Zane BarnesJohnnie Davis

Nolan BosworthKimberly SmithShaina WeaverAnna Sterling

Clay Jones

Barriers to ImitationA blue ocean strategy brings with it

considerable barriers to imitationSome are operational and others are

cognitive. These barriers can usually last 10 to 15

years without credible challengesExamples include: Cirque du Soleil,

Southwest Airlines, FedEx, The Home Depot, Bloomberg, and CNN

Value InnovationA value innovation move does not make sense

based on conventional strategic logic.An example is CNN, who was ridiculed by

CBS, ABC, and NBC for the idea of 24/7, real-time news without star broadcasters. CNN was referred to as Chicken Noodle News by the industry. Ridicule does not inspire rapid imitation.

Imitation Barrier #2: Brand Image Conflict

Brand image conflict prevents companies from imitating a blue ocean strategy.

Body Shop example

Imitation Barrier #3: Natural MonopoliesNatural monopolies block imitation when the

size of the market can not support another player.

Kineplois example in Belgium

Imitation Barrier #4: Patents Patents or legal permits such as copyrights

block imitation.

Imitation Barrier #5: High VolumeHigh volume generated by value innovation

leads to rapid cost advantages

Wal-Mart example

Imitation Barrier #6: Networks externalitiesHaving an established specialized network

can create competition from imitating your blue ocean.

eBay Example- the more people eBay has within its network the more attractive it is to the customers. Switching to a new electronic auction web site with less users in its network is not desirable.

Imitation Barrier #7: Imitations require substantial changesTo imitate some blue oceans substantial

changes would need to be made. Southwest Airlines Example- to imitate

Southwest the competitors would have to make very radical changes very fast, that would put to much stress on the organization and caused it to fail.

Example of substantial changes needed: changing years of business practices, culture, prices, marketing, flexibility, retraining staff, new equipment, and changing company politics.

Imitation Barrier #8: Customer Loyalty• Companies that value-innovate earn brand

buzz and a loyal customer following that tends to shun imitators.

• Example: Microsoft has been trying to loosen Quicken’s grip on money and business management software to no avail. The brand buzz and loyalty toward Quicken are so great that even though MS manufactures the most popular operating system in the world and bundles in MS Money, Quicken is still the premier personal finance software in the U.S.

Imitation Barriers to Blue Ocean StrategyThe barriers to imitate Blue Oceans are many and

difficult to overcome. Blue ocean strategy is a systems approach that requires not only getting each strategic element right but also aligning them in an integral system to deliver value innovation. (BOS pg. 187)

• Synergy

Imitation Barriers to Blue Ocean Strategy: The ListValue innovation does not make sense to a company’s

conventional logic.Blue ocean strategy may conflict with other

companies’ brand image.Natural monopoly: The market often cannot support a

second player.Patents or legal permits block imitation.High volume leads to rapid cost advantage for the

value innovator, discouraging followers from entering the market.

Network externalities discourage imitation.Imitation often requires significant political,

operational, and cultural changes.Companies that value-innovate earn brand buzz and a

loyal customer following that tends to shun imitators.

When to Value-Innovate AgainEventually almost every blue ocean strategy will be

imitated -Causes you to fall into the trap of competing, in order to beat the new

competition

Over time you start to focus on the competition, and not the buyer

-If you stay on this course, the basic shape of your value curve will begin to converge with those of the competition

When to Value-Innovate AgainTo avoid the trap of competing you need

to monitor your value curve on the strategy canvas.-monitoring value curves signals when to value-innovate and when not to

It alerts you to reach out for another blue ocean when your value curve begins to converge with those of the competition

When to Value-Innovate AgainMonitoring your value curve also keeps you

from pursuing another blue ocean when there is still a profit stream to be collected from your current offering..

When a company’s value curve still has focus, divergence, and a compelling tagline then you should resist the temptation to value-innovate again and should instead focus on lengthening, widening, and deepening your rent stream through operational improvements and geographical expansion to achieve maximum economies of scale and market coverage.

When to Value-Innovate AgainBecause your aim is to dominate the blue ocean over

your imitators for as long as possible you should…Swim as far as possible into the blue oceanMake yourself a moving targetDistance yourself from early imitators

When to Value Innovate Again cont…• Rivalry Increases + (Total Supply > Total

Demand) = Bloody Competition and Red Ocean

• Plot your own and your competitors’ value curve on a strategy canvas to determine when you should create a new blue ocean.

• The closer they are, the more imitation and convergence there is, and the closer you are to a red ocean.– Ex: Body Shop

Cirque du Soleil

Four Actions Framework

• Good to Great: Stop doing List.

Six PrinciplesThe 6 principles of blue ocean strategy

proposed should serve as essential pointers for every company thinking of its future strategy6 principles:

Reconstruct market boundaries Focus on the big picture, not the numbers Reach beyond existing demand Get the strategic sequence right Overcome key organizational hurdles Build execution into strategy

ConclusionTo obtain high performance in this overcrowded

market, companies should go beyond competing for share to creating blue oceans.

Because red and blue oceans have always coexisted, reality suggests that companies succeed in both oceans and master strategies for both.

Companies need to learn how to make competitors irrelevant

This book aims to help balance the scales so that formulating and executing blue ocean strategy can become as systematic and actionable as competing in the red oceans of known market space.