Blue Oceans

and
Other BIG Strategic Ideas
What You Will Learn
Become familiar with concepts behind
Blue Ocean Strategy
Learn what MPI has done to apply Blue
Ocean concepts to your association
Learn about net creation and open
innovation
Formulate ideas on how you might be able
to apply these ideas to your own work
 Red Oceans represent all industries in existence
today.

They have defined rules, competitors, and market

boundaries.

Key words might include competition, price wars,

market share, commoditization, benchmarking,
strategic positioning, value add.
 Blue Oceans represent all industries
NOT
in existence today.

This is undefined market space, otherwise known

as OPPORTUNITY.

Key words might be value innovation, focus,

differentiation, creation of demand, new
marketplace
 Most blue oceans are created from red
ocean companies expanding industry
boundaries.

For example, Cirque du Soleil or [yellowtail]

(more on this in a bit)
 The phrase Blue oceans is new, but the
concept is not. Think of what industries
existed in 1900.

Take 3 minutes
At your table, brainstorm a list of industries
that have emerged since then.
 Some of them might be
automotives, aviation, health care, plastics,
DVDs, computers, personal entertainment
devices (iPods, for example).

All of these industries created

new market space.
 The premise is simple:

To win in the future, companies must stop

competing with each other.

The only way to beat the competition is to

stop trying to beat the competition.
The business environment in which most
business strategy and management has
been based on is changing, evolving or
disappearing.
Some of this change is due to technology.
Other reasons might be culture,
globalization, speed of new information, or
the role of demographics in the workplace.
 Value innovation is the new strategic logic
behind Blue Ocean Strategy.

Instead of focussing on beating the competition,

you focus on making it irrelevant by creating a
leap in value for buyers and creating
uncontested market space.
Value innovation only occurs when organizations
have aligned innovation with utility, price and
costs.

The market must be ready to accept the product,

meaning that timing is key.

The focus is on both differentiation and low cost to

provide value to both customers and the
organization.
Graph of Value Innovation
Case study: Cirque du Soleil

Other circuses focused on:

Benchmarking the competition
High-profile stars, which increased costs
but who were largely unknown to the
general public
Traditional venue
Traditional audiences
Case study: Cirque du Soleil
Cirque du Soleil focused on:
Creation of a hybrid between the circus and the
theatre
Retention of the symbolic and glamorous
aspects of circus, such as the tent and the more
breathtaking aspects, such as acrobats
Incorporation of more comfort, sophistication,
elegance and theatrical plots; this brought not
only the richness of theatre but a whole new
demographic of customers
It looked across market boundaries and created
new ones.
 The Strategy Canvas
Captures the current state of play in the
market by detailing the factors players
compete on in product, service and
delivery
For example, the wine industry competes
on price per bottle, refined image in
packaging, marketing strategies, aging
quality of wine, prestige of vineyard,
complexity of taste and diverse product
range
 Ranking Scale

0
2
4
6
8
10
12
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Competetive Factors
ss
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Possible Wine Canvas

Fu
n
Yellowtail
Mission Hill
Quails Gate
 The Strategy Canvas
Each factor is plotted on the canvas, with
a high score reflecting the level of
investment a specific company makes in
that factor (for example a high score on
price means that the price per bottle is
high)
When you plot all US wineries, they score
remarkably similarly
Example of a Strategy Canvas

Blue Ocean
Space
 The Strategy Canvas
To differentiate yourself in the market
place, you must focus on alternatives and
non-customers to re-define the
marketplace
For example, Casella Wines looked at the
strategy canvas and redefined the
question: How do you make a fun and
non traditional wine that is easy for
everyone to drink?
Case Study: [yellowtail]

Casella saw that most US consumers

preferred beer, spirits and pre-packaged
cocktails to wine
Consumers saw wine as a turn-off due to
It was pretentious
The taste was too complex
It could be intimidating
Case Study: [yellowtail]
They created a wine that broke out of the
red ocean by creating a wine that:
Appealed to beer and spirits drinkers by being
fun and unpretentious as well as to wine
drinkers
Had a less complex, sweeter and smooth
taste
Was easy to select as it did not focus on
prestige, aging, etc.
They eliminated all factors that the wine
industry had long competed on
 Four Actions:
Eliminate/Reduce/Raise/Create
Which of the factors that the industry
takes for granted should be eliminated?
Which should be reduced?
Which should be raised well above
standard?
Which factors should be created that have
not existed before?
 3 Characteristics of
a Good Strategy
It is focused; it is not diffused across all
potential aspects of the market
The shape of the value curve diverges
from any potential competitors
It has a compelling tagline
Your Strategy Canvas
At your table, choose an industry one (or
more) of you belong to.
What industry are you in?
What factors does it traditionally compete
on? (i.e. price, amenities, etc.)
Are there any factors that set you apart?
Are there any factors that do not add any
value and could be dropped?
What could be created to add value?
Creation Nets and Open Innovation

Open innovation is the concept that by

looking beyond your own boundaries, you
can gain access to better ideas,
knowledge and technology than you could
by relying on your own resources
Networks of creation, or Creation Nets
are an extension of this concept
Creation Nets
Involve many sometimes hundreds or
even thousands of people from diverse
backgrounds coming together, often over
the internet, to create knowledge, learn
best practices, and build on each others
work.

Nobody is as smart as everybody

William C. Taylor, Founder of Fast Company
The Positive Press
For companies, creation nets have many
advantages:
The rapid flow of change in todays economy
makes new knowledge valuable, as opposed
to the past where a private knowledge base
could give value overlong periods
Greater access to intellectual resources
Greater access to new and different
technologies
Ability to tap into knowledge across traditional
knowledge boundaries and industries
Creative breakthroughs
The Negative Press
Trust can be hard to establish
Concerns about proprietary information
Large groups of people working to innovate
together can be hard to control
Conflict among participants increases the more
people involved
Different tolerances for cost
Uncertainty on how to create value
Loss of confidence in own abilities
Net Creation at Work
Development of iPod was stimulated
through a creation net formed by a
smaller player in the marketplace,
PortalPlayer
The development of Linux, a computer
operating system, was through net
creation and involved companies such as
IBM, Intel and Hewlett Packard
The discovery of gold in an Ontario mine
at Goldcorp, today considered the worlds
richest mine
Net Creation at Work
Development of the internet itself

The worlds most important technology

platform relies on ideas and computer
code generated largely by a decentralized
corps of volunteer programmers, most of
whom have never met each other and few
of whom work together in any formal
setting
William C. Taylor, Mavericks at Work
Net Creation Summary
Just because you are in charge doesnt
mean you need to have all the answers
Just because people dont work for you
doesnt mean that they cant work with
youbut you have to invite them
No one is as smart as everyone
It is about the architecture of
participation (Tom OReilly, OReilly Media)
Personal Creation Networks
Find a partner:
How can you utilize this concept either
personally or at work?
What technology exists that you can use?

At your table:
Share your ideas.
Pick one that you can share with the room