Blue Ocean Strategy

Chapter 4
Focus on the Big Picture, Not the
Numbers

February 10, 2009

Group 1
Anna Sterling
Clay Jones
Johnnie Davis
Kimberly Smith
Nolan Bosworth
Shaina Weaver
Zane Barnes
 Focusing on the Big
Picture
 Draw your company’s Strategy Canvas:
1. Shows the strategic profile of the industry
by divulging factors of competition the
shape the industry.
2. Shows the strategic profile of current and
potential competitors and what factors
they concentrate on.
3. Shows your own company’s strategic
profile against those or you competitors
and the factors your organization focuses
on.
 Drawing Your Strategy
Canvas
 The Four Steps of Visualizing Strategy: A
summary
1. Visual Awakening – Compare your business with
competitors’ businesses by creating an “as is”
strategy canvas. Discuss what changes should be
made.
2. Visual Exploration – Management must go into
the field and decide where best to implement the
6 paths of Blue Oceans. Observe advantages and
disadvantages of new products and services.
Decide which factors to keep, eliminate, or
modify.
Drawing Your Strategy Canvas
(Cont.)
 The Four Steps of Visualizing Strategy: A
summary
1. Visual Strategy Fair – Draw a second strategy
canvas based on observations from time spent in
the field. Receive feedback from customers,
competitors’ customers, and employees. Use this
feedback to construct your final canvas.
2. Visual Communication – Distribute all drafts of
your strategy canvas on a single page for
comparison. Accept projects and operational
moves only if they are in-line with your new
strategy.
Step 1: Visual Awakening
 Common Mistakes:
 Discussing changes in strategy before
resolving differences of opinion about
the current state of play
 Executives are often reluctant to accept
the need for change

 Executives’ answer:
 A highly determined leader or a crisis
Step 1: Continued, Helping
Executives Understand
 Ask them to draw the value curve of
their company’s strategy bring home
the need for change
 This can be a forceful wake-up call
for companies to challenge their
existing strategies
 Example: EFS
 EFS: European Financial
Services
 Had been struggling for a long time with
an ill-defined and poorly communicated
strategy

 Began the strategy process by bringing

together upper management from Europe,
N. American, Asia, and Australia

 2 Teams: Value curve production and

emerging online foreign exchange business
 EFS: Continued
 The experience: Europe vs. America

 The power of the website

 EFS strategy vs. competitors

(Clearskies)
 Step 2: Visual Exploration:
EFS Example
 EFS sent managers out for four weeks to
gather information.

 They had to interview ten people involved in

corporate foreign exchange.

 Also reached outside the industry’s

traditional boundaries to other companies
that did not yet use corporate foreign
exchange.
 Step 2: Visual Exploration:
EFS Example
 EFS Findings:
 What they thought was important turned out
not to be what the customer thought was
important.

 Becauseof these findings, EFS was able to

reformulate new strategies.

 Redid
the value curves and formulated new
compelling taglines that fit their business
model.
 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.

 They realized that 1/3 of what they had thought were key competitive factors
were, in fact, marginal to customers. Another 1/3 either were not well articulated
or had been overlooked in the visual awakening phase. It then became clear that
the executives needed to reassess things such as EFS’s separation of its online &
traditional business.

 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 EFS’s 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

Eliminate Raise

Relationship Management Ease of use

Security
Accuracy
Speed
Market commentary

Reduce Create

Account Executives Confirmation

Corporate Dealers Tracking
 Step 3: Visual Strategy
Fair
 The new value curve exhibited the criteria of
a successful strategy, and it 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.
 Visualizing Strategy at a
Corporate Level
 Using a strategy canvas aides in informing
individual business units throughout the
corporation about the necessary path to a blue
ocean

 When business units present their strategy

canvases to one another, they deepen their
understanding of the other businesses in the
corporate portfolio
 transfer of strategic best practices across
units
 Step 4: VISUAL
COMMUNICATION
Easily Understood
 When communicating the future
strategy, you need to “dumb it down”.
 All employees, in all departments, need to
understand.
 Use only one page for easy
comprehension.
 Make sure everyone understands.
 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 were held to explain what needed to
be reduced, raised, eliminated and created to
get them into a blue ocean
 EFS employees were so motivated by this plan that
they even hung up the one-page picture in their
cubes.
 All investment decisions had to fit this picture.
 Visualizing Strategy at a
Corporate Level
 Samsung Electronics of Korea

 used strategy canvases at 2000 corporate

conference

 seventy top managers attended, including CEO

 unit heads presented canvases and

implementation plans with focus towards a
blue ocean
 Visualizing Strategy at a
Corporate Level
 Samsung Electronics has institutionalized the
use of the strategy canvas through its
establishment of the Value Innovation
Program (VIP) Center

 equipped with 20 project rooms

 teams discuss strategic projects

focusing on strategy canvases
 Visualizing Strategy at a
Corporate Level
 Do your business heads lack an
understanding of the other businesses in
your corporate portfolio?

 Are your strategic best practices poorly

communicated across your business units?

 Are your low-performing units quick to blame

their competitive situations for their results?
 Using the Pioneer-Migrator-
Settler (PMS) Map
 PMS Map- helps visualize, plan, and predict a
companies future growth and profit.
 Pioneers- business that offer unprecedented
value and are powerful sources of profitable
growth. Their value curves are different form
the competitions on a strategy canvas. All
pioneers are blue oceans.
 Migrators- are in between pioneers and
settlers. They offer improved value, but not
innovative value.
 Settlers- do not contribute to much future
growth and are stuck in a red ocean. Their value
curves match the basic shape of the industry.
Example PMS Map
Overcoming the Limitations of
Strategic Planning
1. Big picture (use a strategy canvas, and
PMS map)
2. Use creative components
3. Be motivational, invoking commitment
4. Discuss number-crunching and
documents

“The soul never thinks without an image”,

Aristotle
 Takeaways
 Step 1: Visual Awakening – Compare your
business with competitors’ businesses by
creating an “as is” strategy canvas. Discuss
what changes should be made.

 Step 2: Visual Exploration – Management

must go into the field and decide where best
to implement the 6 paths of Blue Oceans.
Observe advantages and disadvantages of
new products and services. Decide which
factors to keep, eliminate, or modify.
 Takeaways
Step 3: Visual Strategy Fair
 First, draw your “to be” strategy canvas
based on insights from field observations
 Second, get feedback on alternative strategy
canvases from customers, competitors’
customers, and noncustomers
 Third, use feedback to build the best “to be”
future strategy
 Takeaways
 Step 4: Visual Communication
 Distribute your before-and-after
strategic profiles on one page for easy
comparison.
 Support only those projects and
operational moves that allow your
company to close the gaps to actualize
the new strategy.
 Takeaways
 Make a Pioneer-Migrator-Settler
(PMS) Map to identify strengths and
weakness.