Blue Oceans Chapter 4 FOCUS ON THE BIG PICTURE, NOT THE NUMBERS Team #1 Andrew McDaniel Brad Schaefer Brandon Christian Robert Pace Ryan Schafer OVERVIEW
Focus on the Big Picture Four Steps of Visualizing Strategy Visualizing Strategy at Corporate Level Overcoming Limitations of Strategic Planning
FOCUS ON THE BIG PICTURE Most Blue Ocean companies still get stuck on Red Ocean Strategy Difficult to focus on big picture with managements conflicting agendas
Drawing a strategy canvas helps to chart future strategy WHY USE A STRAGETY CANVAS? Shows a strategic profile of an industry by depicting factors affect the industries competition. Shows competitors strategic profile and identifies which factors they invest strategically
Shows a companies strategic profile (value curve) showing how they invest in competitive factors and how they may invest in the future FOUR STEPS OF VISUALIZING STRATEGY Step 1: Visual Awakening Compare your business with your competitors Draw your as is strategy canvas
See where your strategy needs to change Ex: EFS (European Financial Services) Corporate foreign exchange offline Corporate foreign exchange online VISUAL AWAKENING Online
Easy to use vs. Speed of website STEP 2: VISUAL EXPLORATION Go into the field and explore ways to create blue oceans Observe distinct advantages of other products
See what to eliminate, create, or change VISUAL EXPLORATION Dont rely on other peoples reports Examples Artists Michael Bloomberg Online analytics for financial information VISUAL AWAKENING
Offline Price, corporate dealers, flexible payment, speed, relationship management, ease of use, responsiveness, knowledge, risk Online Price, real time rates, customer support, web site attractiveness, speed, ease of use, accuracy, and security STEP 3: VISUAL STRATEGY FAIR
Both teams presented their strategy canvases at a visual strategy fair. (6 by the online group/6 by the offline group) Attendees included senior corporate executives noncustomers customers of competitors demanding EFS customers
After all 12 strategies were presented, each judge was given 5 sticky notes and told to put them next to his/her favorite, then explain why they did not choose certain curves. 1/3 of what they had thought were key competitive factors were, in fact, marginal to customers. 1/3 either were not well articulated or had been overlooked in the visual awakening phase.
Following the visual strategy fair, the teams were able to draw a value curve that was a truer likeness of the existing strategic profile than anything they had produced earlier STEP 3: VISUAL STRATEGY FAIR STEP 3: VISUAL STRATEGY FAIR Figure 4-5 summarizes EFSs 4 actions to create value innovation, which is the cornerstone of blue ocean strategy.
Figure 4-5: Eliminate-Reduce-Raise-Create Grid: The Case of EFS STEP 3: VISUAL STRATEGY FAIR The new value curve exhibited the criteria of a successful strategy displayed more focus than the previous strategy. By collapsing its online & traditional businesses into 1 offering, EFS substantially cut the operational complexity of its business model, making systematic execution far easier. STEP 4: VISUAL COMMUNICATION
EASILY UNDERSTOOD Explain All employees, in all departments, need to understand. Use only one page for easy comprehension.
Support only plans in the direction of the new strategy . STEP 4: VISUAL COMMUNICATION WHAT EFS DID Gave every employee a one-page picture showing the new and old strategies. This allowed the employees to focus their efforts on the future. Meetings held EFS employees were motivated. Hung up the one-page picture in their cubes.
All investment decisions had to fit this picture. VISUALIZING STRATEGY AT CORPORATE LEVEL Greatly informs the dialogue among individual business units and the corporate center This helps transform a company from a Red to Blue ocean player When Businesses present their strategy canvases to another they deepen their understanding of other businesses in the corporate portfolio.
USING THE STRATEGY CANVAS In 2000 Samsung Electronics used strategy canvases at its corporate conference. Unit heads presented their canvases and implementation plans Discussions were heated saying that the freedom of unit has to future strategies was constrained by the degree of competition Poor performers felt that they had little choice but to match their competitors offerings USING THE STRATEGY CANVAS (CONT.)
However, thanks to the mobile phone businesss implemented by their canvas strategy the need to match competitors prices was removed. This is thanks to the value curve brought forth by the VIP or value innovation plan put in place on their mobile phones USING THE STRATEGY CANVAS (CONT.) Successful implementation of this strategy canvas, was created by
Samsung establishing the (VIP) or Value Innovation Program. Core cross-functional team members come together in the VIP center to discuss their implementation of the strategic projects by focusing on strategy canvases. To get an idea of how much time it takes for a strategy canvas to take place, Samsung spent four months in the VIP room to create and launch their top selling 40in LCD T.V.
USING THE PIONEER-MIGRATOR-SETTLER (PMS) MAP For a company to and become more profitable managers must visualize strategy. What separates the company's in this book that have created a blue ocean for themselves is not that they found a new blue ocean, but rather developed new technologies no other competitors offered.
USING THE PIONEER-MIGRATOR-SETTLER (PMS) MAP (CONT.) A pioneer defined by this book is- the businesses that offer unprecedented value. These are your blue ocean strategists, and are your most powerful sources of profitable growth. A useful exercise for a corporate team pursing profitable growth is to plot the company's current and planned portfolios on a pioneer-migrator-settler
(PMS) map. OVERCOMING LIMITATIONS OF STRATEGIC PLANNING Integrate these ideas with strategic planning Discuss strategic planning Look at the big picture (Strategy canvas & PMS map) Include a creative component Motivate employees The soul never thinks without an image Aristotle OVERCOMING LIMITATIONS OF STRATEGIC
PLANNING Mission Statement: Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live. Questions?
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