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Blue Ocean Strategy

& Idea creation

Bart van Hattum

Date: 12.3.2013

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Business Model Generation – mentioned last week

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Blue Ocean Strategy – Agenda

1. Introduction

2. What is the method ?

3. How to use the method ?

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Why Blue Ocean Strategy?

“Make the competition irrelevant!”

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Create value AND lower costs at the same time

Waarde

Kosten

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Why do we stay on this train?

Why do we are in Red Oceans?• We think market boundaries are given• They are reconstructed by the actions & beliefs of industry players

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Video

• Video: http://www.youtube.com/watch?v=QPxLs0Cv4zY

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How to brake loose from the Red Ocean? An example

The Circus

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How to brake loose from the Red Ocean? An example

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What did they do?: increasing customer value at lower cost.

Costs

Value Innovation

Buyer Value

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How to attract a new type of customer?

Second Tier

Third Tier

Your current Market

First Tier

Non-customers who have never thought of your market’s offerings as an option.Non-customers who have never thought of your market’s offerings as an option.

Non-customers who refuse to use your industries offerings. Non-customers who refuse to use your industries offerings.

Your current customersYour current customers

• Define first, second and third tier customers• Define what they want to become a customer• Use those wants as ideas to reduce, eliminate, raise or create

• Define first, second and third tier customers• Define what they want to become a customer• Use those wants as ideas to reduce, eliminate, raise or create

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What to eliminate, create, or change?

Which factors should be

created that the industry has

never offered?

A New Value Curve

Create

Which of the factors that the

industry takes for granted should be eliminated?

Eliminate

Which factors should be

reduced well below industry

standards?

Reduce

Which factors should be raised

well above the industry’s standard?

Raise

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Example: Cirque Du Soleil brings the circus business to the next level. But how?

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Do your own exercise

• Pick a topic, product, campaign, etc.• Fill in the canvas

- 1. What are the key factors on which we compete today?- 2. How do we and competitors score on these factors?- 3. Evaluate all factors and Reduce, Eliminate, Raise and Create

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• compete in existing markets

• beat the competition

• explore existing demand

• make the value/cost trade-off

• align with differentiation OR low cost

• create uncontested markets

• make competition irrelevant

• create & capture new demand

• break value/cost trade-off

• align with differentiation AND low cost

RED OCEAN BLUE OCEAN

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Example: Citizen M

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How did Citizen M create a Blue Ocean?

• Eliminate: Reinvented the hotel concept: Small, standard rooms• Raise: Focus on ‘Mobile Citizens’: wifi, self service, ambassadors• Create: Affordable luxury for the people: design, living room• Reduce: major cost drivers: personnel, prefab building and distribution

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Go take a look! – Citizen M Rotterdam will be at the ‘A’

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Extra – not mentioned in class

• You can take a look at the example of Yellowtail wine:• http://blueoceanstrategy.org/Presentation.ppt#1971• And see the next slide to go through the steps to fill in the Blue Ocean

Canvas (put on ‘presentation’ mode)

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Three steps to fill in the canvas – example Yellowtail wine

High

Low

Price Use of enological

terminology

Above-the-line marketing Aging

quality

Vineyard prestige and legacy Wine

complexity

Wine range

Competitor B

1. What are the key factors on which we compete today?

2. How do we and competitors score on these factors?

“We (Current)”

Competitor A“We NEW”

We have created a blue ocean!

3. Evaluate all factors and make a new line by Reduce, Eliminate, Raise and Create

Easy drinkingEasy drinking

Ease of selectionEase of selection

Fun and adventureFun and adventure

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Templates to try this yourself!

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Eliminate

which factors that the industry takes for granted should be eliminated ?

Reduce

which factors should be reduced well below the industry’s standard ?

Raise

which factors should be raised well above the industry’s standard ?

Create

which factors should be created that the industry doesn’t offer ?

Draw your “to be” strategy canvas

1. What are the key factors on which we compete today?

2. How do we and competitors score on these factors?

3. Evaluate all factors and Reduce, Eliminate, Raise and Create

Steps:

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To conclude on Blue Ocean Strategy

• Blue Ocean Strategy can be used to make the competition irrelevant• It is also a good method to frame your thinking about new products and

markets• But, it gives no solutions for the problems in the Red Oceans (e.g. what

to do with the huge investments in things you already do)• And be aware: Blue Oceans will always become Red Oceans

eventually…

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Goed idee? - begin bij het waarom

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Hoe krijg je een goed idee? - vakliteratuur

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Ideeen krijg je niet alleen

• http://www.youtube.com/watch?v=NugRZGDbPFU

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Ontdek het onverwachte via anderen

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Appendix

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Maak van jezelf een Blue Ocean!

• Blue Ocean Strategy is ook toe te passen op jezelf

Volg de stappen• Verhogen: waar ben ik goed in en wil ik nóg beter in worden?• Verlagen: wat kost mij meer moeite dan het oplevert?• Weggooien: welke dingen zijn nutteloos of doet iedereen al?• Toevoegen: wat vind ik gaaf en kan ik me op onderscheiden?

• Door dit dan ook echt te gaan DOEN creëer je je eigen Blue Ocean

SUCCES!