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Value Innovation
Blue Ocean Strategy is about revolutionary
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.
Creating Customer Value: 9 Questions To Answer
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...
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Red Ocean Strategy
In the red ocean (Head-To-Head competition
area),
differentiation
costs because firms
compete with the same
best-practice principle. Here, the strategic choices for firms are to pursue
either differentiation or low cost.
The focus is on rivals within an industry,
competitive
position within a strategic group; better
serving the buyer group, maximizing the
value of product or service offerings within the bounds of its industry,
and adapting to external trends as they occur.
Blue Ocean Strategy
In case of revolutionary value innovation (radical
innovation), the strategic aim is to create new best-practice rules by
breaking the existing value-cost trade-off and thereby creating blue ocean.
10 Commandments of Innovation
To define a blue ocean strategy, you should
look across alternative industries, look across strategic group within
industry, redefine the industry buyer group, look across to complementary
product and service offerings, and participate in shaping external trends
over time. You need to
stand
apart in the marketplace. So, your strategy must deviate from
me-too-ism, and your value curve must diverge from industry standards.
Venture Strategies and Blue
Ocean Strategy
“Blue Ocean Strategy” has a lot in common with
the well-known term “Venture
Strategy.” Venture strategies have been being practiced by many
market leaders
for decades. There are some difference between “Venture Strategies” and
“Blue Ocean Strategies”. Venture strategies deal specifically with
technology innovation that must be brought to the market
very fast.
"Blue Ocean Strategy" talks about
value innovation in general; speed-to-market is not emphasized.
Corporate
Strategy: 2 Logics
The Six Principles of Blue
Ocean Strategy
The six principles drive the successful
formulation and
execution of Blue Ocean Strategy.
These principles attenuate the six risks.
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Principles |
Risk Factors |
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Formulation Principles
Reconstruct market boundaries
Focus
on the big picture, not the numbers
Reach
beyond existing demand
Get the
strategic sequence right
Evaluation principles
Overcome key organizational hurdles
Build
execution into strategy |
Search
risk
Planning risk
Scale
risk
Business
model
risk
Organizational risk
Management risk |
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