red ocean strategy canvas

These changes brought new gameplay ideas to the system as well as reduced the cost of the console compared to its competitors. The concepts behind the Blue Ocean Strategy (such as the competing factors, the consumer cycle, non-customers, etc.) The book was named a bestseller by the Wall Street Journal, BusinessWeek, and Amazon.com. This is the same idea expressed in the form of an analogy. [49] The blue ocean/red ocean analogy is a powerful and memorable metaphor, which is responsible for its popularity. [17][18][19] Strategy+Business magazine selected it as #1 strategy book of 2005. This is what the authors call the reconstructionist view. Just as blue ocean strategy claims that a red ocean strategy does not guarantee success, Funky Business explained that "Competitive Strategy is the route to nowhere". Assuming that structure and market boundaries exist only in managers’ minds, practitioners who hold this view do not let existing market structures limit their thinking. As the market space gets crowded, prospects for profits and growth are reduced. Do get more details in our full 12-page summary. Hence, a critical question is whether this book and its related ideas are descriptive rather than prescriptive. [citation needed] Meanwhile, several attempts at empirical validations and conceptual extensions of the blue ocean strategy have been published. "[31][32] BusinessWeek says that "Blue Ocean Strategy will have you wondering why companies need so much persuasion to stay out of shark-infested waters. It exposes just how similar the players’ strategies look to buyers and reveals how they drive the industry toward the red ocean. [13][14][15][16] It was selected as one of the “Best Books of 2005” by Fast Company magazine, won “The Best Business Book of 2005” Prize at the Frankfurt Book Fair, and achieved bestselling book of the decade status by 800-CEO-READ (2000-2010). The horizontal axis on the strategy canvas captures the range of factors that an industry competes on and invests in, while the vertical axis captures the offering level that buyers receive across all of these key competing factors. Here, grabbing a bigger share of the market is seen as a zero-sum game in which one company's gain is achieved at another company’s loss. The first part presents key concepts of blue ocean strategy, including Value Innovation – the simultaneous pursuit of differentiation and low cost – and key analytical tools and frameworks such as the strategy canvas and the four actions framework. The Four Actions Framework is used to help create value innovation and break the value-cost trade-off. Companies need to go beyond competing. For anyone tired of competing head-to-head and not getting far. Ridderstråle and Nordström also claim that the aim of companies is to create temporary monopolies. To sustain themselves in the marketplace, practitioners of red ocean strategy focus on building advantages over the competition, usually by assessing what competitors do and striving to do it better. The aim of value innovation, as articulated in the article, is not to compete, but to make the competition irrelevant by changing the playing field of strategy. For example, "competing factors" in blue ocean strategy are similar to the definition of "finite and infinite dimensions" in Funky Business. [44] The authors present many examples of successful innovations, and then explain from their Blue Ocean perspective – essentially interpreting success through their lenses. The four principles are: 3. [37][38][39][40][41][42][43], While Kim and Mauborgne propose approaches to finding uncontested market space, at the present there are few success stories of companies that have actively applied their theories. : Beat the competition. Importantly, it creates a commonly owned baseline for change. [citation needed], Many of the book's key concepts were previously covered in Competing For The Future by Gary Hamel and C.K. This creates uncontested market space and makes competition irrelevant. It exposes just how similar the players’ strategies look to buyers and reveals how they drive the industry toward the red ocean. [50] The authors encouraged managers to stake out new marketing space, which they termed white space, in order to "create and dominate emerging opportunities". [45] Criticisms include claims that no control group was used, that there is no way to know how many companies using a blue ocean strategy failed and the theory is thus unfalsifiable, that a deductive process was not followed, and that the examples in the book were selected to "tell a winning story". Red oceans represent all the industries in existence today – the known market space. [8], Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. Value innovation challenges Michael Porter's idea that successful businesses are either low-cost providers or niche-players. [7] The following section discusses the concept behind the book in detail. There is ample opportunity for growth that is both profitable and rapid. The 3DS is Nintendo's third endeavour for its blue ocean strategy. "[36] In addition, the book has received many positive reviews from various publications that include Chicago Tribune, Daily Herald, Credit Union Journal, Vancouver Sun, Association Meetings, Strategy & Leadership, and Business First, among many others. On this page, we’ve covered just some of strategy related articles on this site. Read the latest on environmental policy, climate milestones, scientific discoveries, animal news, and sustainable trends. Here companies try to outperform their rivals to grab a greater share of product or service demand. He proposed that a combination of differentiation and low cost might be necessary for firms to achieve a sustainable competitive advantage. Kim and Mauborgne argue that while traditional competition-based strategies (red ocean strategies) are necessary, they are not sufficient to sustain high performance. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. The Strategy Canvas [46][47][48], Additionally, blue ocean strategy cannot be identified as true causation for success. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.[8]. Many others have proposed similar strategies. Such a strategy therefore allows firms to largely play a non–zero-sum game, with high payoff possibilities. The strategy canvas allows your organization to see in one simple picture all the factors an industry competes on and invests in, what buyers receive, and what the strategic profiles of the major players are. The metaphor of red and blue oceans describes the market universe. Get ready to stop struggling and seize new growth ! "[33] The Business Strategy Review said the book "challenges everything you knew about strategy", and the Business Times called on firms to "adopt blue ocean strategy to stay ahead. Kim and Mauborgne claim that blue ocean strategy makes sense in a world where supply exceeds demand. 1. They defined this success as a significant drop in crime in the City of New York after Bratton took office in 1994. Discover a curated selection of men’s clothing, footwear and lifestyle items. Discover each of the tools and learn HOW to put them into practice with exercise templates. Connect with brands in a content-rich shopping environment. Products become commodities or niche, and cutthroat competition turns the ocean bloody; hence, the term "red oceans". Learn the essentials of blue ocean strategy and shift created by the #1 Management Thinkers in the World. The authors justify with original and practical ideas that neither the company nor the industry is the best unit of analysis of profitable growth; rather it is the strategic move that creates "blue ocean" and sustained high performance. © Chan Kim & Renée Mauborgne. One success story that does exist is Nintendo, who first applied the blue ocean strategy to create the Nintendo DS handheld game system, which was the first portable gaming system to offer dual-screen gaming and a touch screen in 2004. The concept was initially developed in the 1990s when W. Chan Kim was taking part in a consulting project for Philips, headed by the management scholar C.K. Its first two attempts, the Nintendo DS and Wii, were wildly successful, becoming some of the biggest selling platforms in history. Here’s a brief overview of some of the tools and frameworks used in the formulation and execution of the Blue Ocean Strategy. The crux of the problem is how to create it. [Achievements] [Fast Focus] One of the achievements that seems to give players problems is the "Fast Focus" where you must search Hidden Object Scenes (HOS) 15times/30minutes for level 1 then 30/30minutes for level 2 and finally 50/30minutes for level 3. The four key hurdles comprise the cognitive, resource, motivational and political hurdles that prevent people involved in strategy execution from understanding the need to break from status quo, finding the resources to implement the new strategic shift, keeping your people committed to implementing the new strategy, and from overcoming the powerful vested interests that may block the change.[5][6]. [9] Value innovation is the simultaneous pursuit of differentiation and low cost, creating value for both the buyer, the company, and its employees, thereby opening up new and uncontested market space. Unlike the "red ocean strategy", the conventional approach to business of beating competition derived from the military organization, the "blue ocean strategy" tries to align innovation with utility, price and cost positions. This is achieved via the simultaneous pursuit of differentiation and low-cost. For example, Swedish educators Jonas Ridderstråle and Kjell Nordström in their 1999 book Funky Business follow a similar line of reasoning. how to create uncontested market space by reconstructing market boundaries, reaching beyond existing demand and supply in new market spaces, This page was last edited on 25 January 2021, at 02:05. They focus on dividing up the red ocean, where growth is increasingly limited. [27][28][29], The Wall Street Journal recommends Blue Ocean Strategy for the top manager. Within about 35 years, Red Bull has transitioned from an idea to a global leader in the energy drink sector. By expanding the demand side of the economy, new wealth is created. [10], Nintendo's Wii video game console, first released in 2006, has been often considered an example of the blue ocean concept. Business Model Canvas; Blue Ocean Strategy; Red Ocean Strategy; Why Mergers Fail; Benchmarking; Free As a Business Model; What is the Long Tail? The complete list is below. [44], It is argued that rather than a theory, blue ocean strategy is an extremely successful attempt to brand a set of already existing concepts and frameworks with a highly "sticky" idea. The authors argue that competition based strategies assume that an industry's structural conditions are given and that firms are forced to compete within them, an assumption based on what academics call the structuralist view, or environmental determinism. [23] Blue Ocean Strategy won the Thinkers50 2011 Strategy Award for Best Business Book of the decade and in the same year, it was introduced to the Fast Company Leadership Hall of Fame. The strategy canvas is an analytical framework we developed in our research on blue ocean strategy, which can be used to express an organization’s three strategy propositions. Many of these tools are also used by Six Sigma practitioners and proposed by other management theorists. : Break the value-cost trade-off. In the book the authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base to create unconventional success – a strategy termed as "blue ocean strategy". In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. All rights reserved. Many social scientists would disagree that it was Bratton's policies that led to crime reduction: rather, the city was simply part of a nationwide trend in decreasing crime. Blue Ocean Strategy is a book published in 2004 written by W. Chan Kim and Renée Mauborgne, professors at INSEAD,[1] and the name of the marketing theory detailed on the book. [30] Forbes calls it one of the ten business trends for 2013 and argues that "blue ocean strategies are more influential than ever. This metaphor can be powerful enough to stimulate people to action. In the book “Blue Ocean Strategy“ written by two eminent business theorists W. Chan Kim and Renée Mauborgne, this new strategy was originated. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. Ridderstråle and Nordström also claimed in 1999 that "in the slow-growth 1990s overcapacity is the norm in most businesses". To understand red ocean strategy let us begin by defining blue ocean strategy. are not new, however. Industry?" These four formulation principles address how an organization can create blue oceans by looking across the six conventional boundaries of competition (Six Paths Framework), reduce their planning risk by following the four steps of visualizing strategy, create new demand by unlocking the three tiers of noncustomers and launch a commercially viable blue ocean idea by aligning unprecedented utility of an offering with strategic pricing and target costing and by overcoming adoption hurdles. Nintendo revealed their Blue Ocean Strategy during an E3 press conference during the hype build-up of the Wii. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. : Make the value-cost trade-off. Prahalad, which was published in 1996. These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed. Jack Link’s Beef Jerky Variety Pack Includes Original and Teriyaki Beef Jerky, Good Source of Protein, 96% Fat Free, No Added MSG, (9 Count of 1.25 oz Bags) 11.25 oz: Amazon.com: Grocery & Gourmet Food The four actions framework consists of the following: 2. Red Ocean Strategy Blue Ocean Strategy; Compete in existing market space. Therefore, it can be reduced without completely eliminating it. The four actions framework aids in eliminating the trade-off between differentiation and low cost within a company. Blue Ocean Strategy is a book published in 2004 written by W. Chan Kim and Renée Mauborgne, professors at INSEAD, and the name of the marketing theory detailed on the book.. Create: This prompts companies to be innovative with their products. This new market space is created by launching new offerings, with the aim being to make the competition irrelevant so that an organization can grow, uncontested, at least in the beginning. Here, cost and value are seen as trade-offs and a firm chooses a distinctive cost or differentiation position. A value curve or strategic profile is the graphic depiction of a company’s relative performance across its industry’s factors of competition. Kim and Maubourgne take the marketing of a value innovation as a given, assuming the marketing success will come as a matter of course. "[34][35] Marketplace magazine recommends Blue Ocean Strategy as a book "you need to read. Just like blue ocean strategy, a sensational strategy is about "playing a different game" according to Ridderstråle and Nordström. : Exploit existing demand. : Create and capture new demand. The book mocks at the phenomena of conventional choice between product/service differentiation and lower cost, but rather suggests that both differentiation and lower costs are achievable simultaneously. The second part describes the four principles of blue ocean strategy formulation. Company? Eliminate: This questions which areas of a company or industry could be completely eliminated to reduce costs and to create an entirely new market. The cornerstone of blue ocean strategy is "value innovation", a concept originally outlined in Kim & Mauborgne's 1997 article "Value Innovation - The Strategic Logic of High Growth". Competition in the old game is therefore rendered irrelevant. [citation needed], With just one case study, however, this hole in their data persists despite the publication of value innovation concepts dating back to 1997. Kim and Mauborgne explain that the aim of companies is to create blue oceans, that will eventually turn red. Treehugger News. It propels users to action by reorienting their focus from competitors to alternatives and from customers to noncustomers of the industry and allows you to visualize how a blue ocean strategic move breaks away from the existing red ocean reality. The authors cite the strategies used by NYPD Commissioner Bratton as a key example of Blue Ocean applied in the public sector. Red Bull is a perfect example of how far passion in whatever you are doing can take you. Raise: This questions which factors must be raised within an industry in terms of product, pricing or service standards. We have now placed Twitpic in an archived state. Chan Kim and Renée Mauborgne’s Strategy Canvas is a central diagnostic tool and an action framework that graphically captures, in one simple picture, the current strategic landscape and the future prospects for an organization. [2] An expanded edition of the book was published in 2015, while a sequel entitled Blue Ocean Shift was published in 2017. [50], Learn how and when to remove this template message, "Blue Ocean Strategy: From Theory to Practice", "A conversation with W.Chan Kim and Renee Mauborgne", "Value Innovation – The Strategic Logic of High Growth", "TOP20 Książek, Które Ukształtowały Polskich Liderów", "Leadership Hall of Fame: W. Chan Kim and Renee Mauborgne, Authors of "Blue Ocean Strategy, "Harvard Business Review Readers Choose the Best Management Books 2013", "Ten Business Trends From The Trenches For 2013", "Multiple Critiques of Blue Ocean Strategy", "Examining the Emergence and Evolution of Blue Ocean Strategy through the Lens of Management Fashion Theory", "Empirical Validation of Blue Ocean Strategy Sustainability in an International Environment", https://en.wikipedia.org/w/index.php?title=Blue_Ocean_Strategy&oldid=1002573182, Articles with a promotional tone from May 2020, Articles that may contain original research from December 2017, All articles that may contain original research, Articles with unsourced statements from August 2016, Articles with unsourced statements from May 2009, Articles with unsourced statements from July 2018, Creative Commons Attribution-ShareAlike License, 658.8/02 22, 658.8/02 23 (expanded edition). Blue Ocean Strategy is where a company creates a completely new market space (or market category). The first misconception is that you've got to do all 30 or 50 in the 30minutes. In 2006, Nintendo released the Wii, which used unique motion controls. Dear Twitpic Community - thank you for all the wonderful photos you have taken over the years. Working with consultants from the Mac Group (a consulting company that was later bought by Capgemini), he developed strategy tools leading to the publication of a series of articles in the Harvard Business Review, and then in 2005 of the Blue Ocean Strategy book. Blue ocean strategy, on the other hand, is based on the view that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. : Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost. As a result, the Wii sold more than 100 million units over its lifetime, far outselling the competitors. Value innovation is necessarily the alignment of innovation with utility, price and cost positions. The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. Where Red Ocean Strategy is a zero-sum game that is all about splitting up the pie between rivals, Blue Ocean Strategy is about creating the pie and/or enlarging it. In blue oceans, demand is created rather than fought over. The new chapters in the expanded edition of the book deal with the issues of how to develop and align the three strategy propositions of value, profit and people, how to sustain and renew blue ocean strategy at both the business level and the corporate level, and how to avoid red ocean traps that keep organizations anchored in existing market space even as they attempt to create new market space. The book examines the experience of companies in areas as diverse as watches, wine, cement, computers, automobiles, textiles, coffee makers, airlines, retailers, and even the circus, to answer this fundamental question and builds upon the argument about "value innovation" being the cornerstone of a blue ocean strategy. [11][12], Since Blue Ocean Strategy was published in 2005 it has been translated into 43 languages and has sold over 3.5 million copies. This, in turn, requires a shift of attention from supply to demand, from a focus on competing to a focus on value innovation – that is, the creation of innovative value to unlock new demand. : Make the competition irrelevant. #BlueOceanShift and #BlueOceanStrategy are worldwide business strategy bestsellers, helping you to move beyond competing and start creating your #blueocean. Reduce: This questions which areas of a company’s product or service are not entirely necessary but play a significant role in your industry, for example, the cost of manufacturing a certain material for a product could be reduced. Hence, competition, the supply side of the equation, becomes the defining variable of strategy. Red Bull SWOT Analysis offers invaluable insight into how passionate businesses thrive and succeed in a highly competitive marketplace. Instead, blue ocean strategy proposes finding value that crosses conventional market segmentation and offering value and lower cost. – a fundamental question without which any strategy for profitable growth is not worthwhile. The book presents analytical frameworks and tools to foster an organization's ability to systematically create and capture "blue oceans"—unexplored new market areas. The strategic move must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. Funky Business argues that firms need to create "sensational strategies". Before moving any further with a discussion on the Strategy Canvas , we need to go over the Blue Ocean Strategy first. [20], In 2009, Blue Ocean Strategy was selected by the China Daily and the China Research Institute as one of the 40 most influential books in the History of the People's Republic of China (1949-2009) along with Adam Smith’s ″The Wealth of Nations″ under the category of ″Economics and Finance.″[21][22] In 2010, Polish group ThinkTank selected Blue Ocean Strategy as one of the Top 20 books that have shaped Polish Leaders.
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