Blue Ocean Strategy News

Blue Ocean Strategy Global Current     ISSUE 2, 2013   In this Issue In Focus Zoom-in: BOS and the Technology Sector Companies in Action Nations on the Move Featured Academic Research Conversations on BOS   Dear BOS Community, "How can we innovate to be more successful?" It’s always a valid question for companies both large and small. Innovation is commonly perceived as a random occurrence, dependent either on entrepreneurial activity or costly technological activities, neither of which guarantee commercial success. The only guarantee is risk. Innovation without value tends to be technologically driven and often produces products that fail to match what customers want or are willing to pay for; value without innovation will not make a company stand out in a crowded market. Blue ocean strategy relies on value innovation, with equal emphasis on value and innovation, as a systematic approach to creating uncontested market space and achieving strong, profitable growth in a risk-minimizing way. In this issue we showcase successful companies from the technology sector that value innovated and succeeded in the marketplace through blue ocean strategy. The In Focus section presents an interview with Professor W. Chan Kim, who explains how the concept of value innovation underlies blue ocean strategy. In the Zoom-in section that follows, examples of value innovation in the technology sector show that technology alone was not the sole driver of overwhelming success. Since the release of the last newsletter in January more than 290 articles from more than 20 countries discussing blue ocean strategy have appeared in press around the world. These will be made accessible to you soon through the BOS eLibrary that we are currently developing and look forward to telling you more about in upcoming newsletters. In the interim, we have included a selection of these articles for you in the current newsletter. We hope you enjoy reading it. Blue Oceans Ahead! The BOS Team www.blueoceanstrategy.com     JUST RELEASED : Skype, Zappos, Wii pedagogical materials   We are pleased to announce the latest BOS cases and accompanying videos and lecture slides. The case on Skype focuses on how to set a strategic price for an unprecedented offering. The two-part case series on Zappos focuses on reconstructing industry boundaries and explores the online retailer’s people proposition. Finally, the topic of reaching noncustomers is considered through an examination of the Nintendo Wii. Read more   >    IN FOCUS: TECHNOLOGY VS. VALUE INNOVATION Blue Ocean Man – W. Chan Kim Professor Kim, co-author of Blue Ocean Strategy, talks about the differences between red and blue oceans, the power of value innovation, and how to inculcate blue ocean thinking into an organization. Outlook Business India, Feb 2013 How is BOS superior to a random process of innovation? Is it fair to say that all BOS is innovation but not vice versa? Indeed, innovation in the conventional sense is largely a random occurrence. It depends either on entrepreneurial insight, which can hardly be replicated in a corporation over the long run, or on costly R&D activities, which, while highly organised, do not guarantee commercially applicable results. A related challenge is the high risks associated with innovation. Since random innovation largely follows a trial and error process, financial and strategic risks are high. Consider Motorola Iridium, a technology marvel that turned out to be a flop in the market as it did not provide attractive   utility for the mass of buyers and at the same time was unreasonably expensive because of high production costs. Its failure hit the company hard. All these drawbacks call for a systematic approach to innovation. BOS provides such an approach. Its actionable frameworks, tools and processes guide companies to maximise opportunities and minimise risks in pursuing value innovation and creating blue oceans. Conventional innovations are often technology-based sub-system activities of a company. Blue ocean strategy is about value-based innovations, forms the core of a company’s business strategy and aims to achieve differentiation and low cost simultaneously. Read the full article here       "We’ve always taken an approach in social gaming that we call blue ocean not red ocean. We’ve always thought how do we think about bringing a category of gaming to the mass market, to make it more social. The growth in our company historically has been driven by introducing tens of millions of people to gaming for the first time, or to a new category for the first time. ..." Mark Pincus CEO Zynga The Wall Street Journal Blog   >    ZOOM-IN: BOS AND THE TECHNOLOGY SECTOR   Salesforce Kickoff Salesforce.com strategy has been different from its competitors from the company’s inception more than a decade ago. The author suggests that Salesforce.com has been applying blue ocean strategy. Read more Enterprise Irregulars Feb 2013 USA (In English) Access our recently published case, "Salesforce.com: Creating a Blue Ocean in the B2B Space"   Blue Ocean Strategy in the Networked Society Ericsson’s Network Society Blog launches a series of blog posts that discuss how blue ocean strategy can be applied to telecommunications. The first post introduces the concept of blue ocean strategy and creates a strategy canvas for the telecom market using the example of two Asian telecom operators. Read more Ericsson The Network Society Blog March 2013 Sweden (In English)   Apple versus the Strategy Professors The performance and strategic direction of Apple is evaluated from the perspective of different approaches to strategy: Porter’s choice-making, Kim and Mauborgne’s blue ocean strategy, and Christensen’s disruptive innovation. Read more HBR Blog Jan 2013 USA (In English)   Focusing on the Most Important 2 Feet in Marketing @HCLTech Inspired by the book, Blue Ocean Strategy, CEO of HCL Technologies of India, Vineet Nayar transformed the culture of the company by implementing an "Employees First, Customers Second" strategy. Read more Customer Think March 2013 US (In English)   Galaxy Note II – the Blue Ocean Strategy to Win The article credits the success of Samsung’s Galaxy Note II phone to its application of blue ocean strategy. Read more Nhip Song So Feb 2013 Vietnam (In Vietnamese)   Skype in the Voice-Over-IP Industry: A Commercially Viable Blue Ocean? Our recently published case illustrates the experience of an avid Skype user who uses Skype’s voice and video offerings interchangeably for business and personal communication. Access our case here         >    COMPANIES IN ACTION   How a Blue Ocean Strategy Helped the Murugappa Group Murugappa Group’s Executive Vice-Chairman, A. Vellayan, shares his experience in applying blue ocean strategy at the Murrugrappa Group, one of India’s leading business conglomerates, comprised of 28 businesses across various sectors. Read more The Hindu Business Line Jan 2013 India (In English)   Pernod Ricard Innovates Without Moderation Pernod Ricard, the world’s leading spirits company, recognizes the influence of blue ocean strategy on their approach to grow beyond existing operations. Read more Challenges Feb 2013 France (In French)   OxygenBroadband Leverages New Partnership to Expand Network OxygenBroadband Networks, one of Nigeria’s leading providers of social internet, is expanding its network across the country using strategic alliances in Fast Moving Consumer Goods (FMCG), hospitality, music, and software industries – all geared towards enhancing Nigeria’s broadband ecosystem. CEO Wande Adalemo stated, "We are focused on delivering an ecosystem to deepen broadband penetration in Nigeria. It is our blue ocean strategy aimed at enriching our partners and consumers. We are creating an ecosystem to deliver the value of broadband to Nigerians." Read more Business Day March 2013 Nigeria (In English)   San Francisco’s Five Mill Ventures Proving Out Self-Funding Investment Model Five Mill Ventures, an angel investment incubator based in San Francisco, has proven its self-funding, revenue-only investment model with several companies in its portfolio including Argoz, an internet retail startup that sold more than 10,000 pairs of argyle socks in 2012, its first year of business. Said founder Dan Soha, "We start with a purely digital sales approach to each startup, then apply blue ocean strategy…High-fashion socks have been around a long time, but we created a new, dynamic internet retail model that was able to build brand loyalty without the high manufacturing, distribution and marketing costs of a traditional brick and mortar retail environment." Read more 24-7 Press Release March 2013 USA (In English)   Wawa’s New Boss Pledges a Bread Oven in Every Store Wawa CEO Chris Gheysens creates a blue ocean strategy by reconstructing industry boundaries and combining conveniently located gas stations with quality food and great customer service. The CEO wants his business to be seen not as fast food but as "Fast Casual." Read more En.Parset.com Jan 2013 USA (In English)   Jin Air’s 2012 Financial Performance Reaches New Heights Jin Air has recorded its best-ever financial results since its establishment in 2008, with a higher than average growth rate when compared to worldwide airline industry results. Success is attributed to implementation of blue ocean strategy through new route expansion where other low cost carriers are not present. Read more eTravel Blackboard Asia March 2013 Australia (In English)   Blue Ocean Strategy Royal Imex Chairman Jhung Jin-chul has successfully employed blue ocean strategy in the wig industry by focusing on human hair wigs. Royal Imex is currently the industry leader with lion’s share of the market. Read more The Korea Times Jan 2013 Korea (In English)             >    NATIONS ON THE MOVE   Do Drones Hold the Key to Solving Our Healthcare and Deficit Woes? Blue ocean strategy’s value innovation is explained using the example of unmanned aerial vehicles, or drones. The article, accompanied by an explanatory video, suggests the concept can be applied to other industries and the government can draw analogies to further apply value innovation to break the value-cost trade-off. Read more Innovation Excellence Feb 2013 USA (In English)   How Turkey’s Business Superwoman Steers Empire in Man’s World Guler Sabanci is Chairwoman and Managing Director of Sabanci Holding, Turkey’s largest financial and industrial conglomerate. She comments on joining the new tire manufacturing company, the family business, after graduating from university in 1978: "The tire company was something new it was just coming up, a new venture in the group. When I graduated I guess I wanted to have blue ocean strategy." Read more CNN Feb 2013 USA (In English)   Blue Diplomacy A former diplomat to the United States, Dr. Kinga Petro de Chalendar of Hungary, reflects he power of blue ocean strategy beyond the corporate sector. She argues that blue ocean strategy can be used in mediation to find common interest in an efficient way. The example of Béni Kállay, a major player in Hungary’s economic development after 1867 and the chief architect of modern state administration and law in Bosnia-Herzegovia, illustrates "blue diplomacy." Read more Diplomata Feb 2013 Hungary (In English)   Use National Blue Ocean Strategy in Work Chief Secretary to the Government of Malaysia, Datuk Seri Dr Ali Hamsa, urged public servants to practice the National Blue Ocean Strategy approach when carrying out their work to increase their productivity. Read more The New Straits Times Feb 2013 Malaysia (In English)         >    FEATURED ACADEMIC RESEARCH   Systematizing New Value Proposition through a TRIZ-based Classification of Functional Features Borgianni, Yuri, et al. "Systematizing New Value Proposition through a TRIZ-based classification of Functional Features." Procedia Engineering 9 (2011): 103–118. Summary: This paper attempts to systematize the procedure for constructing new value propositions to create a blue ocean strategy. The authors compare the value curves of 32 selected case studies from blue ocean strategy literature, classifying the reported factors for each case’s strategy canvas into the four actions: eliminating, reducing, raising and creating. Then, based on TRIZ classification of functional features, they categorize these attributes into three main groups: useful functions (UF); harmful functions (HF); and resource consumption mitigating functions (RES). Sub-functional features are also described and statistical analysis is conducted to identify mutual correlations. The authors report a trend of increasing deployment of RES and HFs as eliminating and reducing actions. They also reported an increased focus on raising the UFs that industries had traditionally competed on. No correlation among the newly-created attributes was reported. The authors suggest that this systemization effort is the first of its kind and that future research streams along these lines may be used to identify more prescriptive guidelines. Full Article   Lessons from Breakthrough Strategic Moves Over the Last Century Description: The case entitled, "Lessons from Breakthrough Strategic Moves Over the Last Century" illustrates how businesses over the last 100 years have periodically broken away from the competition to create and capture new market space – often giving rise to entirely new industries. To date, there is very little understanding of the underlying strategic logic behind these breakthrough strategic moves. This case and its accompanying video examine whether there is a shared pattern across these strategic moves by using three representative industries that touch peoples’ everyday lives: automobiles – how people get to work; computers – what people use at work; and movie theaters – where people go after work for entertainment. The complementary video called, "A History of Blue Ocean Strategic Moves: Is There a Pattern?" (free for instructor download), provides a visual demonstration of these three representative industries so that participants can deduce shared patterns across strategic moves. For use with both MBAs and executives, the case and video come with a comprehensive teaching note. Access materials here       CONTACT US We want to hear from you! Is your company applying BOS? Do you know of a story that should be featured in the newsletter? Contact us at suggest@blueoceanstrategy.com   >    CONVERSATIONS ON BOS   Thought Leaders on Innovation Professors Kim and Mauborgne, authors of Blue Ocean Strategy, discuss the importance of fair process in executing business strategy: "Fair process builds trust and commitment. In turn, trust and commitment produce voluntary cooperation. And voluntary cooperation leads people to go beyond the call of duty in executing strategy and in sharing their knowledge and applying their creativity." Read more Workforce Jan 2013 USA (In English)   How to Do a "Blue Ocean Strategy?": Step 1 This blog post presents a deep dive on applying blue ocean strategy in practice. Blue ocean strategy tools such as strategy canvas, pioneer-migrator-settler map, and visual awakening, are explained in detail. Read more Executive Street March 2013 USA (In English)   Travel Agents and Blue Ocean Strategy Travel Research Online, a blog for the travel agent community, runs a series of ten posts dedicated to blue ocean strategy theory and its practical application for travel agents. Full articles: 1 2 3 4 5 6 7 8 9 10 Travel Research Online Jan-Feb 2013 USA (In English)   A Estratégia do Oceano Azul – Descubra o Seu Caminho Para o Sucesso Dedicated entirely to the concept of blue ocean strategy, the author first briefly explains the concept and follows with examples of successful implementation by describing Nintendo Wii and DS. Read more diHITT Jan 2013 Brazil (In Portuguese)   6 Paths for Leading Your Education Business to Blue Ocean, Part I & II A series of blog posts on blue ocean strategy introduces the 6 Paths Framework and applies it in the context of publishing industry. Part I discusses Path 1 – Looking Across Alternative Industries, while Part II focuses on Path 2 – Looking Across Strategic Groups. Read more, Part I; Part II Tagoras Feb 2013 USA (In English)   From Crisis to Sustenance: Treasure is out there in the Blue Ocean A brief summary of the major concepts of blue ocean strategy. Read more Daily Mirror March 2013 Sri Lanka (In English)

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