Blue Ocean Strategy

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.