about winning without fighting

Blue Ocean Strategy

to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting

Master Sun Tzu in Art of War

Conventional Strategy
DIFFERENTIATION OR LOW COST

Blue Ocean talks about Value Innovation

DIFFERENTIATION AND LOW COST

BLUE OCEAN STRATEGY

Value Innovation
Region where a companys actions favourably affect both its cost structure and its value proportion to buyers Cost savings by eliminating and reducing the factors an industry competes on Buyer values is lifted by raising & creating elements the industry has never offered Over time, costs are reduced further as scale economies kick in

Costs

Value Innovation

Buyer Value

Comparison of Red vs. Blue

Conventional or Red Ocean Compete in existing market space Beat the competition Blue Ocean Create a new market space Make competition irrelevant

Exploit current demand Make the value cost trade-off

Fight to win

Create and capture new demand Break the value cost trade-off
Win without fighting

How to find new Value Curve

Four Actions Framework Eliminate
Which of the 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 has never offered?

Case Study 1 : US Wine Industry Pre-Yellow Tail

High

Low

Budget Wines Premium Wines

Case Study 1: US Wine Industry Post Yellow Tail

High

Budget Wines Premium Wines

Low

Yellow Tail

Case Study 1 : Value Curve for Yellow Tail

Eliminate
Enological Terminology Above the Line Focus on Aging Quality

Reduce
Vineyard Prestige & Legacy Wine Complexity Wine Range

Raise
Price as compared to Budget Retail Store Environment

Create
Easy Drinking Ease of Selection Fun & Adventure

Case Study 2 : US Women Exercise Pre Curves

High

Traditional Gym Home Exercise

Low

Case Study 2: US Women Exercise Post Curves

High

Traditional Gym
Home Exercise Curves Low

Case Study 2 : Value Curve for Curves

Reduce
When compared to traditional gym Price Amenities Equipment Workout time Availability of instructors

Raise
Environment encouraging discipline & motivation Same sex non-threatening

Create
Womanly fun atmosphere

Case Study 3 : Cricket Before IPL

High

Test Cricket

Low

One Day

Case Study 3: Cricket After IPL

High

Low
Test Cricket One Day 20-20

Case Study 3 : Value Curve for IPL

Reduce
Spectator Time Invested (Competes with Movie/Football) Emphasis on Classic Techniques (Batting/Bowling) Emphasis on Patience, Perseverance

Raise
Emphasis on Athleticism Pace of the Game Entertainment with Bollywood, Cheerleaders etc. Certainty of Result

Create
City Loyalty Welcome to Dummies

Is Tata Nano Really Creating a Blue Ocean ?

High
Small Car

Nano
2 Wheeler

Low

skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field Master Sun Tzu in Art of War

Reference : Blue Ocean Strategy By W. Chan Kim, Rene Mauborgne