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Date Submitted: 10/24/2012 02:33 AM
Blue ocean strategy
Value Innovation
Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates.
The Six Principles of Blue Ocean Strategy
This figure highlights the six principles driving the successful formulation and execution of blue ocean strategy and the risks that these principles attenuate.
Reconstruct market boundaries
Focus on the big picture, not the numbers
Reach beyond existing demand
Get the strategic sequence right Search risk
Planning risk
Scale risk
Business model risk
Evaluation principles Risk factor each principle attenuates
Overcome key organizational hurdles
Build execution into strategy Organizational risk
Management risk
Strategy Canvas
The strategy canvas is both a diagnostic and an action framework for building a compelling blue ocean strategy. It captures the current state of play in the known market space. This allows you to understand where the competition is currently investing, the factors the industry currently competes on in products, service, and delivery, and what customers receive from the existing competitive offerings on the market. The horizontal axis captures the range of factors the industry competes on an invests in. The vertical axis captures the offering level that buyers receive across all these key competing factors. The value curve then provides a graphic depiction of a company’s relative performance across its industry’s factors of competition.