march 10 09 finalforposting with speakernotesblue ocean strategy presentation

HARVARD BUSINESS SCHOOL CLUB OF WASHINGTON DC

ENTREPRENEURSHIP ROUNDTABLE

WEBINAR SERIES FOR NATIONAL UNIVERSITY STARTUP COMPETITION

INTRODUCTION TO INNOVATIVE STRATEGIES FOR ENTREPRENEURS SERIES

March 10, 2009 WEBINAR

THIS WEBINAR SERIES - OUR APPROACHOur Objective:• To make participants in the competition aware of

cutting edge approaches to conceiving and launching new ventures

Our Target Audience: • University researchers who are considering

launching new ventures

• Calendar:– January 27/09: A presentation of Some Traditional Basic

Elements for Venture Development– February 9/09: An Overview of Disruptive Innovation

Strategy – Today/March 10/09: An Overview of Blue Ocean Strategy

TODAY’S SESSION

Blue Ocean Strategy:

This new thinking makes it possible for innovative entrepreneurs to increase their chances for success and the extent of potential success. It includes:

• Insights about the innovative positioning of new ventures; and • Tools to make it possible.

To help you:

• Modify your business model, • Re-orient your product or service, • Change the borders of your target market, and • More effectively carry out your venture.

CUSTOMER ORIENTATION

• A distinctive aspect of Blue Ocean Strategy is that:

• instead of looking to serve existing prime customers in the existing market place,

- it is largely concerned with modifying a

product or service offering, and

- establishing new market space by targeting

dissatisfied customers and non-customers,

the potential customers for the new venture.

THE POTENTIAL IMPACT OF BLUE OCEAN

What interests me most about Blue Ocean is that it gives you a path to find and implement a winning formula for your business model:

• with improved understanding of the way that markets work; along with• methods of analysis, and tools for strategy implementation

BLUE OCEAN BACKGROUND

• This discipline has been developed by W.Chan Kim and Renée Mauborgne, professors at INSEAD, who are co-authors of the book, Blue Ocean Strategy, and are co-directors of the Blue Ocean Institute.

• Blue Ocean Strategy provides an approach to conceiving ventures that allows you to reconfigure your product or service offering and its market.

• The discipline began with the study of successful strategic moves by many businesses in many different industries over the years - everything from Henry Ford’s Model T to the Cirque de Soleil.

• Its principal objective is to make it possible to reconfigure and implement a new business model in order:

• to leave a highly-contested market (a “Red Ocean” with blood in the water); and

• create new market space without effective competition (a “Blue Ocean”).

• The Blue Ocean approach makes use of a process called “value innovation” in which you:

• look at the elements of a product or service offering on which ventures in the industry compete, and

• determine elements that can be: – Eliminated, – Reduced, – Improved, and – Added

THE KEY TO BLUE OCEAN STRATEGY

• Doing value innovation is not simple, but there is an excellent systematic approach and there are tools to help you:

• Modify your product/service offering; • Change the market borders of your business

model; and • Implement your strategy – with execution methods

to incorporate into it.

PRESENTERS

• Mario Castaneda Director of the Boston Office of StratX ([email protected])

• Marshall Maglothin, COO of Inpatient Specialists, and President of Blue Oak Consulting ([email protected])

• Bob Kolodney, serial entrepreneur and moderator of the Entrepreneurship RoundTable of the Harvard Business School Club of Washington, DC ([email protected])

10

©From www.StratX.com

BLUE OCEAN STRATEGY

Blue Ocean Strategy: How to Create Uncontested Market Space and

Make the Competition Irrelevant

RESEARCHING THE HISTORY OF BLUE OCEAN CREATION

• Data: 150 blue ocean creations, more than 30 industries, over 100 years (1880-2000)

• Hotel, cinema, retail, airline, energy, computer, broadcasting, home construction, automobile, steel manufacturing, chemicals, cosmetics, software, etc.

• Variables considered: industrial, organizational, strategic© Kim & Mauborgne 2005 – all rights reserved

Business Launch

Revenue Impact

Profit Impact

Red OceansMarket-Competing Business Launches

Blue OceansMarket-Creating Business Launches

Companies Have Achieved Substantially Higher Returns from Investments in Blue Oceans

© Kim & Mauborgne. All Rights Reserved. 13

Industry History Teaches Us That:

Blue oceans are not about technology innovation per se

Incumbents often create blue oceans - and usually within their core businesses

Company and industry are the wrong unit of analysis

Creating blue oceans builds brands

© Kim & Mauborgne. All Rights Reserved.

Red Ocean Versus Blue Ocean Strategy

Create uncontested market space

Blue Ocean StrategyRed Ocean Strategy

Compete in existing market space

Beat the competition

Exploit existing demand

Make the value-cost trade-off

Make the competition irrelevant

Create and capture new demand

Break the value-cost trade-off

Align the whole system of a firm’s activities with its strategic choice of

differentiation or low cost

Align the whole system of a firm’s activities with its strategic choice of

differentiation and low cost

© Kim & Mauborgne 2005 – all rights reserved

Blue Ocean

Strategy

Value Innovation: The simultaneous pursuit of differentiation and low cost

Eliminate

Reduce

Raise

Create

Cost

Buyer Value

Value

Cost


Value Innovation is the cornerstone of blue ocean strategy. Value innovation is the simultaneous pursuit of differentiation and low cost. Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company, thereby opening up new and uncontested market space. Because value to buyers comes from the offering’s utility minus its price, and because value to the company is generated from the offering’s price minus its cost, value innovation is achieved only when the whole system of utility, price and cost is aligned.

In the Blue Ocean Strategy methodology, the Four Actions Framework and ERRC grid assist managers in breaking the value-cost tradeoff by answering the following questions:

What factors can be eliminated that the industry has taken for granted?What factors can be reduced well below the industry’s standard?What factors can be raised well above the industry’s standard?What factors can be created that the industry has never offered?

VALUE INNOVATION


http://www.blueoceanstrategy.com/about/tools/4_actions.html

A NewValue Curve

Four Actions Framework ReduceWhich factors should be reduced well below

the industry’s standard?

Eliminate Which factors that the

industry takes for granted should be

eliminated ?

RaiseWhich factors should be raised well above

the industry’s standard?

CreateWhich factors should

be created that the industry has never

offered?


FOUR ACTIONS FRAMEWORK

To reconstruct buyer value elements in crafting a new value curve, we use the Four Actions Framework.

As shown in the diagram above, to break the trade-off between differentiation and low cost and to create a new value curve, there are four key questions to challenge an industry's strategic logic and business model:

• Which of the factors that the industry takes for granted should be eliminated?

• Which factors should be reduced well below the industry's standard?

• Which factors should be raised well above the industry's standard?

• Which factors should be created that the industry has never offered? © Kim & Mauborgne 2005 – all rights reserved

EliminateEliminate RaiseRaise

ReduceReduce CreateCreate

ERRC Grid:

Which factors can you eliminate that your industry

has long competed on?

List those factors here…

Which factors should be reduced below above the

industry’s standard?


Which factors should be created that the industry has

never offered?


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



ERRC GRIDThe Eliminate-Reduce-Raise-Create Grid (ERRC) is complementary to the four actions framework. It pushes companies not only to ask all four questions in the four actions framework but also to act on all four to create a new value curve, essential for unlocking a new blue ocean.

By driving companies to fill in the grid with the actions of eliminating and reducing as well as raising and creating, the grid gives companies four immediate benefits:

• It pushes them to simultaneously pursue differentiation and low cost to break the value-cost trade off.

• It immediately flags companies that are focused only on raising and creating and thereby lifting the cost structure and often over- engineering products and services - a common plight in many companies.

• It is easily understood by managers at any level, creating a high level of engagement in its application.

• Because completing the grid is a challenging task, it drives companies to robustly scrutinize every factor the industry competes on, making them discover the range of implicit assumptions they make unconsciously in competing. © Kim & Mauborgne 2005 – all rights reserved

The strategy canvas is the central diagnostic and action framework for building a compelling blue ocean strategy. The horizontal axis captures the range of factors that the industry competes on and invests in, and the vertical axis captures the offering level that buyers receive across all these key competing factors.

The strategy canvas serves two purposes:• Firstly, it captures the current state of play in the known market space. This allows you to understand where the competition is currently investing and the factors that the industry competes on.• Secondly, it propels you to action by reorienting your focus: - from competitors to alternatives; and - from customers to non customers of the industry.The value curve is the basic component of the strategy canvas. It is a graphic depiction of a company's relative performance across its industry's factors of competition.

As you can see on the diagram above, what makes a good value curve is focus, divergence as well as a compelling tagline.

THE STRATEGY CANVAS


Budget Wines

Premium Wines

hi

lo

off

erin

g le

vel

Wine range

Vineyardprestige

and legacy

Agingquality

Above-the-line

marketingPrice

Use of enological terminology and

distinctions in winecommunication

Wine complexity

The US Wine Industry


EliminateEliminate RaiseRaise

ReduceReduce CreateCreate

Eliminate-Reduce-Raise-Create Grid:[The case of yellow tail]

Enological terminologyand distinctions

Aging qualities

Above-the-line marketing

Wine complexity

Wine range

Vineyard prestige

Easy drinking

Ease of selection

Fun and adventure

Price versus budget wines

Retail store involvement


Result: Strategy Canvas [of yellow tail]

Premium Wines

Budget Wines

[yellow tail]

Easydrinking

Ease of selection

Fun &Adventure

hi

lo

off

erin

g le

vel

Wine range

Vineyardprestige

and legacy

Agingquality

Above-the-line

marketingPrice

Use of enological terminology

and distinctions in wine

communication

Wine complexity


THREE TIERS OF NON-CUSTOMERS


THREE TIERS OF NON-CUSTOMERS

Typically, to grow their share of a market, companies strive to retain and expand existing customers. This often leads to finer segmentation and greater tailoring of offerings to better meet customer preferences. The more intense the competition is, the greater, on average, is the resulting customization of offerings. As companies compete to embrace customer preferences through finer segmentation, they often risk creating too-small target markets.

To maximize the size of their blue oceans, companies need to take a reverse course. Instead of concentrating on customers, they need to look to noncustomers. And instead of focusing on customer differences, they need to build on powerful commonalities in what buyers value. That allows companies to reach beyond existing demand to unlock a new mass of customers that did not exist before.

Although the universe of noncustomers typically offers big blue ocean opportunities, few companies have keen insight into who noncustomers are and how to unlock them. To convert this huge latent demand into real demand in the form of thriving new customers, companies need to deepen their understanding of the universe of noncustomers.


• There are three tiers of noncustomers that can be transformed into customers. They differ in their relative distance from your market.

• The first tier of noncustomers is closest to your market. They sit on the edge of the market. They are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself. However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand.

• The second tier of noncustomers is people who refuse to use your industry’s offerings. These are buyers who have seen your industry’s offerings as an option to fulfill their needs but have voted against them.

• The third tier of noncustomers is farthest from your market. They are noncustomers who have never thought of your market’s offerings as an option.

By focusing on key commonalities across these noncustomers andexisting customers, companies can understand how to pull them into their new market.

THREE TIERS OF NON-CUSTOMERS- CONT


The Six Conventional Boundaries of Competition

To Creating Across

From Competing

Within

Industry

Strategic group

Buyer group

Scope of product or service

offeringFunctional-emotional

orientation of an industry

Time

Six Paths to Blue Ocean Strategy


6 PATHS: Allows Exploration Outside of Traditional Boundaries


Path 6 - TimeWhat trends have a high probability of impacting your industry, are

irreversible, and evolving in a clear trajectory? How will these trends impact your industry? Given this, how can you open up

unprecedented customer utility?Apple Music, Cisco Systems, CNN,

HBO’s “Sex and the City”

Path 6 - TimeWhat trends have a high probability of impacting your industry, are

irreversible, and evolving in a clear trajectory? How will these trends impact your industry? Given this, how can you open up

unprecedented customer utility?Apple Music, Cisco Systems, CNN,

HBO’s “Sex and the City”

Path 1 - IndustryWhat are the alternative industries to your industry?

Why do buyers trade across to them?NTT DoCoMo, Federal Express, Southwest Airlines, NetJets

Path 1 - IndustryWhat are the alternative industries to your industry?

Why do buyers trade across to them?NTT DoCoMo, Federal Express, Southwest Airlines, NetJets

Path 2 – Strategic GroupWhat are the strategic groups in your industry?

Why do buyers trade up for the higher group, and why do they trade down for the lower one?

Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus

Path 2 – Strategic GroupWhat are the strategic groups in your industry?

Why do buyers trade up for the higher group, and why do they trade down for the lower one?

Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus

Path 3 - Buyer GroupWhat is the chain of buyers in your industry?

Which buyer group does your industry typically focus on?If you shifted the buyer group of your industry,

how can you unlock new value?Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips Alto

Path 3 - Buyer GroupWhat is the chain of buyers in your industry?

Which buyer group does your industry typically focus on?If you shifted the buyer group of your industry,

how can you unlock new value?Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips Alto

Path 4 - Scope of product or service offeringWhat is the context in which your product or service is used?

What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a

complementary product or service offering?Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis

Kiné-kids, Zenick Salick’s Cancer Centers

Path 4 - Scope of product or service offeringWhat is the context in which your product or service is used?

What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a

complementary product or service offering?Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinépolis

Kiné-kids, Zenick Salick’s Cancer Centers

Path 5 - Functional-emotional orientation of an industryDoes your industry focus on functionality or emotional appeal? If

you compete on emotional appeal, what elements can you strip out to make it functional? If you compete on functionality, what

elements can be added to make it more emotional?Starbucks, QB House, Direct Line Group, Pfizer’s Viagra

Path 5 - Functional-emotional orientation of an industryDoes your industry focus on functionality or emotional appeal? If

you compete on emotional appeal, what elements can you strip out to make it functional? If you compete on functionality, what

elements can be added to make it more emotional?Starbucks, QB House, Direct Line Group, Pfizer’s Viagra

Sequence of

Blue Ocean Strategy


e

PMS MAP


PMS MAPA useful exercise for a corporate management team pursuing profitable growth is to plot the company's current and planned portfolios on the pioneer-migrator-settler (PMS) map.

For the purpose of the exercise, settlers are defined as me-too businesses, migrators are business offerings better than most in the marketplace, and a company's pioneers are the businesses that offer unprecedented value.

These are your blue ocean strategies, and are the most powerful sources of profitable growth. They are the only ones with a mass following of customers.

If both the current portfolio and the planned offerings consist mainly of settlers, the company has a low growth trajectory, is largely confined to red oceans, and needs to push for value innovation. Although the company might be profitable today as its settlers are still making money, it may well have fallen into the trap of competitive benchmarking, imitation, and intense price competition.


PMS MAP - CONTIf current and planned offerings consist of a lot of migrators, reasonable growth can be expected. But the company is not exploiting its potential for growth, and risks being marginalized by a company that value-innovates. In our experience the more an industry is populated by settlers, the greater the opportunity to value-innovate and create a blue ocean of new market space.

This exercise is especially valuable for managers who want to see beyond today's performance. Revenue, profitability, market share, and customer satisfaction are all measures of a company's current position. Contrary to what conventional strategic thinking suggests, those measures cannot point the way to the future; changes in the environment are too rapid. Today's market share is a reflection of how well a business has performed historically.

Clearly, what companies should be doing is shifting the balance of their future portfolio toward pioneers. That is the path to profitable growth. The PMS map above depicts this trajectory, showing the scatter plot of a company's portfolio of businesses, where the gravity of its current portfolio of twelve businesses, expressed as twelve dots, shifts from a preponderance of settlers to a stronger balance of migrators and pioneers. © Kim & Mauborgne 2005 – all rights reserved

FOUR HURDLES TO STRATEGY EXECUTION


FOUR HURDLES TO STRATEGY EXECUTION

Once a company has developed a blue ocean strategy with a profitable business model, it must execute it. The challenge of execution exists, of course, for any strategy. Companies, like individuals, often have a tough time translating thought into action whether in red or blue oceans.

The challenges managers face are steep. They face four hurdles:

• A cognitive hurdle. waking up employees to the need for a strategic shift. Red oceans may not be the paths to future profitable growth, but they feel comfortable to people and may have even served an organization well until now, so why rock the boat?

• Limited resources. The greater the shift in strategy, the greater it is assumed are the resources needed to execute it. But many companies find resources in notoriously short supply

• Motivation. How do you motivate key players to move fast and tenaciously to carry out a break from the status quo?

• Politics. As one manager put it, “In our organization you get shot down before you stand up.”


FOUR HURDLES TO STRATEGY EXECUTION - CONT

Although all companies face different degrees of these hurdles, and many may face only some subset of the four - knowing how to triumph over them is key to attenuating organizational risk.

To achieve this effectively, however, companies must abandon perceived wisdom on effecting change. Conventional wisdom asserts that the greater the change, the greater the resources and Time you will need to bring about results.

Instead, you need to flip conventional wisdom on its head using what we call tipping point leadership. Tipping point leadership allows you to overcome these four hurdles fast and at low cost while winning employees’ backing in executing a break from the status quo.

The key questions answered by tipping point leaders are as follows: • What factors or acts exercise a disproportionately positive influence – • On breaking the status quo? • On getting the maximum bang out of each buck of resources? • On motivating key players to aggressively move forward with change? • On knocking down political roadblocks that often trip up even the best strategies?

By single mindedly focusing on points of disproportionate influence, tipping point leaders can topple the four hurdles that limit execution of blue ocean strategy. They can do this fast and at low cost. © Kim & Mauborgne 2005 – all rights reserved

FAIR PROCESS

• Engagement

• Explanation

• Expectation

Clarity


FAIR PROCESS• Engagement

• Explanation

• Expectation

Clarity

What is fair process?

Fair process builds execution into strategy by creating people's buy-in up front. When fair process is exercised in the strategy making process, people trust that a level playing field exists. This inspires them to cooperate voluntarily in executing the resulting strategic decisions.

There are three mutually reinforcing elements that define fair process: engagement, explanation, and clarity of expectation.

Whether people are senior executives or shop employees, they all look to these elements. We call them the three Ε principles of fair process.


FAIR PROCESS - CONT

The Three Principles of Fair Process

Engagement

Engagement means involving individuals in the strategy decisions that affect them by asking for their input and allowing them to refute the merits of one another’s ideas and assumptions.

Encouraging refutation communicates management’s respect for individuals and their ideas. Encouraging refutation sharpens everyone’s thinking and builds better collective wisdom.

Engagement results in better strategic decisions by management and greater commitment from all involved to execute those decisions

• Engagement

• Explanation

• Expectation

Clarity


FAIR PROCESS - CONT


Explanation

Explanation means that everyone involved and affected should understand why final strategic decisions are made as they are.

An explanation of the thinking that underlies decisions makes people confident that managers have considered their opinions and have made decisions impartially in the overall interests of the company.

An explanation allows employees to trust managers’ intentions even if their own ideas have been rejected. It also serves as a powerful feedback loop that enhances learning.

• Engagement

• Explanation

• Expectation

Clarity


FAIR PROCESS - CONT• Engagement

• Explanation

• Expectation

Clarity


Expectation Clarity

Expectation clarity requires that after a strategy is set, managers state clearly the new rules of the game. Although expectations may be demanding, employees should know up front what standards they will be judged by and the penalties for failure.

When people clearly understand what is expected of them, political jockeying and favoritism are minimized, and people can concentrate on executing the strategy rapidly.

==========================================================================

Taken Together these criteria collectively lead to judgments of fair process. This is important because any subset of the three does not create judgments of fair process.


The conventional theory of organizational change rests on transforming the mass. So change efforts are focused on moving the mass, requiring steep resources and long time frames — luxuries few executives can afford.

Tipping point leadership, by contrast, takes a reverse course. To change the mass it focuses on transforming the extremes: the people, acts, and activities that exercise a disproportionate influence on performance.

By transforming the extremes, tipping point leaders are able to change the core fast and at low cost to execute their new strategy.

CONVENTIONAL WISDOM

VS

TIPPING POINT LEADERSHIP


In carrying out tipping point management, several approaches help to make it happen:

• Providing first-hand experience of conditions and problems

• Using a “Consigliore”

• Leveraging “Angels” and Silencing “Devils”

• Using “Kingpins”

• Using “Fishbowls”

• Identifying and Addressing Hot Spots and Cold Spots

• Horse-trading for Resources

• Atomizing

TOOLS OF TIPPING POINT LEADERSHIP

Formulation Risks

Execution Risks

Formulation Principles

Execution Principles

Minimizing Risks & Maximizing Opportunities in Formulating and Executing Blue Ocean Strategy

Focus on the big picture, not the numbers

Search Risk

Reach beyond existing demand

Get the strategic sequence right

Overcome key organizational hurdles

Build execution into strategy

Reconstruct market boundaries

Planning Risk

Scale Risk

Business Model Risk

Organizational Risk

Management Risk


THE MAIN THINGS TO TAKE AWAY FROM TODAY’ SESSION

Blue Ocean Strategy is a well-developed coherent Discipline with great potential utility for Entrepreneurs

• It emphases the reconfiguration of business models;• It concentrates on marginal customers and non-customers;• Its Objective is to create new uncontested market space for a reoriented

product or service model• It incorporates “Value Innovation”• Value innovation involves four actions with respect to the elements of a

product offering on which an industry competes: - Eliminate;

- Reduce - Raise - Create

• A Strategy Canvas shows a “Value Curve” - which should show focus, differentiation and a compelling tag line;

• Your Blue Ocean Concept should be sequenced (Review: Buyer Utility, Pricing, Cost, Adoption Hurdles to be addressed)

• Even a valid Blue Ocean Offering requires implementing change – which is challenging – and the Blue Ocean Discipline has tools to facilitate this (e.g. Fair Process, Tipping Point Management)

Q & A

……………Wrap-up

SUPPLEMENTAL CONSIDERATIONS – DRILLING DOWN

We have presented an overview of Blue Ocean Strategy. You should be aware that the discipline contains additional tools to help you carry out various tasks.

Here is a thumbnail sketch of tools for developing buyer utility and for doing strategic pricing – two particularly difficult challenges for Entrepreneurs

BUYER UTILITY CYCLE – 6 UTILITY LEVERSConsider The Six Stages of the Buyer Experience Cycle:Purchase – >Delivery – > Use – > Supplements – >Maintenance – >Disposal

At each stage consider Six Utility Levers:Customer Utility – Simplicity – Convenience – Risk Reduction – Fun/Image – Environmental Friendliness

How long does it take to find a product you need?

Is the place of purchase attractive and accessible?

How secure is the transaction environment

How rapidly can you make a purchase?

How long does it take to get the product delivered?

How difficult is it to unpack and install the new product?

Do buyers have to arrange delivery themselves? If yes, how costly and difficult is this?

Does the product require training or expert assistance?

Is the product easy to store when not in use?

How effective are the product’s features and functions?

Does the product or service deliver far more power or options than required by the average user? Is it overcharged with bells and whistles?

Do you need other products or services to make this product work?

If so, how costly are they?

How much time do they take?

How much pain do they cause?

How easy are they to obtain?

Does the product require external maintenance?

How easy is it to maintain and upgrade the product?

How costly is maintenance?

Does use of the product create waste items?

How easy is it to dispose of the product?

Are there legal or environmental issues in disposing of the product safely?

How costly is disposal?

© Kim & Mauborgne. All Rights Reserved

THE BUYER UTILITY MAP

Purchase Delivery Use Supplements Maintenance Disposal

Customer Productivity

Simplicity

Convenience

Risk Reduction

Fun/Image

Environmental

Friendliness


Then use the Buyer Utility Map to find possible utility levers to use at each stage of the Buyer Experience Cycle:

THEN UNCOVER (AND TRY TO RESOLVE)

THE BLOCKS TO EACH POSSIBLE UTILITY LEVER

Customer Productivity In which stage are the biggest blocks to Customer Productivity?

Simplicity: In which stage are the biggest blocks to Simplicity?

Convenience: In which stage are the biggest blocks to Convenience?

Risk Reduction: In which stage are the biggest blocks to Risk Reduction?

Fun/Image: In which stage are the biggest blocks to Fun/Image?

Environmental

Friendliness: In which stage are the biggest blocks to Environmental

Friendliness?


Purchase Delivery Use Supplements Maintenance Disposal

IN DOING STRATEGIC PRICING YOU CAN USE

THE PRICE CORRIDOR OF THE MASSStep 1: Identify the price

Corridor of the mass

Three alternative product/service types:

Different form

Same Different form, and function,

form same function same objective


Size of circle is proportional to number of buyers that product/service attracts

Upper-level pricing

Mid-level pricingLower-level pricing

High degree of legal and resource protection

Difficult to imitate

Low degree of legal and resource protection

Some degree of legal and resource protection

Step 2: Specify a price level within the corridor

Price Corridor

of the Mass

DON’T FORGET ABOUT THE IMPLEMENTATION TOOLS:

• BLUE OCEAN STRATEGY PROVIDES THE CONCEPTS AND TOOLS TO CRAFT BUSINESS MODELS THAT HAVE A HIGH POTENTIAL FOR SUCCESS.

• THE IMPLEMENTATION APPROACHES OF BOS ARE ALSO WELL WORTH MASTERING FOR ENTREPRENEURS BECAUSE THEY DEAL WITH CARRYING OUT CHANGE.

• THERE ARE POWERFUL PSYCHOLOGICAL AND HUMAN NATURE FORCES BEHIND TIPPING POINT MANAGEMENT AND FAIR PROCESS.

•USING THEM EFFECTIVELY CAN MAKE IT POSSIBLE: - TO OVERCOME RESISTANCE; - EXECUTE EFFECTIVELY WITH LIMITED RESOURCES; - AVOID HALF-HEARTED EFFORTS; AND - MAKE POSSIBLE TEAMWORK WITH THE FULL ENTHUSIASM, ENERGY, RESOURCEFULNESS AND INITIATIVE THAT MAKE THINGS HAPPEN.

THE MAIN THINGS TO TAKE AWAY FROM THIS WEBINAR SERIES

• Entrepreneurship is challenging;• The business plan is important and useful;• Making adjustments as you go along is the key to real success.• Entrepreneurship is not an ivory tower activity;• Customers’ needs should be your needs;• You need to learn how to sell;• You need to know how to break-even, and you need to manage your

cash;• You should be on the lookout for a winning formula for your business;• Disruptive Innovation and Blue Ocean Strategy can help you improve

the likelihood and the extent of success for your venture;• The needs of non-customers may be as important, or more important,

to you as existing customers of an industry;• The insights and tools developed by Clayton Christensen, W. Chan

Kim, and Renée Mauborgne and their collaborators can make a big difference to entrepreneurs, and we are all in their debt.

RESOURCES FOR THIS SESSION

• Overview information about Blue Ocean strategy at www.blueoceanstrategy.com , particularly the diagrams in the BOS tools section (found under “About Blue Ocean Strategy) and the summaries (found under “Press Resources” and elsewhere)

• Book: Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne – Professors at INSEAD and Co-Directors of the Blue Ocean Institute

• Blue Ocean Simulation Software by StratX (www.stratx.com)

MOST OF THE MATERIALS FOR THIS SESSION – INCLUDING ALL OF THE DIAGRAMS – COME FROM THE BLUE OCEAN WEBSITE AND BOOK.

WE THANK PROFESSORS KIM AND MAUBORGNE FOR THEIR USE

http://www.blueoceanstrategy.com/

http://www.stratx.com/

RESOURCES FOR THIS WEBINAR SERIES

• Overall: Wiki Statement for the Entrepreneurship Round Table Innovative Strategies for Entrepreneurs Best Practices Initiative – posted at the website of the Harvard Business School Club of Washington DC (www.hbsclubwdc.net) on the Entrepreneurship tab

• For the January 27 session: The materials at website of Steven Brandt, www.scbrandt.com – particularly Entrepreneuring: The Ten Commandments and Profit Mechanics (in the "Building a Business" section;

• For the February 9 session: Various information on disruptive innovation strategy at the Innosight website, www.innosight.com, and the book, The Entrepreneur's Guide to Growth, (as well as The Innovator's Dilemma, the Innovator’s Solution and Seeing What's Next)

• For the March 10 session: Overview information about Blue Ocean strategy at www.blueoceanstrategy.com , particularly the diagrams in the BOS tools section (under “About Blue Ocean Strategy”) and the book, Blue Ocean Strategy, as well about Blue Ocean concepts, simulation and certification at www.stratx.com

http://www.hbsclubwdc.net/

http://www.scbrandt.com/

http://www.innosight.com/

http://www.blueoceanstrategy.com/

COMMUNICATIONS

• Mario Castaneda – [email protected]

• Marshall Maglothin – [email protected]

• Bob Kolodney – [email protected]

march 10 09 finalforposting with speakernotesblue ocean strategy presentation

Documents

blue ocean approach

blue ocean institute

red ocean

new business model

new market space

new thinking

new venturescalendar

market borders