Introduction to Blue Ocean Strategy by Derek Hendrikz

Introduction to BlueOcean Strategy
derek hendrikz

Based on ‘Blue Ocean Strategy’, a book published
in 2005 and written by W. Chan Kim and Renée
Mauborgne, Professors at INSEAD and Co-Directors
of the INSEAD Blue Ocean Strategy Institute
Presented by
www.derekhendrikz.com

BOS defined…
The avoidance of costly competition
through innovation with the aim to create
a market where no firms currently
operate, leaving the company to expand
without competition.

BOS & Strategic Positioning

Viewing the Cost / Value Relationship as Inverse…
Cost
Reduction
Value
Increase
• Increase of value implies
increase of cost
• Reduction of cost implies
decrease in value

Viewing the Cost / Value Relationship as Direct…
Cost
Reduction
Value
Increase
• Both cost reduction and
value increase are
possible…

Value to
Company
Value to
Customer
Efficiency
Based
Effectiveness
Based

Profit and Growth Consequence of Creating BOS

Six Principles of BOS
• Reconstruct market boundaries
• Focus on the big picture, not
the numbers
• Reach beyond existing demand
• Get the strategic sequence right
Formulation
Principles
• Overcome key organisational
hurdles
• Build execution into strategy Execution
Principles

1. Reconstruct Market Boundaries…

2. Focus on the Big Picture, Not the Numbers…
• Which factors
should be created
that the industry
never offered?
• Which factors
should be raised
well above the
industry standard?
• Which factors
should be reduced
well below the
industry standard?
• Which of the factors
that the industry
takes for granted
should be
eliminated?
Eliminate Reduce
Raise Create

Reduce
A New
Value
Curve
Create
Raise
Eliminate

3. Reach Beyond Existing Demand…

4.
Get the Strategic
Sequence
Right…

5. Overcome Key Organisational Hurdles…

6. Build Execution into Strategy…
Explanation
Engagement
Expectation Clarity

BOS Case Studies…
Cirque du Soleil:
Blending of opera and ballet with circus format while eliminating star
performer and animals.
Netjets:
Fractional jet ownership.
Southwest Airlines:
Offering flexibility of bus travel at the speed of air travel using secondary
airports.

BOS Case Studies (cont)…
Curves:
Redefining market boundaries between health clubs and home exercise
programs for women.
Home Depot:
Offering the prices and range of lumberyard, while offering consumers
classes to help them with DIY projects.
Dyson:
Cyclonic Vacuum Cleaners.

Working with other BOS Tools…

The Strategy Canvas:
• Shows the strategic profile of an industry by depicting very clearly the
factors that affect competition among industry players, as well as those
that might in the future.
• Shows the strategic profile of current and potential competitors,
identifying which factors they invest in strategically.
• Draws the company’s strategic profile, or value curve, showing how it
invests in the factors of competition and how it might invest in them in
the future.
• The horizontal axis lists factors of competition for the industry.
• The vertical axis indicates the degree to which industry players and the
providers of alternative services invest in the competitive factors.

Strategy Canvas for Cirque du Soleil

The PMS Grid:

PMS Grid Sample…

The Buyer Experience Cycle / Buyer Utility Map
(BEC / BUM) Framework

Tipping Point Leadership…

Introduction to Blue Ocean Strategy by Derek Hendrikz

Introduction to Blue Ocean Strategy by Derek Hendrikz

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