Slides used for understanding Blue Ocean Strategy (2005) and Value Innovation. Grasping how to beat the Value/Cost Trade off

1. value creation and blue ocean strategy in the WAM

3. Value Innovation Blue Oceans vs Red Oceans Building Your Value Factors & Four Actions Framework

5. THE CONCEPT OF VALUE INNOVATION

6. UNDERSTANDING BLUE OCEAN STRATEGY

7. FOUR ACTIONS FRAMEWORK

9. Thinking Partnership Tell someone about a recent purchase you have been extremely happy with and one which you think added a lot of value to you. Why? What was the value it added?

10. Value is Multiple

11. VALUE INNOVATION PERCEIVED VALUE PRICE COST

12. Moving away from Strategy as the territory of War

13. Red and Blue Ocean Strategy Red Ocean Strategy Compete in existing market space Beat the competition Exploit existing demand Make the Value/Cost trade-off Align the whole system of a company’s activities with its strategic choice of quality differentiation or low cost Blue Ocean Strategy Create uncontested market space Make competition irrelevant Create & capture new demand Break the Value/Cost trade-off Align the whole system of a company’s activities with its strategic choice of quality differentiation and low cost

15. Value Innovation for [Yellowtail] 5 4 3 2 1 0 Price Wine range Aging quality Easy drinking Easy selection Fun & Adventure Wine complexity Vineyard prestige Above-the-line marketing Use of enological terminology Premium Wines Budget Wines Yellow Tail

16. “The most powerful family owned wine brand in Australia” Intangible Business(2009) “Fifth most powerful wine brand in the world” Food Week (2008)

17. Value Innovation For Cirque De Soleil HIGH Ringling Bros. and Barnum Bailey Value Curve Cirque De SoleilValue Curve Smaller Regional Circuses LOW Price Theme Unique Venue Animal Shows Fun and Humor Star Performers Thrills and Danger Aisle Concessions Multiple Productions Multiple Show Arenas Artistic Music and Dance Refined Watching Environment http://pds4.egloos.com/pds/200708/04/00/d0028500_05080812.jpg

18. high Level of value low e.g. price Value factors Strategy Canvas Plot value factors against level of value offered

19. Four Actions Framework (Kim & Mauborgne, 2005)

20. Four Actions Framework Cost Structure Reduction ELIMINATE What costs a lot and does not seem to add much more value? REDUCE Where can you decrease emphasis? Buyer Value RAISE Which current value offering should you increase, or add to? What can you increase that does not cost much, but raises the perceived value of what you sell considerably? CREATE What would your customer really appreciate that is not being offered in your industry at the moment? Is there any other value “factor” you could add or create which would make you stand out from everybody else who does what you do?

21. Value Innovation Are you seeing the whole picture? Ladder of Inference Value Factors – What are you assuming to be true which is not necessarily so?

22. VALUE INNOVATION How do you build VALUE? Perceived Benefit – Cost = Value Innovation

23. Value Innovation COSTS VALUE INNOVATION BUYER VALUE

24. Six Paths Framework To reconstruct market boundaries, look across:- Alternatives: Ch/air/bag, Art, Second hand stores, online etc Strategic groups – what does the premium market offer which would cost little to add Chain of buyers incl. strategic network Complementary products & services– coffee shop, meal coupons Functional or emotional appeal to buyers Time (Kim & Mauborgne, 2005)

26. INSIGHT USE INSIGHT USE UNCLEAR