examine the future in the present.
 If a company meets the 3 criteria: focus, divergence,
and a compelling tagline; that company is on the right
track to be a winner.
 If a company does not meet the 3 criteria and the value
curve converges with its competitors the company will
most likely get caught in the Red Ocean.
Reading the Value Curves (cont.)
 When a company’s value curve has all high level
factors, this is not necessarily good. The company’s
market share and profitability must reflect these
investments. If not, this means the company may be
oversupplying their customers.
 When the company’s curve goes in zigzag patterns this
means the company does not have a strategy and the
company is based on independent sub strategies.
Reading the Value Curves (cont.)
 Strategic contradictions are seen when a company
offers a high level on one competing factor while
ignoring others that support that factor.
 Ex. Easy to use website that moves very slow.
 A company must also use good competing factors.
 Use language that is easily understood by the customers.
Conclusion of Tools and Framework
 Using all of the tools and analytical techniques
discussed in this chapter are essential to help
companies break from competition and compete in
the blue ocean world.