ppt blue ocean strategy

Presented by:

Dr. Ling Kwok Sung, BDS (Mal), DDPHRCS (Eng), MBA (Aust),

Pakar Perunding Pergigian Kesihatan Awam, Jabatan Kesihatan Negeri Sarawak at Mesyuarat Blue Oceans Strategy:- The follow-up on 17 – 18 July 2013, Sibu

� Basic Concepts of Blue Ocean Strategy

� Case Study : - Cirque du Soleil- Tourism in Malaysia- QB (Quick Beauty) House

� Government Transformation Programme and National Blue Ocean Strategy (NBOS)

Blue Ocean

Strategy (BOS)

The Basic Concepts

WHAT ?

HOW ?WHY ?

WH0 ?WHEN ?

WHERE ?

� Published in 2005 by Harvard Business Publishing Corporation, USA.

Blue Ocean Strategy :-What?


• Professor of Strategy and

Management at INSEAD,

France.

• CO – Director of INSEAD Blue

Ocean Strategy/Institute,

France.

• Ranked 2nd in World’s Top 50

Thinkers (Year 2011)

W. Chan Kim and Renee Mauborgne

World Top 50 Thinkers1. Clayton Christensen (28)

2. W. Chan Kim & Renée

Mauborgne (5)

3. Vijay Govindarajan (24)

4. Jim Collins (17)

5. Michael Porter (11)

6. Roger Martin (32)

7. Marshall Goldsmith (14)

8. Marcus Buckingham (25)

9. Don Tapscott (39)

10. Malcolm Gladwell (2)

11. Sylvia Ann Hewlett (-)

12. Lynda Gratton (18)

13. Nitin Nohria (-)

14. Robert Kaplan & David Norton (37)

15. Gary Hamel (10)

16. Linda Hill (-)

17. Seth Godin (-)

18. Teresa Amabile (-)

19. Rita McGrath (-)

20. Richard Rumelt (-)

21. Richard D'Aveni (26)

22. Jeffrey Pfeffer (-)

23. David Ulrich (31)

24. Tom Peters (19)

25. Rosabeth Moss Kanter (27)

(http://thinkers50.com/results/2011 accessed on 29.11.12 at 9:56 a.m)


World Top 50 Thinkers

26. Nirmalya Kumar (-)

27. Pankaj Ghemawat (-)

28. Herminia Ibarra (-)

29. Daniel Pink (-)

30. Henry Mintzberg (33)

31. Costas Markides (47)

32. Thomas Friedman (30)

33. Tammy Erickson (46)

34. John Kotter (41)

35. Amy Edmondson (-)

36. Kjell Nordström & Jonas

Ridderstråle (23)

37. Howard Gardner (16)

38. Henry Chesbrough (-)

39. Daniel Goleman (34)

40. Vineet Nayar (-)

41. Rakesh Khurana (44)

42. Fons Trompenaars (-)

43. Ken Robinson (-)

44. Andrew Kakabadse (-)

45. Stewart Friedman (-)

46. Adrian Slywotzky (-)

47. Stephen Covey (29)

48. Sheena Iyengar (-)

49. Umair Haque (-)

50. Subir Chowdhury (-)

(http://thinkers50.com/results/2011 accessed on 29.11.12 at 9:56 a.m)


*Asia-Pacific

The UCSI Blue Ocean

Strategy Regional

Strategy Centre, Kuala

Lumpur, Malaysia

USA

The manufacture & business

Association Blue Ocean Strategy

Centre Pennsylvania

Latin American

The Kimberly Clark

Blue Ocean Strategy

Institute, Sao Paulo,

Brazil

Europe

The INSEAD Blue Ocean Strategy

Institute, Fountainebleau, France

Blue Ocean

Strategy

Institutes/

Centres

* Asia-Pacific :- Malaysia, Australia, Canada, China, India, Indonesia, Philippines, Singapore,

Taiwan and Thailand.


Conventional Practices

• Companies engage in head-to-head competition

in search of sustained, profit-able growth.(Red

Ocean)

• Companies fight for competition advantage,

and battle over market share.

Blue Ocean Strategy :- Avoid Head to Head Competition


Conventional Practices:- Head to head competition

Blue Ocean Strategy :- Avoid Head to Head Competition


� Arthurs’ Research :- A study of 150 strategic

moves in 30 industries (spanning over 100 years)

� Conclusion :-

That companies of the future will succeed NOT

by battling competitors (Red Ocean), but by

creating ‘Blue Ocean’ of uncontested market

space through value innovation.


Red Ocean Vs Blue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space. Create uncontested market space.

Beat the competition. Make the competition irrelevant

Exploit existing demand. Create and capture new demand.

Make the value-cost trade-off Break the value-cost trade-off

Align the whole system of a firm’s

activities with its strategy choice of

differentiation or low cost.

Align the whole system of a firm’s

activities in pursuit of differentiation

and low cost.

(Source : Blue Ocean Strategy Pg.18)


The term “Blue Ocean” is new,

but its EXISTENCE is NOT!


Value Innovation

� Is the corner-stone of Blue Ocean Strategy

� To achieve the desired results (Benefits, lowered

cost) through innovativeness.

� Place EQUAL emphasis on values (Benefit, lower

cost) and innovation (creativity).


� Value without innovation → Value creation

with slow improvement only.

� Innovation without value → Technology –

driven but customer not ready to accept or

pay.


Value Innovation

Value + Innovation →→→→Value Innovation →→→→ large and desired improvement

In a nutshell:-

“Is to achieve the desiredoutcome at a minimum cost

through creativity and with the avoidance of head-to-head

competition.”


Blue Ocean Strategy :-Why?

• Profit Organisations

The Profit and Growth Consequences of Creating Blue Oceans


Note: 86% of Business Launch (Red Ocean) generating only 39% of profits where as14% Business Launch (Using Blue Ocean Strategy) creating as 61% profits.

NON-PROFIT ORGANISATIONS

Reminder : Blue Ocean Strategy is about the use of creativity to achieve desired

results at a lowered cost.

Blue Ocean Strategy :-Why?

The Principle of Return on Management (ROM)

OUTCOME POSSIBILITIES

HIGH

MODERATE

LOW

LOW MODERATE HIGH

TIME/COST

HIGH ROM : HIGH BENEFITS-LOW TIME (COST)

LOW ROM : LOW BENEFITS – HIGH TIME (COST)

Who to use it?

• Anybody, everybody• 5 – 105 years old

Where to use it?

• Anywhere, everywhere• Private sector• Public sector• Home

When to use it?

• Anytime, all the time

Remember: The over aching focus of Blue Ocean Strategy is to achieve desired results (benefits, lowered costs) through value innovation.

Blue Ocean Strategy :- How?

CREATIVITY:- THINK OUT THE BOX

Do not limit the scope of your thinking

There must be an alternative

corn



Steps

1. Indentify the issue/ area of concern to be addressed.

2. Construct the strategy canvas (AS-IS)

3. Apply the 4 action frame work to generate the eliminate –

reduce – raise - create grid. (ERRC)

4. Construct the new Strategy Canvas. (TO-BE)

Step 1 : - Identify the Issue

� Magnitude of issue is variable, ranging from micro to macro issues.

- e.g. Macro issue : Delivery of Health Service in

Sarawak.

- e.g. Micro issue : Counter service at Klinik Pergigian

XXXXX

Step 2: Construct the Strategy Canvas (AS-IS)

� Is both a diagnostic and an action framework for formulating Blue Ocean Strategy.

� Consist of value curves which are graphic depictions of a company’s relatives performance across its industry’s factors of competition.

y

x

high

low

� Horizontal axis:

Show the value factors the

industry competes on and

invest in.

� Value factors:

- What do the provider(s) offer

to their customers

- 6 - 8 in nos.

- Always put cost (or price) as

the first value factor and rate it

on an absolute value basis.

Off

eri

ng

s

Value factors

Step 2: Construct the Strategy Canvas (AS-IS)

Strategy Canvas

y

x

high

low

� Vertical axis :

- Show the offering level

that buyer (customer)

receive across all the

key competing factors.

� Offerings:

- Outside-in perspective (what

customer wants) VS inside-out

perspective (what provider

offers)

- Scale:- Low to high

e.g. 0 – 5

0 – 10

0 – 100%

Off

eri

ng

s

Value factors

Value factors for Counter receptions

� Cost

� Promptness

� Friendly service

� Communication skills

� Technology used

� Personalized services

� Professionalism

� Technology used

� Environment

Value factors for Service delivery at provider – client interphase

� Cost

� Promptness

� Communication skills

� Accurate diagnosis

� Friendliness

� Professionalism

� Personalized services

� Technology used

� Environment

� Personal grooming

The Strategy Canvas of an Average Airline


High

Low

Price Meals Lounges Seating

class

choices

Hub

connectivity

Friendly

service

Speed

Average Airlines

Take a critical relook at the value factors to determine what to eliminate, reduce or raise!

Create

Which factors should be

created that the industry

has never offered?

Raise

Which factors should be raised well

above the industry’s standard?

Eliminate

Which of the factors that

the industry takes for

granted should be

eliminated?

Reduce

Which factors should be reduced

well below the industry’s standard?

A New

Value

Curve


The ERRC Grid of South-West Airline

Eliminate

• Seating class choices

Raise

Reduce Create

• Speed

• Frequent point to

point departures

• Hub connectivity

• Price

• Meal

• Lounge

• Friendly service

Some Methods

1. Brain Storming

2. Fish Bone Diagramme

3. Po (Lateral Thinking)

4. 6 Thinking Hats

What to “create”?

Step 4: Construct the Strategy Canvas (TO-BE)


High

Low

Price Meals Lounges Seating

class

choices

Hub

connectivity

Friendly

service

Speed Frequent

Point-to-

point

departures

Average Airlines

Southwest

Car Transport

Value Innovation

� Cost saving are made by eliminating and reducing the factors an industry competes on.

� Buyer value is lifted by raising and creating elements the industry has never offered.


Costs

Buyer Value

Value

Innovation

Ideas die fast in a closed mind

The mind works just like the parachute,

only if it opens

1. The rapid growth of “Cirque du

Soleil”

2. Tourism in Malaysia

3. QB (Quick Beauty) House

Cirque du

Soleil

A traveling circus from Canada,

created in 1984

Production seen by 40 million

people in 90 cities world wide

Has attained the level of

revenues in less than 20 years

that took the global champion in

Circus Industry ( Ringling Bros

and Barnum & Bailey) more than

100 years to achieve!

Rapid growth not achieved in an

attractive industry but rather in a

declining industry e.g. Children

cry out for play stations rather

than a visit to the circus.

The Strategy Canvas of Circus (AS-IS)

High

Low

Price

Star

performers

Animal

shows

Aisle

concessions

Multiple

Show

arenas Fun

And

humor

Thrills and

dangerUnique

venue

Ringling Bros, and Barnum & Bailey Value Curve

Smaller

Regional

Circuses

Eliminate-Reduce-Raise-Create Grid: The Case of Cirque du Soleil

Eliminate

• Star performers

• Animal shows

• Aisle concession sales

• Multiple show arenas

Raise

• Unique venue

Reduce

• Fun and humor

• Thrill and danger

Create

• Theme

• Refined environment

• Multiple productions

• Artistic music and dance


The Strategy Canvas of Cirque du Soleil (TO-BE)

Note that Cirque du Soleil offers new and non-circus factors such as theme,

refined watching environment and artistic music and dance

Note that Cirque du Soleil offers new and non-circus factors such as theme,

refined watching environment and artistic music and dance

High

Low

Price

Star

performers

Animal

shows

Aisle

concessions

Multiple

Show

arenas Fun

And

humor

Thrills and

dangerUnique

venue

Theme

Refined

watching

environment

Multiple

productions

Artistic

music

and dance

Ringling Bros, and Barnum & Bailey Value Curve

Cirque du Soleil

Value Curve

Smaller

Regional

Circuses

• Usual circus

• Cirque du Soleil

Usual Circus

Cirque du Soleil

Case Study 2:

Strategy Canvas (AS-IS) on Tourism Malaysia

Thailand

AS-IS

ERRC Grid on Tourism in Malaysia

Eliminate

Ownership requirement for

2-3 star hotel

Reduce

•Hassle for travelers

•Selling Eco and nature

tourism packages

Raise

•All-in-one shopping mall/ resort city

concept (ala Sunway or the Mines)

comprising shopping, hotel & theme park

•More regional airlines to operate from

cities in the targeted region to cities in

Malaysia

•Technology content in service offering.

Create

•Focus on emerging middle-class in

Asia

•Recruitment of tour agencies

•Building massive 2-3 star hotels

Rise of emerging middle class leads to rising

demand for international travel

International travels

Middle Class

bil

(Source: World Bank, 2007; World Tourism Organization UNWTO, 2006)

Strategy Canvas (TO-BE) on Tourism in Malaysia

Eliminate

Reduce

Raise Create

Thailand

AS-IS

TO-BE

Case Study 3:

The Strategy Canvas of QB House

QB House

Average Japanese Barbershop

Price

Reservation

desk

Extra

Services

(other than

Haircutting)

Range of

hair

treatments

Hygiene

Time

savings

on waiting

Time savings

on haircutHigh-

performance

“air wash”

system

High

Low

Government Transformation Programme (GTP)

(Adapted from Government Transformation Programme Annual Report 2011)

Government Transformation Programme (GTP)

• Launched by Prime Minister in 2010

• Purpose:-

1. Address key areas of concern to people (People 1st)

2. Create fundamental changes on a nation wide

basis to deliver big fast results (Performance Now!).

Big Picture: Malaysia to be a high-income and developed nation by 2020

Government

Transformation

Programme

(GTP)

Timeframe:-

Horizon 1 : 2010 – 2012

Horizon 2 : 2012 – 2015

Horizon 3 : 2015 – 2020

Initiative led by the Prime

Minister and his cabinet and

supported by the Chief

Secretary to the Government

and the civil service.

The Performance Management

and Delivery Unit (PEMANDU)

in the Prime Minister’s

Department is tasked with

driving this initiative.

The National Key Result Areas (NKRA) : The Pillars of GTP

No. NKRA Lead Minister/ Minister

1 Reducing crime Minister of Home Affairs

2 Fighting corruption Minister in Prime Minister Dept.

Law & Parliamentary Affair

3 Improving student outcomes Minister of Education

4 Raising living standard of low-

income households

Minister of Women, Family and

Community Development

5 Improving urban public transport Minister of Transport

6 Improving rural basic

infrastructure

Minister of Rural & Regional

Development

*7 Addressing the rising cost of living Deputy Prime Minister

* New NKRA introduced in July 2011.

(Adapted from Government Transformation Programme Annual Report 2011)

1. None for Ministry of Health.

2. Reviewed by Prime Minister every 6 monthly.

National Blue Ocean Strategy (NBOS)

NKRADesired

Results

Methodology :- Blue Ocean Strategy

National Blue Ocean Strategy (NBOS)

• Najib said the blue ocean strategy way of thinking involved thinking out of the box through the application of creative and innovative methods but at minimum cost.

( http://www.themalaysiainsider.com/malaysia/article/apply-blue-oceanstrategy

accessed on 17th July 2012 at 4:23p.m)

“Blue Ocean Strategy:-The Key to Najib’s Tranformation Plan

• “…..Malaysia is on the path of maximising on

effective outcomes while minimising the cost

incurred”

• “Blue ocean thinking strategy involves thinking

out of the box through the application of creative

and innovative methods but at minimum cost.”

( http://www.malaysiadigest.com.opinion/20372-blue-ocean.strategy accessed on

17th July 2012 at 4:19p.m)

(Source : Message from Prime Minister Malaysia 2 April 2012 as reported in

Government Transformation Programme Annual Report 2011)

“GTP accomplished the impossible. And it

did this without an overly large budget or

expansive resources. Instead, it took the

passionate and committed civil service,

supported by the right action plans, result-

oriented goals and a people-centric focus, to

make a difference.”

National Blue Ocean

Strategy (NBOS)

Activities & Achievement

(Adapted from: The Sunday Post, 14th Oct. 2012, Pg.20)

NBOS 1 & 2

NBOS 3

NBOS 4 & 5

Enabled the government to save cost as it

did not have to build new prisons costing

between RM50 – 60 millions each

Sarawak

• Build houses for selected families at Kg.

Bunan Gega and Kg. Bunan Pondok in

collaboration with the army

• Involve Rural Transformation Centres

(RTC)

• e.g. 1Malaysia Health Clinics

National Blue Ocean

Strategy (NBOS)

Activities & Achievement

(Adapted from: The Sunday Post, 14th Oct. 2012, Pg.20)

NBOS 6

• Collaboration among various government

departments and agencies for the benefits

of the people and country

• e.g. Health Fairs in Sarawak & Sabah

• Urban Transformation Centres (UTC)

• Harness the benefits of RTC and Urban

Transformation Centre (UTC) to market food

and agricultural products.

• Aims to reduce rural- urban migration

• e.g. 1Malaysia Family Care

NBOS 7

Summary

Blue

Ocean

Strategy

The Basic Concepts

Case Study:

� Cirque du Soleil

� Tourism in Malaysia

Government

Transformation

Programme (GTP) and

National Blue Ocean

Strategy (NBOS)

Blue Ocean

Strategy

The Basic

Concepts

What ?

� A creative way of

thinking to achieve

desired results at a

minimum cost.

� Avoid head-to-head

competition (Red

Ocean)

� Corner stone:- Value

innovation

Why ?

� Profit organisation:-

Generates large profit

Who?

� Anybody

� 5 – 105 years old

Where ?

� Anywhere

When ?

� All the time

How ?

Step:

1.Identify the issue

2.Construct strategy canvas

(AS-IS)

3.Formulate ERRC Grid

4.Construct Strategy Canvas

(TO-BE)

1

2

3

4

5

6

Summary

Blue

Ocean

Strategy

Case Study

on Cirque

du Soleil

Summary

Blue

Ocean

Strategy

Case Study

on Tourism

in Malaysia

Summary

Blue

Ocean

Strategy

Government

Transformation

Programme &

NBOS

Aim

Address people concern

To achieve a developed

and high-income nation

by 2020NKRAS

1 Reducing Crime

2 Fighting corruption

3 Improving student

outcomes

4 Raising living standard

of low-income

households

5 Improving urban

public transport

6 Improving rural basic

infrastructure

7 Addressing the rising

cost of living

NBOS

1 NBOS 1

2 NBOS 2

3 NBOS 3

4 NBOS 4

5 NBOS 5

6 NBOS 6

7 NBOS 7

ppt blue ocean strategy

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