March 10 09 Finalforposting With Speakernotesblue Ocean Strategy Presentation

HARVARD BUSINESS SCHOOL CLUB
OF WASHINGTON DC
ENTREPRENEURSHIP ROUNDTABLE
WEBINAR SERIES FOR NATIONAL
UNIVERSITY STARTUP COMPETITION
INTRODUCTION TO INNOVATIVE
STRATEGIES FOR ENTREPRENEURS SERIES
March 10, 2009 WEBINAR
THIS WEBINAR SERIES - OUR APPROACH

Our Objective:
To make participants in the competition aware of
cutting edge approaches to conceiving and
launching new ventures
Our Target Audience:
University researchers who are considering
launching new ventures
Calendar:
January 27/09: A presentation of Some Traditional Basic
Elements for Venture Development
February 9/09: An Overview of Disruptive Innovation
Strategy
Today/March 10/09: An Overview of Blue Ocean Strategy
TODAYS SESSION
Blue Ocean Strategy:
This new thinking makes it possible for innovative
entrepreneurs to increase their chances for success and
the extent of potential success. It includes:
Insights about the innovative positioning of new
ventures; and
Tools to make it possible.
To help you:
Modify your business model,

Re-orient your product or service,
Change the borders of your target market, and
More effectively carry out your venture.
CUSTOMER ORIENTATION
A distinctive aspect of Blue Ocean Strategy is
that:
instead of looking to serve existing prime
customers in the existing market place,
- it is largely concerned with modifying a
product or service offering, and
- establishing new market space by targeting
dissatisfied customers and non-customers,
the potential customers for the new venture.
THE POTENTIAL IMPACT OF BLUE OCEAN

What interests me most about Blue Ocean is that it
gives you a path to find and implement a winning
formula for your business model:
with improved understanding of the way that
markets work; along with
methods of analysis, and tools for
strategy implementation
BLUE OCEAN BACKGROUND

This discipline has been developed by W.Chan Kim and
Rene Mauborgne, professors at INSEAD, who are coauthors of the book, Blue Ocean Strategy, and are codirectors of the Blue Ocean Institute.
Blue Ocean Strategy provides an approach to conceiving
ventures that allows you to reconfigure your product or
service offering and its market.
The discipline began with the study of successful strategic
moves by many businesses in many different industries
over the years - everything from Henry Fords Model T to
the Cirque de Soleil.
THE KEY TO BLUE OCEAN STRATEGY
Its principal objective is to make it possible to reconfigure and

implement a new business model in order:
to leave a highly-contested market (a Red Ocean with blood in the

water); and
create new market space without effective competition (a Blue
Ocean).
The Blue Ocean approach makes use of a process called value

innovation in which you:
look at the elements of a product or service offering on which ventures
in the industry compete, and
determine elements that can be:
Eliminated,
Reduced,
Improved, and
Added
Doing value innovation is not simple, but there is

an excellent systematic approach and there are
tools to help you:
Modify your product/service offering;
Change the market borders of your business
model; and
Implement your strategy with execution methods
to incorporate into it.
PRESENTERS
Mario Castaneda Director of the Boston Office of
StratX (mario.castaneda@StratX.com)
Marshall Maglothin, COO of Inpatient Specialists,
and President of Blue Oak Consulting
(mmaglothin@medaxiom.com)
Bob Kolodney, serial entrepreneur and moderator
of the Entrepreneurship RoundTable of the
Harvard Business School Club of Washington, DC
(bobko@post.harvard.edu)
BLUE OCEAN STRATEGY
From www.StratX.com
10
Blue Ocean Strategy:

How to Create Uncontested Market Space and
Make the Competition Irrelevant
RESEARCHING THE HISTORY

OF BLUE OCEAN CREATION
Data: 150 blue ocean creations, more than
30 industries, over 100 years (1880-2000)
Hotel, cinema, retail, airline, energy, computer,
broadcasting, home construction, automobile, steel
manufacturing, chemicals, cosmetics, software, etc.
Variables considered: industrial,

organizational, strategic
Kim & Mauborgne 2005 all rights reserved
Companies Have Achieved Substantially

Higher Returns from Investments in Blue Oceans
Business Launch
Revenue Impact
Profit Impact
Red Oceans
Market-Competing Business Launches
Kim & Mauborgne. All Rights Reserved.
Blue Oceans
Market-Creating Business Launches
13
Industry History Teaches Us That:

Blue oceans are not about technology innovation per se
Incumbents often create blue oceans - and usually within
their core businesses
Company and industry are the wrong unit of analysis
Creating blue oceans builds brands
Red Ocean Versus Blue Ocean Strategy

Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market space
Create uncontested market space
Beat the competition
Make the competition irrelevant
Exploit existing demand
Create and capture new demand
Make the value-cost trade-off
Break the value-cost trade-off
Align the whole system of a firms

activities with its strategic choice of
differentiation or low cost
Align the whole system of a firms

activities with its strategic choice of
differentiation and low cost
Value Innovation:
The simultaneous pursuit of differentiation and low cost
Eliminate
Cost
Cost
Reduce
Raise
Blue
Ocean
Strategy
Buyer Value
Create
Value
VALUE INNOVATION
Value Innovation is the cornerstone of blue ocean strategy. Value
innovation is the simultaneous pursuit of differentiation and low cost.
Value innovation focuses on making the competition irrelevant by
creating a leap of value for buyers and for the company, thereby opening
up new and uncontested market space. Because value to buyers comes
from the offerings utility minus its price, and because value to the
company is generated from the offerings price minus its cost, value
innovation is achieved only when the whole system of utility, price and
cost is aligned.
In the Blue Ocean Strategy methodology, the Four Actions Framework
and ERRC grid assist managers in breaking the value-cost tradeoff by
answering the following questions:
What factors can be eliminated that the industry has taken for granted?
What factors can be reduced well below the industrys standard?
What factors can be raised well above the industrys standard?
What factors can be created that the industry has never offered?
Four Actions Framework

Reduce
Which factors should
be reduced well below
the industrys
standard?
Eliminate
Which factors that the
industry takes for
granted should be
eliminated ?
A New
Value
Curve
Raise
be raised well above
the industrys
standard?
Create
be created that the
industry has never
offered?
FOUR ACTIONS FRAMEWORK

To reconstruct buyer value elements in crafting a new value
curve, we use the Four Actions Framework.
As shown in the diagram above, to break the trade-off
between differentiation and low cost and to create a new
value curve, there are four key questions to challenge an
industry's strategic logic and business model:
Which of the factors that the industry takes for granted
should be eliminated?
Which factors should be reduced well below the industry's
standard?
Which factors should be raised well above the industry's
standard?
Which factors should be created that the industry has never
offered?
ERRC Grid:
Eliminate
Raise
Which factors can you

eliminate that your industry
has long competed on?
Which factors should be

raised well above the
industrys standard?
List those factors here
Reduce
Create

reduced below above the created that the industry has
industrys standard?
never offered?
ERRC GRID
The Eliminate-Reduce-Raise-Create Grid (ERRC) is complementary to

the four actions framework. It pushes companies not only to ask all four
questions in the four actions framework but also to act on all four to
create a new value curve, essential for unlocking a new blue ocean.
By driving companies to fill in the grid with the actions of eliminating and
reducing as well as raising and creating, the grid gives companies four
immediate benefits:
It pushes them to simultaneously pursue differentiation and low cost to
break the value-cost trade off.
It immediately flags companies that are focused only on raising and
creating and thereby lifting the cost structure and often overengineering products and services - a common plight in many
companies.
It is easily understood by managers at any level, creating a high level of
engagement in its application.
Because completing the grid is a challenging task, it drives companies
to robustly scrutinize every factor the industry competes on, making
them discover the range of implicit assumptions they make
unconsciously in competing.
THE STRATEGY CANVAS

The strategy canvas is the central diagnostic and action framework for
building a compelling blue ocean strategy. The horizontal axis captures
the range of factors that the industry competes on and invests in, and
the vertical axis captures the offering level that buyers receive across
all these key competing factors.
The strategy canvas serves two purposes:
Firstly, it captures the current state of play in the known market
space. This allows you to understand where the competition is
currently investing and the factors that the industry competes on.
Secondly, it propels you to action by reorienting your focus:
- from competitors to alternatives; and
- from customers to non customers of the industry.
The value curve is the basic component of the strategy canvas. It is a
graphic depiction of a company's relative performance across its
industry's factors of competition.
As you can see on the diagram above, what makes a good value curve
is focus, divergence as well as a compelling tagline.
The US Wine Industry

hi
offering level
Premium Wines
Budget Wines
lo
Price
Use of enological
terminology and
distinctions in wine
communication
Above-theline
marketing
Aging
quality
Vineyard
prestige
and legacy
Wine
complexity
Wine
range
Eliminate-Reduce-Raise-Create Grid:
[The case of yellow tail]
Eliminate
Raise
Enological terminology
and distinctions
Price versus budget wines
Aging qualities
Retail store involvement
Above-the-line marketing
Reduce
Create
Wine complexity
Easy drinking
Wine range
Ease of selection
Vineyard prestige
Fun and adventure
Result: Strategy Canvas [of yellow tail]

hi
Premium Wines
offering level
[yellow tail]
Budget Wines
lo
Price
Use of enological
terminology
and distinctions
in wine
communication
Above-theline
marketing
Aging
quality
Vineyard
prestige
and legacy
Wine
complexity
Wine
range
Fun &
Easy Ease of
drinking selection Adventure
THREE TIERS OF NON-CUSTOMERS
THREE TIERS OF NON-CUSTOMERS

Typically, to grow their share of a market, companies strive to retain and
expand existing customers. This often leads to finer segmentation and
greater tailoring of offerings to better meet customer preferences. The
more intense the competition is, the greater, on average, is the resulting
customization of offerings. As companies compete to embrace customer
preferences through finer segmentation, they often risk creating too-small
target markets.
To maximize the size of their blue oceans, companies need to take a
reverse course. Instead of concentrating on customers, they need to look
to noncustomers. And instead of focusing on customer differences, they
need to build on powerful commonalities in what buyers value. That
allows companies to reach beyond existing demand to unlock a new
mass of customers that did not exist before.
Although the universe of noncustomers typically offers big blue ocean
opportunities, few companies have keen insight into who noncustomers
are and how to unlock them. To convert this huge latent demand into real
demand in the form of thriving new customers, companies need to
deepen their understanding of the universe of noncustomers.
THREE TIERS OF NON-CUSTOMERS- CONT
There are three tiers of noncustomers that can be transformed into

customers. They differ in their relative distance from your market.
The first tier of noncustomers is closest to your market. They sit on the
edge of the market. They are buyers who minimally purchase an
industrys offering out of necessity but are mentally noncustomers of
the industry. They are waiting to jump ship and leave the industry as
soon as the opportunity presents itself. However, if offered a leap in
value, not only would they stay, but also their frequency of purchases
would multiply, unlocking enormous latent demand.
The second tier of noncustomers is people who refuse to use your

industrys offerings. These are buyers who have seen your industrys
offerings as an option to fulfill their needs but have voted against
them.
The third tier of noncustomers is farthest from your market. They are
noncustomers who have never thought of your markets offerings as
an option.
By focusing on key commonalities across these noncustomers and

existing customers, companies can understand how to pull them into
their new market.
Six Paths to Blue Ocean Strategy

The Six Conventional Boundaries of Competition
Industry
Strategic group
From
Buyer group
Within
Scope of product or service

offering
Functional-emotional
orientation of an industry
Competing
Time
To
Creating
Across
6 PATHS: Allows Exploration Outside of

Traditional Boundaries
Path 1 - Industry
What are the alternative industries to your industry?
Why do buyers trade across to them?
NTT DoCoMo, Federal Express, Southwest Airlines, NetJets
Path 2 Strategic Group

What are the strategic groups in your industry?
Why do buyers trade up for the higher group, and why
do they trade down for the lower one?
Polo Ralph Lauren, Curves, Sony Walkman, Toyota Lexus
Path 3 - Buyer Group

What is the chain of buyers in your industry?
Which buyer group does your industry typically focus on?
If you shifted the buyer group of your industry,
how can you unlock new value?
Novo Nordisk, Bloomberg Terminals, Canon Copiers, Philips Alto
Path 4 - Scope of product or service offering

What is the context in which your product or service is used?
What happens before, during, and after? Can you identify the pain
points? How can you eliminate these pain points through a
complementary product or service offering?
Borders and Barnes & Noble, Dyson Vacuum Cleaners, Kinpolis
Kin-kids, Zenick Salicks Cancer Centers
Path 6 - Time
What trends have a high probability of impacting your industry, are
irreversible, and evolving in a clear trajectory? How will these
trends impact your industry? Given this, how can you open up
unprecedented customer utility?
Apple Music, Cisco Systems, CNN,
HBOs Sex and the City
Path 5 - Functional-emotional orientation of an industry

Does your industry focus on functionality or emotional appeal? If
you compete on emotional appeal, what elements can you strip out
to make it functional? If you compete on functionality, what
elements can be added to make it more emotional?
Starbucks, QB House, Direct Line Group, Pfizers Viagra
Sequence of
Blue Ocean
Strategy
PMS MAP
PMS MAP
A useful exercise for a corporate management team pursuing
profitable growth is to plot the company's current and planned
portfolios on the pioneer-migrator-settler (PMS) map.
For the purpose of the exercise, settlers are defined as me-too
businesses, migrators are business offerings better than most in the
marketplace, and a company's pioneers are the businesses that offer
unprecedented value.
These are your blue ocean strategies, and are the most powerful
sources of profitable growth. They are the only ones with a mass
following of customers.
If both the current portfolio and the planned offerings consist mainly
of settlers, the company has a low growth trajectory, is largely
confined to red oceans, and needs to push for value innovation.
Although the company might be profitable today as its settlers are
still making money, it may well have fallen into the trap of
competitive benchmarking, imitation, and intense price competition.
PMS MAP - CONT

If current and planned offerings consist of a lot of migrators, reasonable
growth can be expected. But the company is not exploiting its potential
for growth, and risks being marginalized by a company that valueinnovates. In our experience the more an industry is populated by
settlers, the greater the opportunity to value-innovate and create a blue
ocean of new market space.
This exercise is especially valuable for managers who want to see beyond
today's performance. Revenue, profitability, market share, and customer
satisfaction are all measures of a company's current position. Contrary to
what conventional strategic thinking suggests, those measures cannot
point the way to the future; changes in the environment are too rapid.
Today's market share is a reflection of how well a business has
performed historically.
Clearly, what companies should be doing is shifting the balance of their
future portfolio toward pioneers. That is the path to profitable growth.
The PMS map above depicts this trajectory, showing the scatter plot of a
company's portfolio of businesses, where the gravity of its current
portfolio of twelve businesses, expressed as twelve dots, shifts from a
preponderance of settlers to a stronger balance of migrators and
pioneers.
FOUR HURDLES TO STRATEGY EXECUTION
FOUR HURDLES TO STRATEGY EXECUTION

Once a company has developed a blue ocean strategy with a
profitable business model, it must execute it. The challenge of
execution exists, of course, for any strategy. Companies, like
individuals, often have a tough time translating thought into action
whether in red or blue oceans.
The challenges managers face are steep. They face four hurdles:
A cognitive hurdle. waking up employees to the need for a
strategic shift. Red oceans may not be the paths to future
profitable growth, but they feel comfortable to people and may
have even served an organization well until now, so why rock the
boat?
Limited resources. The greater the shift in strategy, the greater it is
assumed are the resources needed to execute it. But many
companies find resources in notoriously short supply
Motivation. How do you motivate key players to move fast and
tenaciously to carry out a break from the status quo?
Politics. As one manager put it, In our organization you get shot
down before you stand up.
FOUR HURDLES TO STRATEGY EXECUTION - CONT

Although all companies face different degrees of these hurdles, and many may
face only some subset of the four - knowing how to triumph over them is key to
attenuating organizational risk.
To achieve this effectively, however, companies must abandon perceived wisdom
on effecting change. Conventional wisdom asserts that the greater the change,
the greater the resources and Time you will need to bring about results.
Instead, you need to flip conventional wisdom on its head using what we
call tipping point leadership. Tipping point leadership allows you to overcome
these four hurdles fast and at low cost while winning employees backing in
executing a break from the status quo.
The key questions answered by tipping point leaders are as follows:
What factors or acts exercise a disproportionately positive influence
On breaking the status quo?
On getting the maximum bang out of each buck of resources?
On motivating key players to aggressively move forward with change?
On knocking down political roadblocks that often trip up even the best
strategies?
By single mindedly focusing on points of disproportionate influence, tipping point
leaders can topple the four hurdles that limit execution of blue ocean strategy.
They can do this fast and at low cost.
FAIR PROCESS
Engagement
Explanation
Expectation
Clarity
Engagement
FAIR PROCESS
Explanation
Expectation
Clarity
What is fair process?

Fair process builds execution into strategy by
creating people's buy-in up front. When fair process is
exercised in the strategy making process, people trust
that a level playing field exists. This inspires them to
cooperate voluntarily in executing the resulting
strategic decisions.
There are three mutually reinforcing elements that
define fair process: engagement, explanation, and
clarity of expectation.
Whether people are senior executives or shop
employees, they all look to these elements. We call
them the three principles of fair process.
Engagement
Explanation
FAIR PROCESS - CONT
Expectation
Clarity
The Three Principles of Fair Process

Engagement
Engagement means involving individuals in the strategy decisions
that affect them by asking for their input and allowing them to refute
the merits of one anothers ideas and assumptions.
Encouraging refutation communicates managements respect for
individuals and their ideas. Encouraging refutation sharpens
everyones thinking and builds better collective wisdom.
Engagement results in better strategic decisions by management and
greater commitment from all involved to execute those decisions
Engagement
Explanation
FAIR PROCESS - CONT
Expectation
Clarity

Explanation
Explanation means that everyone involved and affected should
understand why final strategic decisions are made as they are.
An explanation of the thinking that underlies decisions makes people
confident that managers have considered their opinions and have
made decisions impartially in the overall interests of the company.
An explanation allows employees to trust managers intentions even
if their own ideas have been rejected. It also serves as a powerful
feedback loop that enhances learning.
Engagement
FAIR PROCESS - CONT
Explanation
Expectation
Clarity

Expectation Clarity
Expectation clarity requires that after a strategy is set, managers
state clearly the new rules of the game. Although expectations may
be demanding, employees should know up front what standards they
will be judged by and the penalties for failure.
When people clearly understand what is expected of them, political
jockeying and favoritism are minimized, and people can concentrate
on executing the strategy rapidly.
==========================================================================
Taken Together these criteria collectively lead to judgments of fair

process. This is important because any subset of the three does not
create judgments of fair process.
CONVENTIONAL WISDOM
VS
TIPPING POINT LEADERSHIP
The conventional theory of organizational change rests on
transforming the mass. So change efforts are focused on
moving the mass, requiring steep resources and long time
frames luxuries few executives can afford.
Tipping point leadership, by contrast, takes a reverse course.
To change the mass it focuses on transforming the extremes:
the people, acts, and activities that exercise a
disproportionate influence on performance.
By transforming the extremes, tipping point leaders are able
to change the core fast and at low cost to execute their new
strategy.
TOOLS OF TIPPING POINT LEADERSHIP

In carrying out tipping point management, several
approaches help to make it happen:
Providing first-hand experience of conditions and

problems
Using a Consigliore
Leveraging Angels and Silencing Devils
Using Kingpins
Using Fishbowls
Identifying and Addressing Hot Spots and Cold Spots
Horse-trading for Resources
Atomizing
Minimizing Risks & Maximizing Opportunities

in Formulating and Executing Blue Ocean Strategy
Formulation Principles
Formulation Risks
Reconstruct market boundaries
Search Risk
Focus on the big picture, not

the numbers
Planning Risk
Reach beyond existing demand
Scale Risk
Get the strategic sequence right
Business Model Risk
Execution Principles
Execution Risks
Overcome key organizational

hurdles
Organizational Risk
Build execution into strategy
Management Risk
THE MAIN THINGS TO TAKE AWAY

FROM TODAY SESSION
Blue Ocean Strategy is a well-developed coherent Discipline with great potential
utility for Entrepreneurs
It emphases the reconfiguration of business models;
It concentrates on marginal customers and non-customers;
Its Objective is to create new uncontested market space for a reoriented product
or service model
It incorporates Value Innovation
Value innovation involves four actions with respect to the elements of a product
offering on which an industry competes:
- Eliminate;
- Reduce
- Raise
- Create
A Strategy Canvas shows a Value Curve - which should show focus,
differentiation and a compelling tag line;
Your Blue Ocean Concept should be sequenced (Review: Buyer Utility, Pricing,
Cost, Adoption Hurdles to be addressed)
Even a valid Blue Ocean Offering requires implementing change which is
challenging and the Blue Ocean Discipline has tools to facilitate this (e.g. Fair
Process, Tipping Point Management)
Q&A
Wrap-up
SUPPLEMENTAL CONSIDERATIONS
DRILLING DOWN
We have presented an overview of Blue Ocean
Strategy. You should be aware that the discipline
contains additional tools to help you carry out
various tasks.
Here is a thumbnail sketch of tools for developing
buyer utility and for doing strategic pricing two
particularly difficult challenges for Entrepreneurs
BUYER UTILITY CYCLE 6 UTILITY LEVERS

Consider The Six Stages of the Buyer Experience Cycle:
Purchase >Delivery >
How long does How long does it

it take to find a take to get the
product you
product delivered?
need?
How difficult is it to
Is the place of unpack and install
purchase
the new product?
attractive and
Do buyers have to
accessible?
arrange delivery
How secure is themselves? If yes,
the transaction how costly and
environment
difficult is this?
How rapidly can
you make a
purchase?
Use
>
Supplements >Maintenance >Disposal
Does the product Do you need other

require training products or
or expert
services to make
assistance?
this product work?
Is the product
If so, how costly are
easy to store
they?
when not in use?
How much time do
How effective are they take?
the products
How much pain do
features and
they cause?
functions?
How easy are they
Does the product
to obtain?
or service deliver
far more power
or options than
required by the
average user? Is
it overcharged
with bells and
whistles?
Does the
product
require
external
maintenance?
How easy is it
to maintain
and upgrade
the product?
How costly is
maintenance?
Does use of
the product
create waste
items?
How easy is it
to dispose of
the product?
Are there legal
or
environmental
issues in
disposing of
the product
safely?
How costly is
disposal?
Kim & Mauborgne. All Rights Reserved
At each stage consider Six Utility Levers:

Customer Utility Simplicity Convenience Risk Reduction Fun/Image Environmental Friendliness
Then use the Buyer Utility Map to find possible utility levers to use at
each stage of the Buyer Experience Cycle:
THE BUYER UTILITY MAP

Purchase
Customer Productivity
Simplicity
Convenience
Risk Reduction
Fun/Image
Environmental
Friendliness
Delivery
Use
Supplements
Maintenance Disposal
THEN UNCOVER (AND TRY TO RESOLVE)

THE BLOCKS
TO EACH POSSIBLE UTILITY LEVER
Purchase
Delivery
Customer Productivity
Simplicity:
Convenience:
Risk Reduction:
Fun/Image:
Environmental
Friendliness:
Use
Supplements
Maintenance
Disposal
In which stage are the biggest blocks to Customer Productivity?

In which stage are the biggest blocks to Simplicity?
In which stage are the biggest blocks to Convenience?
In which stage are the biggest blocks to Risk Reduction?
In which stage are the biggest blocks to Fun/Image?
In which stage are the biggest blocks to Environmental

Friendliness?
IN DOING STRATEGIC PRICING

YOU CAN USE
THE PRICE CORRIDOR OF THE MASS
Step 1: Identify the price
Step 2: Specify a price

level within the corridor
Corridor of the mass

Three alternative product/service types:
Different form
Same Different form, and function,
form same function same objective
g
el pricin
v
e
l
r
e
p
Up
Price Corridor
of the Mass
High degree of legal and resource

protection
Difficult to imitate
Mid-level pricing
Some degree of legal and
Lowerresource protection
level pr
icing
Low degree of legal and resource
protection
Size of circle is proportional to

number of buyers that product/service
attracts
DONT FORGET ABOUT THE

IMPLEMENTATION TOOLS:
BLUE OCEAN STRATEGY PROVIDES THE CONCEPTS AND TOOLS
TO CRAFT BUSINESS MODELS THAT HAVE A HIGH POTENTIAL FOR
SUCCESS.
THE IMPLEMENTATION APPROACHES OF BOS ARE ALSO WELL
WORTH MASTERING FOR ENTREPRENEURS BECAUSE THEY DEAL
WITH CARRYING OUT CHANGE.
THERE ARE POWERFUL PSYCHOLOGICAL AND HUMAN NATURE
FORCES BEHIND TIPPING POINT MANAGEMENT AND FAIR
PROCESS.
USING THEM EFFECTIVELY CAN MAKE IT POSSIBLE:
- TO OVERCOME RESISTANCE;
- EXECUTE EFFECTIVELY WITH LIMITED RESOURCES;
- AVOID HALF-HEARTED EFFORTS; AND
- MAKE POSSIBLE TEAMWORK WITH THE FULL
ENTHUSIASM, ENERGY, RESOURCEFULNESS AND
INITIATIVE THAT MAKE THINGS HAPPEN.
THE MAIN THINGS TO TAKE AWAY

FROM THIS WEBINAR SERIES
Entrepreneurship is challenging;
The business plan is important and useful;
Making adjustments as you go along is the key to real success.
Entrepreneurship is not an ivory tower activity;
Customers needs should be your needs;
You need to learn how to sell;
You need to know how to break-even, and you need to manage your
cash;
You should be on the lookout for a winning formula for your business;
Disruptive Innovation and Blue Ocean Strategy can help you improve
the likelihood and the extent of success for your venture;
The needs of non-customers may be as important, or more important,
to you as existing customers of an industry;
The insights and tools developed by Clayton Christensen, W. Chan
Kim, and Rene Mauborgne and their collaborators can make a big
difference to entrepreneurs, and we are all in their debt.
RESOURCES FOR THIS SESSION
Overview information about Blue Ocean strategy at

www.blueoceanstrategy.com , particularly the diagrams in the BOS
tools section (found under About Blue Ocean Strategy) and the
summaries (found under Press Resources and elsewhere)
Book: Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne

Professors at INSEAD and Co-Directors of the Blue Ocean Institute
Blue Ocean Simulation Software by StratX (www.stratx.com)
MOST OF THE MATERIALS FOR THIS

SESSION INCLUDING ALL OF THE DIAGRAMS
COME FROM THE BLUE OCEAN WEBSITE AND
BOOK.
WE THANK PROFESSORS KIM AND
MAUBORGNE FOR THEIR USE
RESOURCES FOR THIS WEBINAR SERIES
Overall: Wiki Statement for the Entrepreneurship Round Table

Innovative Strategies for Entrepreneurs Best Practices Initiative
posted at the website of the Harvard Business School Club of
Washington DC (www.hbsclubwdc.net) on the Entrepreneurship tab
For the January 27 session: The materials at website of Steven Brandt,

www.scbrandt.com particularly Entrepreneuring: The Ten
Commandments and Profit Mechanics (in the "Building a Business"
section;
For the February 9 session: Various information on disruptive

innovation strategy at the Innosight website, www.innosight.com, and
the book, The Entrepreneur's Guide to Growth, (as well as The
Innovator's Dilemma, the Innovators Solution and Seeing What's Next)
For the March 10 session: Overview information about Blue Ocean

strategy at www.blueoceanstrategy.com , particularly the diagrams in
the BOS tools section (under About Blue Ocean Strategy) and the
book, Blue Ocean Strategy, as well about Blue Ocean concepts,
simulation and certification at www.stratx.com
COMMUNICATIONS
Mario Castaneda mario.castaneda@StratX.com

Marshall Maglothin maglothin@medaxiom.com
Bob Kolodney bobko@post.harvard.edu

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HARVARD BUSINESS SCHOOL CLUB

THIS WEBINAR SERIES - OUR APPROACH

Modify your business model,

THE POTENTIAL IMPACT OF BLUE OCEAN

BLUE OCEAN BACKGROUND

THE KEY TO BLUE OCEAN STRATEGY

Its principal objective is to make it possible to reconfigure and

to leave a highly-contested market (a Red Ocean with blood in the

The Blue Ocean approach makes use of a process called value

Doing value innovation is not simple, but there is

BLUE OCEAN STRATEGY

Blue Ocean Strategy:

RESEARCHING THE HISTORY

Variables considered: industrial,

Companies Have Achieved Substantially

Kim & Mauborgne. All Rights Reserved.

Industry History Teaches Us That:

Kim & Mauborgne. All Rights Reserved.

Red Ocean Versus Blue Ocean Strategy

Blue Ocean Strategy

Compete in existing market space

Create uncontested market space

Beat the competition

Make the competition irrelevant

Exploit existing demand

Create and capture new demand

Make the value-cost trade-off

Break the value-cost trade-off

Align the whole system of a firms

Align the whole system of a firms

Kim & Mauborgne 2005 all rights reserved

Kim & Mauborgne. All Rights Reserved.

Four Actions Framework

FOUR ACTIONS FRAMEWORK

Which factors can you

Which factors should be

List those factors here

List those factors here

Which factors should be

List those factors here

The Eliminate-Reduce-Raise-Create Grid (ERRC) is complementary to

Kim & Mauborgne 2005 all rights reserved

THE STRATEGY CANVAS

The US Wine Industry

Kim & Mauborgne 2005 all rights reserved

Price versus budget wines

Retail store involvement

Fun and adventure

Kim & Mauborgne 2005 all rights reserved

Result: Strategy Canvas [of yellow tail]

Kim & Mauborgne 2005 all rights reserved

THREE TIERS OF NON-CUSTOMERS

Kim & Mauborgne 2005 all rights reserved

THREE TIERS OF NON-CUSTOMERS

THREE TIERS OF NON-CUSTOMERS- CONT

There are three tiers of noncustomers that can be transformed into

The second tier of noncustomers is people who refuse to use your

By focusing on key commonalities across these noncustomers and

Six Paths to Blue Ocean Strategy

Scope of product or service

Kim & Mauborgne. All Rights Reserved.

6 PATHS: Allows Exploration Outside of

NTT DoCoMo, Federal Express, Southwest Airlines, NetJets