Description
Hello everyone,
Download the PowerPoint 5 slides and study them carefully to do this assignment.
The next SMA4 is on BMW. To prepare for this SMA, you will need to read the case and Annual Report, download and read PowerPoint 5, watch the blue ocean strategy video, and look at the sample paper.
Everyone should have the same GIP:
Goal: The BMW Group develops and manufactures innovative premium automobiles and motorcycles on a worldwide basis.
Industry: Automobile
Product: Cars
Generic Strategies Grid (you do not need to include this in your analysis)
X-axis: Differentiation (as perceived by consumers and R&D invested)
Y-axis: Niche (4.5% luxury vehicle consumers1)
1The luxury car segment made up about 4.5 percent of the light vehicle market in the United States in June 2021 (Statistica, 2023).
Five Forces Model (you do not need to include this in your analysis)
Barriers to entry: high – low threat
Supplier power: high – high threat (few suppliers for the BMW brand)
Buyer power: low – low threat
Rivals: many – high threat
Substitutes: many – high threat (other than luxury vehicles)
Steps in conducting the Blue Ocean Strategy analysis:
1.Identify the problem (decarbonization2), vision of the future and the product (in the future).
2.Identify the Tier 3 consumers in the future and determine the price corridor of the mass (see the PowerPoint slide and cover all of the dimensions). Note: this has been added since the Sample Paper.
3.Discuss each of the aspects of the Four Actions Framework with 2 characteristics each and cited:
a)Factors that can be raised
b)Factors that can be reduced
c)Factors than can be created (which do not currently exist)
d)Factors that can be eliminated (which currently exist)
4.Choose one of the six paths (alternative industries, strategic groups within the industry, redefining buyer group, etc.) and discuss with citations.
5.Bibliography should have at minimum of 5 different references not including the case and the annual report. References must have the APA format similar to the sample paper.
2There are two aspects to decarbonization. The first entails reducing the greenhouse gas emissions produced by the combustion of fossil fuels. This can be done by preventing emissions through the use of zero-carbon renewable energy sources such as wind, solar, hydropower, geothermal and biomass, which now make up one-third of global power capacity and electrifying as many sectors as possible. Energy efficiency will reduce the demand for energy, but increasing electrification will increase it, and in 2050, the demand for power is expected to be more than double what it is today. Consequently, decarbonization will also require absorbing carbon from the atmosphere by capturing emissions and enhancing carbon storage in agricultural lands and forests.To achieve decarbonization, all aspects of the economy must change—from how energy is generated, and how we produce and deliver goods and services, to how lands are managed. The carbon dioxide and methane emissions that are warming the planet come largely from the power generation, industry, transport, buildings, and agriculture and land use sectors of the global economy, so these sectors must all be transformed. (Cho, State of the Planet, 2022)
Grading rubric:
10% Word count and format
10% Missing citations
10% References
10% Problem & vision
10% Tier-3 customers in the future
10% Path to the future
Four Action Framework:
10% Raise
10% Reduce
10% Create
10% Eliminate
Unformatted Attachment Preview
SAMPLE STRATEGY MODEL ANALYSIS PAPER
INFO 6790
Blue Ocean Strategy
Marriott International
GIP:
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Goal: To enhance the lives of their customers by creating and enabling unsurpassed vacation and
leisure experiences.
Industry: Lodging industry, hotels and Resorts Services.
Product: Luxury Suites, premium suites, select suites and longer stays suites.
The Future:
Blue Ocean Strategy (What we see happening in the next 20 years): Co-Living Spaces and
accommodations targeted toward Millennials
With the hospitality industry steadily expanding, travelers have a variety of accommodations to choose
from. Although hotels, vacation rentals, and serviced apartments are traditionally known, alternative
accommodations are becoming seemingly more orthodox (Hollander, 2021). Growing communities and
flourishing relationships are contributing to the evolutionary trend of co-living. Co-living spaces offer an
apartment like unit that could be potentially occupied by 4-8 people, with private bedrooms and shared
common spaces such as; kitchen, dining, living areas, and amenities (CRBE+Streetsense, 2020). By
implementing co-living as a Blue Ocean Strategy for alternative accommodations; Marriott can gain
clientele from socially inclined Millennials, targeting individuals 25-35 years of age (CRBE+Streetsense,
2020).
Four Actions Framework:
Factors that Can be Raised: Research and Development, Advertising, and Loyalty Program
RAISE
1. The co-living concept connects four private bedrooms with a shared living room and kitchen.
Guests can come together and cook meals together and spend quality time together. Marriott
developed this concept after conducting a survey among Americans that showed that they are
searching for alternative ways to connect with family, friends, and colleagues (International,
2019). Colleagues traveling together on business trips would be most interested in this option.
Marriott rolled out a couple of its first ever pop-up lab to demonstrate how they will organize
their new co-living concept and continue to create a grand experience for guests in other ways
through innovation.
2. Research Marriott conducted through a survey revealed that customers were interest in co-living
options since they lived in different states than family and friends, and that colleagues wanted
living options that allowed them to connect with each other more. This caused Marriott to
develop their concept through the Element by Westin. By increasing the level of research that
they have done, they can figure out what companies utilize their standard hotels the most for
company travel. From there, see what those companies’ needs are and advertise to them through
Marriott’s customer loyalty programs.
Factors that Can be Reduced: Number of bedrooms, Price of Rent, Electricity Costs
REDUCE
1. Number of bedrooms: Instead of having multiple bedrooms, Marriott’s co-living space can have a
single shared bedroom with Japanese-style sleeping pods. Guests can have shared access to
amenities such as kitchen, coworking area, gym, etc. The living space is essentially an adult dorm
room. (Gunnerson & Lo, 2020)
2. Price of rent: Marriott can offer monthly co-living subscriptions if guests choose to stay for a
while in one of their hotels. With this subscription model, guests can stay a maximum of 29
nights at any one location. Furthermore, guests can stay at multiple Marriott co-living hotels, if
they stay a minimum of 7 nights at any one location. This allows guests to work and live
anywhere in the world while paying less than big city rent and without a long-term lease.
(CitizenM, 2021)
3. Electricity costs: The co-living space can be designed to have plenty of natural lighting,
encouraging guests to use natural lighting over regular lighting.
Factors that Can be Created: Limiting the accessibility to existing target market, Luxury Services,
Create New Market Boundaries
CREATE
1. Since Marriott has large chain of hotels and a network of customers, targeting the same group of
customers is ideal. The customers being business professionals, luxury seeking and comfort
oriented are to be chosen for the new market segments. The co-living spaces can be presented as a
luxurious vacation spot available for premium customers for premium booking or for existing
Marriott rewards (WordPress, 2016).
2. Making the premium offerings available to the existing target group would reinforce the bookings
of co- living spaces as a destination spot. This also, creates a new market boundary in the coliving accommodation segment. Specially, the business groups may get interested in spending
time at the Marriott’s shared spaces who are potential customers and s probable target market
(Silenaite-Enyed, 2019)
Factors that Can be Eliminated: Services that are a burden to operational costs like lodging taxes,
Services which does not create revenue and value
ELIMINATE
1. Burden costs are hidden costs that directly affect the total operating costs. These costs are
required to be paid by the property owners or managers. An example of burden cost is lodging
tax. This tax is required to be paid by the owners of any property if they want to rent any room.
The taxes are according to the renting prices. By eliminating these costs, Marriott International
aims to save costs on their end. Some burden costs like taxes, insurances, and compensations are
required to be paid, but there can be different ways to make up these burden costs. Other than
those, more burden costs can be managed and saved. Cutting these costs can help improve the
topline revenue of any hotel (Noone, Enz, & Glassmire, 2017).
2. Many services have no revenue or value attached to them. These services may include services
like drop/picking up of guests, offering things for free, complimentary services, etc. These
services have no way of generating revenue as they are provided for free, or the customers are not
charged for these services directly. They also generate no values as customers do not have any
preference for these services and hence no feedback needs to be collected based on these services.
2
Although these services are expected from top hotels and some of these services are even highly
necessary. But other than those services, to increase the topline revenue of any hotel, these
services can be exempted (Jaeger, & Pahiyiannakis, 2020).
Blue Ocean Move – The Path:
Testing:
Marriott can leverage its customer data for testing. It would benefit from matching the tastes and
preferences of the existing customers with the services offered in a co-living space accommodation.
Inviting guests for the new programs and offering the services for a huge, discounted price by providing
feedback in exchange can result in understanding trends and insights (HoCoSo, 2018).
Finalizing:
Firstly, by checking if the invitees expressed interest for the services offered, Secondly, checking with the
value offerings for the price estimated, Thirdly, by understanding the overall satisfaction level of the
invitees would give good understanding of the new offering (Fox News, 2017). And, eliminating the
additional services that doesn’t create value and revenue.
Launching:
Refining the services offered according to the feedback collected and adjusting the price based on value
created and looking at the financials like – breakeven point, return on investment and profit percentage of
the new service offered, Marriott International can launch the new offering in the new market segment
(Hotel revenue management: Strategies to boost your topline revenue, 2021).
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Bibliography:
Hollander, J. (2021, March 31). 100 hotel trends you need to watch in 2021 & Beyond. Retrieved April,
2021, from https://hoteltechreport.com/news/100-hotel-trends#alternativeaccomodations
Ting, D. (2016, June 06). Here’s why co-living could be the next big hospitality trend. Retrieved April,
2021, from https://skift.com/2016/06/06/heres-why-co-living-could-be-the-next-big-hospitality-trend/
International, M. (2019, October 21). Element hotels debuts innovative communal living room concept to
foster opportunities for meaningful “irl” connections among travelers. Retrieved April 04, 2021, from
https://news.marriott.com/news/2019/10/21/element-hotels-debuts-innovative-communal-living-roomconcept-to-foster-opportunities-for-meaningful-irl-connections-among-travelers
Reconstruct Market Boundaries. (2016, August 2). Blueocean. https://blueocean55.wordpress.com/toolframe-work/6-principles/1-reconstruct-market- bounderies/
Silenaite-Enyed, E. (2019, March 5). Blue Ocean strategy in hotel industry. Sabeapp.
https://www.sabeeapp.com/blog/hospitality-industry-inside/blue-ocean-strategy-in-hotel- industry
HoCoSo, A. (2018, November 9). Communal living rooms being tested by Marriott’s Brand Element
Hotels | HoCoSo Hospitality Consulting Solutions. HoCoSo. https://www.hocoso.com/extended- staysector/communal-living-rooms-being-tested-by-marriotts-brand-element-hotels/
Hotel revenue management: Strategies to boost your topline revenue. (2021, March 29). SiteMinder.
https://www.siteminder.com/r/hotel-revenue-management-strategies/
Fox News. (2017, February 3). Marriott considers hotel rooms with communal living space, shared
kitchen. https://www.foxnews.com/travel/marriott-considers-hotel-rooms-with-communal- living-spaceshared-kitchen
Contributor, P. (2016, June 21). PESTLE Analysis of Marriott International. PESTLE Analysis.
https://pestleanalysis.com/pestle-analysis-of-marriott/
CRBE+Streetsense. (2020, January). Multifamily Innovation Watch| The Rise of Co-Living. Retrieved
April, 2021, from https://www.cbre.us//media/cbre/countryunitedstates/media/images/multifamily/innovation-watch/coliving/021420_innovationwatch_january-2020-fw.pdf
Gunnerson & Lo. (2020). 5 Co-Living Companies Innovating the Sector. Retrieved from:
CitizenM. (2021). Global passport by citizenM. Retrieved from: https://www.citizenm.com/globalpassport
Jaeger, J., & Pahiyiannakis, L. (2020). Revenue Management: A Hotel Owner’s Perspective. Hospitality
Revenue Management: Concepts and Practices, 437.
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Innovation Strategy
Spring 2024
Dr. Donald L. Amoroso
Endowed Professor of Innovation and Strategy
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Understanding Wormholes
Understanding the BOS Methodology
BOS Customer-Facing Analysis
BOS Assumptions & Processes
Enhancing Creativity
BOS Strategy Canvas
BOS Leadership
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Blue Ocean Strategy
• The alignment of value proposition, profit proposition and
people proposition to create a new market space is called Blue
Ocean Strategy.
• Data: 150 strategic moves, more than 30 industries, over 100
years (1800-2000).
• Variables considered: industrial, organizational and strategic.
• W. Chan Kim and Renee Mauborgne
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Blue Ocean Strategy
• The idea of Blue Ocean Strategy came from the tagline of the
television show: “to go where no one has gone before.” Based
on Star Trek: Deep Space 9.
• Science fiction movies take you into another world for 2 hours
and get you thinking creatively.
• How can a company move from Point A to Point B without
taking years?
• Technology can help move an organization ahead without
going through the usual time frame.
• Warp speed 12 going from the Alpha quadrant to the Delta
quadrant will take 26 years –or– the wormhole will take 15
minutes.
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Blue Ocean Strategy
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Understanding Wormholes
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Blue Ocean Strategy
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Blue Ocean Strategy
Properties of a Wormhole
• A wormhole is a hypothetical structure connecting disparate
points in spacetime and is based on a special solution of the
Einstein field equations.
• A wormhole can be visualized as a tunnel with two ends at
separate points in spacetime (i.e., different locations, different
points in time, or both).
• Theoretically, a wormhole might connect extremely long
distances such as a billion light years, or short distances such
as a few miles or different points in time, or even different
universes.
• Wormhole stability is a going concern.
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Blue Ocean Strategy
Properties of a Wormhole
• For a simplified notion of a wormhole, space can be visualized
as a two-dimensional surface. In this case, a wormhole would
appear as a hole in that surface, lead into a 3-dimensional
tube (the inside surface of a cylinder), then re-emerge at
another location on the 2D surface with a hole similar to the
entrance.
• The impossibility of faster-than-light relative speed applies
only locally. Wormholes might allow effective superluminal
travel by ensuring that the speed of light is not exceeded
locally at any time. While traveling through a wormhole,
subluminal (slower-than-light) speeds are used..
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Blue Ocean Strategy
Properties of a Wormhole
• While traveling through a wormhole, subluminal (slower-thanlight) speeds are used.
• If two points are connected by a wormhole whose length is
shorter than the distance between them outside the
wormhole, the time taken to traverse it could be less than the
time it would take a light beam to make the journey if it took a
path through the space outside the wormhole.
• However, a light beam traveling through the same wormhole
would beat the traveler.
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Blue Ocean Strategy
Properties of a Wormhole
• If traversable wormholes exist, they might allow time travel. A
proposed time-travel machine using a traversable wormhole
might hypothetically work in the following way: One end of the
wormhole is accelerated to some significant fraction of the speed
of light, perhaps with some advanced propulsion system and
then brought back to the point of origin.
• In summary, an Einstein-Rosen bridge or wormhole, is a
postulated method, within the general theory of relativity, of
moving from one point in space to another without crossing the
space between. Wormholes are a popular feature of science
fiction as they allow faster-than-light interstellar travel within
human timescales.
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Understanding
the BOS Methodology
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Blue Ocean Strategy
Summary of BOS considerations
• High-level – strategy driven, industry-level, ecosystem
considered
• Future-oriented – 30 years in the future
• Problem(s) to be solved
• Products not yet developed nor considered
• Customers not yet marketed to nor currently attained (3rd tier
non-customers)
• Markets not yet explored – no competitors
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Vision Definition Process (revisiting)
Core Values
§ What we hold dear
§ What we will not do
§ What compels us to our purpose
Strategy
§ How we will compete
§ How we will differentiate
§ What specific value we will offer
Goals
§ What the vision looks like in specific terms
§ How we measure progress toward the vision
§ How we connect operating plans to the vision
Purpose
§ Why we exist
§ What we
envision for
our future
§ What we
aspire to be
§ Where we
will compete
Imposed Constraints
§ What we must return to shareowners
§ What rules and regulations we must adhere to
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Blue Ocean Strategy
Red Oceans
• The red ocean represents the existing market space.
• Companies in red oceans most often pursue competitivebased strategies, aiming to get a bigger share of the market
from their competitors – thus the bloody competition – red
ocean metaphor.
• This approach is called the structuralist view of strategy,
meaning that companies adapt their behavior (strategy) to the
existing industry’s conditions.
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Blue Ocean Strategy
Red Oceans
• Due to globalization, lowering cost of production and
availability of information,
• the competition is fiercer some than ever in most
industries, putting more pressure on companies and
shrinking their profit margins.
• In this competition race, products and services tend to
become commoditized much faster.
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Blue Oceans
• The blue oceans are new markets created by companies
following conscious strategic decisions.
• The creation of a new market space gives companies a natural
monopolistic position, which the company can take advantage
from.
• This is called the reconstructionist view of strategy, meaning
that companies recreate the boundaries of an industry (which
are mental barriers, anyway), as a result of the strategy they
pursue.
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Blue Ocean Strategy
Blue Oceans
• However, Blue Ocean Strategy does not encourage companies
to behave monopolistically, as it will hurt them in longer term.
• Instead, companies must price their service/product
strategically, to win a mass of buyers, which results in a winwin situation for the buyers (value proposition), for the
company (profit proposition) and for the employees (people
proposition).
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Blue Ocean Strategy
Blue Ocean Strategy provides direction:
• To link innovation to consumer usefulness
• To change the structure of the industry
• To take a reconstructionist position
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BOS Customer-Facing
Analysis
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Blue Ocean Strategy
Redefining the Market with Blue Ocean Strategy:
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To consider your customer’s alternatives
To consider how customers weight price against performance
To consider other buyers in the chain
To consider those tier-three customers
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BOS Process for Analyzing the Consumer Experience
1. Identify the buyer value on the Y-axis and cost shift on the X-axis.
– Note: we see the cost only, not the buyer.
2. Identify 1st, 2nd, and 3rd-tier noncustomers:
• 1st tier: soon to be noncustomers searching for substitute
• 2nd tier: refuse to use our product or industry offerings
• 3rd tier: never thought to use our product or industry offerings
3. Identify adoption hurdles to reaching the 3rd tier noncustomers
with a BOS product.
4. Identify the price corridor of the mass consumer.
• Specify a price level within the corridor.
5. Identify the 6 buyer utility levers with the buyer experience cycle.
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Blue Ocean Strategy
From price corridor of the mass to BOS product(s)
1. Identify the price corridor of the mass.
2. Specify a price level within the corridor.
3. Understand 3 different product types:
• [SF] Same form products
• [DF] Different form products
• [SO] Different form and function, same objective
4. Create blue ocean opportunities based upon product types
• [DF] create blue ocean that has same core utility as the new
one but takes a different form
• [SO] list groups of alternative products to appeal to tier-3
noncustomers in different industries
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Blue Ocean Strategy
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BOS Assumptions
and Processes
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Blue Ocean Strategy
Process:
1. MASTER THE METHODOLOGY: Choosing the right place to start and
constructing the right Blue Ocean team for the initiative.
2. UNDERSTAND WHERE WE ARE NOW: Getting clear about the
current state of play.
3. IMAGINE WHERE YOU COULD BE: Uncovering the hidden pain
points that limit the current size of the industry and discovering an
ocean of non-customers.
4. FIND HOW TO TO GET THERE: Systematically reconstructing market
boundaries and developing alternative Blue Ocean opportunities.
5. DECIDE ON WHICH PATH: Selecting the right Blue Ocean move,
conducting rapid market tests, finalizing, and launching the shift.
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Blue Ocean Strategy
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Blue Ocean Strategy
BOS assumptions:
1.
2.
3.
4.
5.
6.
Red Ocean strategy analysis
Fair process
Nondisruptive creation
BOS requires deep belief and buy-in
Not about being first-mover to market
Creativity
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Blue Ocean Strategy
Still need Red Ocean Strategy?
• Red Ocean Strategy must be conducted before Blue Ocean
Strategy, Why?
• You need to know the structure of the current industry.
• To know how the structure of the current industry before you
can develop plans for marketing in the future industry.
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Blue Ocean Strategy
Blue Ocean Strategy Fair Process:
• Fair process is a concept that builds execution into strategy by
creating people’s buy-in up front.
• When fair process is exercised in the strategy formulation phase,
people trust that a level playing field exists, inspiring voluntary
cooperation during the execution phase.
• 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.
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Blue Ocean Strategy
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Blue Ocean Strategy
What is Nondisruptive Creation?
• Nondisruptive creation is where one’s gain doesn’t have to come at
the expense of others.
• Very often entrepreneurs associate market creation with disruption
or creative destruction, focusing on displacing existing players and
markets by bringing in a superior product.
• New market space is created based on both disruption and
nondisruptive creation and outlines the path to achieve one over
the other.
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Blue Ocean Strategy
BOS requires deep belief and buy-in
• For any strategic or organizational transformation to be
implemented effectively, a deep buy in is a must.
• Without an intellectual and emotional understanding of the logic
for change, people will not engage in voluntary cooperation, and
execution will be in doubt.
• During the course of these exercises, they develop a strong belief
in the need for change and in how changes should be made.
• On the other hand, their engagement signals the importance of the
initiative, making people at all levels feel respected.
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Blue Ocean Strategy
BOS products are not necessarily first mover to the
market
• Blue ocean strategy is not about being first to market. Rather it is
about being first to get it right by linking innovation to value.
• Organizations that mistakenly assume blue ocean strategy is about
being first to market all too often get their priorities wrong. They
inadvertently put speed before value.
• To avoid this trap, companies must remember that while speed
may be important, linking innovation to value is absolutely
essential.
• No company should rest easy until it achieves value innovation.
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Enhancing Creativity
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Blue Ocean Strategy
How can people enhance their creativity?
New ideas are inspired and created by imagination and creativity.
Watching or reading science fiction movies or books.
Use music or art to express thoughts and/or feelings.
Set aside a few minutes before you go to bed and see if you can
have a creative breakthrough. Believe it or not, your brain tends to
wander and drift when you’re tired, which opens you up to more
creative thoughts or ideas.
• Creativity is really another form of play which is universally
important to each individual’s sense of joy and fulfillment. Imagine
if work felt more like play, then all the stress would melt away.
• Problem solving is a component of the creative process.
•
•
•
•
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Blue Ocean Strategy
How can people enhance their creativity?
• Think about different activities that help put you in a relaxed and
open frame of mind. Take note of any changes to your routine that
help you feel more creative, whether it’s taking a bath, journaling,
calling up a friend, or enjoying a cup of hot tea. Develop a routine
for yourself that will naturally put you in a creative frame of mind,
which may come in handy for future project
• Search for a room in your home that’s painted blue or has a lot of
blue decor. You can also look for a nearby business with blue walls,
like a library or coffee shop. Psychologically speaking, the color
blue is relaxing, which naturally helps you think more creatively.
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Blue Ocean Strategy
How can people enhance their creativity?
• Adjust your light settings so the room is lit without being too
bright. If your lights don’t have multiple settings, turn on a single
lamp while turning off all the other lights in the room. Changing
your environment can help you feel more relaxed and like you
aren’t under a lot of pressure.
• Set a time limit for yourself before you start a creative task, like
drawing a picture or writing a story. Put yourself under a little bit of
pressure to accomplish a certain goal within a specific time limit.
These constraints may help you think more creatively, as you’ll feel
forced to get more done in a certain time limit.
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Blue Ocean Strategy
How can people enhance their creativity?
• Think about some of your favorite ideas and concepts,
whether they’re inventions, stories, or some other creative
medium.
• See if you can find connecting points between some of your
favorite ideas, which can possibly turn into a unique idea of
your very own.
• Blue ocean strategy provides a set of methodologies and
tools that can help managers pursue value innovation
systematically and make blue oceans attainable for any
aspiring organizations and individuals.
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Blue Ocean Strategy
How can people enhance their creativity?
• Think about the movies, TV shows, and books that you
usually gravitate towards. Look for fictional works in a
different genre, or a genre that you don’t watch very often.
You may be surprised at how many creative thoughts and
ideas you can come up with when you experience something
that’s completely out of your comfort zone.
• Give yourself a few minutes to write your thoughts out on a
paper. Don’t restrict yourself to a single topic—just write
about whatever comes into your mind.
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Blue Ocean Strategy
How can people enhance their creativity?
• Switch up your new menu and prepare a meal or snack that
you wouldn’t usually eat. Experiencing new flavors and
sensations may put you in a more creative frame of mind. You
can cook something at home, or visit a new restaurant if you
don’t feel like cooking yourself.
• If you’re blocked on an idea, give yourself a few minutes to sit
and go through all the creative thoughts and ideas running
through your mind. As you jot down your thoughts, try to
come up with more creative ideas.
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Blue Ocean Strategy
How can people enhance their creativity?
• Take a step back and pretend you’re viewing your task or
project through the eyes of a neutral third-party. Ask yourself
what kind of audience you’re catering to, and what your end
goal is. Thinking outside of your own head might help you
think more creatively and get some new ideas.
• Take some of the pressure off yourself and view things in a more
laid-back fashion. Play out your thoughts in a daydream to see if
you can come up with any new ideas.
• If you’re feeling a bit blocked, take a few minutes to relax your
muscles and take several deep breaths.
• Take a walk outside or try some other activity that you enjoy.
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Four Action Framework
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Blue Ocean Strategy
Steps to consider when conducting a BOS analysis:
1. Choosing the right place to start and constructing the right Blue
Ocean team for the initiative.
2. Getting clear about the current state of play.
3. Uncovering the hidden pain points that limit the current size of the
industry and discovering an ocean of non-customers.
4. Systematically reconstructing market boundaries and developing
alternative Blue Ocean opportunities.
5. Selecting the right Blue Ocean move, conducting rapid market
tests, finalizing, and launching the shift.
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Conducting the analysis with BOS
1. Develop a clear understanding of the product you want to develop.
• Time frame is 30 years in the future
• Product has not yet been developed
• Customers are new to the organization
2. Detail the current industry using Red Ocean Strategy tools.
• Understand the external strategy models
• Define the current industry boundaries
3. Use the Four Actions Framework to identify areas that should be
changed.
• Address the four key questions
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Conducting the analysis with BOS
4. Reconstruct the new industry
• Detail how the boundaries of the industry have changed
• Show how the new product fits into the new industry
• Create a strategy canvas
5. Tie in the Four Actions Framework actions with the value
proposition point
• Price: eliminate and reduce
• Value/product features: create and raise
6. Discuss the simultaneous pursuit of high value and low cost
opportunities.
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Four Actions Framework
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Four Actions Framework
The Four Actions Framework poses four key questions to translate
insights into well-constructed strategies:
• Which factors that the industry takes for granted should be eliminated?
• This means removing factors that customers pay for as part of a status
quo that industry players take advantage of.
• Which factors should be reduced well below the industry’s standard?
• Are there any such elements that can be reduced or eliminated if their
relative value or cost does not justify the means? Perhaps some
factors erode profits or reduce competitive advantage?
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Blue Ocean Strategy
Four Actions Framework
The Four Actions Framework poses four key questions to translate
insights into well-constructed strategies:
• Which factors should be raised well above the industry’s standard?
• Can any existing product attributes (competitive factors) be enhanced
in such a way that they provide extra consumer value? In other words,
which attributes can set new industry standards or trends?
• Which factors that the industry has never offered should be created?
• Is there an opportunity to bring something novel to the market that
solves a consumer problem in a more effective way than a competitor
offering?
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Strategic Canvas
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Blue Ocean Strategy
Drawing your BOS Strategy Canvas:
1. Name the industry you are in.
2. For your selected businesses or chosen product/service offering,
identify the key competitive factors your industry or target industry
competes on.
3. Rate the relative offering level of each factor on the vertical axis
using a 5-point scale. A relatively low offering level should be
plotted lower on the axis, and a relatively high offering level should
be plotted higher.
4. Connect the dots to create your as-is strategic profile or value curve.
5. Decide on the best player to plot your offering against and repeat
the process. Select the industry leader or your strongest
competitor.
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Blue Ocean Strategy
Tips When Developing the Strategy Canvas:
• In terms of conventional approach to strategy, companies typically
compete to provider better solutions than their rivals.
• Instead, as part of the value innovation and creation step of
the strategy canvas, companies should try to gather insights
on how to redefine the problem which the industry is facing.
• This will help explore value elements which lie outside of the
current industry boundaries, but still hold value to customers.
• Companies should also try to pursue internal synergies to
enhance the results of their value innovations.
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Tips When Developing the Strategy Canvas:
• The best way to do this would be for a company to change its
strategic focus. Instead of looking at just the competitors, they
should be exploring alternatives to current solutions in the
industry.
• Companies should also not confine themselves to only the
current customers in an industry.
• They can also look beyond this to see how they can expand
market and bring new customer segments into the industry.
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Blue Ocean Strategy
Tips When Developing the Strategy Canvas:
• When looking at the elimination step of the Four Actions
Framework, companies should consider whether there have
been some fundamental changes in what customers value in
the market.
• Often, existing companies are focused on outperforming
competitors on the same conventional factors and lose sight
of new opportunities.
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Blue Ocean Strategy
Tips When Developing the Strategy Canvas:
• Another point to consider is whether the products or services
being offered in the market have been over-engineered in the
race to beat competition.
• It is often the case that companies over-serve customers more
than their requirement or expectation.
• The result is an increase in their overall costs for little to no
gain.
• Companies should instead aim to lift buyer value by creating
new demand with relatively lower competition.
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Blue Ocean Strategy
Steps in the Blue Ocean Strategy leadership process:
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