BOS Short 3-Page

Harvard Business School Press, Boston, Massachusetts BOS-1
Contents
 Background of BOS
 Rising Imperative of Creating BOs
 Creating BOs
 Sustainability & Renewal of Blue BOS
 Blue BOS Tools
 Six Principles of BOS
 Formulating and Executing BOS
Background of BOS
• Decade-long groundbreaking,
empirical research by 2 INSEAD
Professors
̶ More than 150 strategic moves by 1880-
2000 firms across 30 industries to see...
̶ Less successful competitors
• Published in a series of articles in HBR

and compiled into a book in 2005
1
Central Message of BOS
• Market universe consists of 2

sorts of oceans
̶ BO metaphor is used to describe
the unbounded opportunity and
market space
• Many companies are swimming

in the RO of bloody completion
• BOS is a strategic approach

→ A different way of thinking and
a new strategic mindset
→ A bold new path to winning the
future
→ A way of solving problems
differently
• Grounded in analysis
̶ Not based on intuitions or gut-
feelings or assumptions
• Literally changes
a) the way we do business
b) the fundamental basis of

strategy
2
• Turns the way we think of

competition and creates
competitive space where
̶ Products & industries are not yet
well defined
̶ Competitors are not structured
̶ The market is relatively unknown
• A company cannot be perpetually

high-performing
̶ Brilliant vs. Wrongheaded
• Don’t compete head-on using

market competing strategy
̶ Make competition irrelevant
̶ Don’t use competition as benchmark
• Create market by applying

market-creating strategy
• Tap into unsatisfied consumer

demand
• Create win-wins, not win-lose

̶ Win in the future new,
uncontested market space
3
• Value innovate by linking innovation

to value
• Minimize risks while maximizing

opportunities
• Pursue both cost minimization AND

differentiation strategies
• Make products and services as

offerings that have no alternatives
• Use a “strategy canvas”

̶ To know firm’s relative
performance across its
industry factors of
competition
̶ To chart the competition
and exploit their
shortcomings
• Focus more on bringing

noncustomers into industry and
less on serving existing customers
• Look for de-segmentation rather

than finer segmentation
4
• See the possibilities not the

boundaries
• Don’t accept the rules of the

game
̶ Create and set the rules of the
game
• Define and solve new problems

instead of finding existing
solutions
• Use ERRC model to create BO
• Builds execution into strategy
A Quick Check of RED or BLUE

A quick reality check of how RED or BLUE is your company?
Do you face Do you depend on Do you increase ads and
increasing offering deeper price mkt. expense every year,
competition from discounts to make yet the impact of these
rivals? sales happen? efforts keep falling?
Do you focus on cost Do you blame slow Do you see outsourcing

cutting and quality economic and market and job cuts as a way to
control at the conditions most of regain competitiveness
expense of growth, the time? and profitability?
innovation, and brand
creation?
Is merger or Is it easier to follow Do you now start to

acquisition a principal competitors than to worry that the
means to grow in the break away from marketplace has become
future? them? crowded?
If your answer to 3 or more questions is YES, you are in RED OCEAN
5
Subtle War vs. Brutal War
Michel Poter‘s Competition
Attack on Michel Porter
• “Five forces” model is the best

model for competing in the RO
• Apply both cost minimization AND

differentiation simultaneously
• Competing is simply a red-ocean

thinking
6
What is Red Ocean?
• Represents all the industries in

existence today
• Known market space is crowded and

prospects for profits and growth get
reduced
• Spends most time, efforts, and

resources beating competition
• Everything is competition-based
What is Blue Ocean?
• Represents all the industries NOT in

existence today
• Largely uncharted, yet to be created
• Unknown market defined by
̶ Untapped market space
̶ Demand creation
̶ Unlimited opportunity for profitable
growth
• Everything is innovation-based
Impact of Creating Blue Oceans
A study of the
business
launches of 108
companies
7
Unit of Analysis:
Company or Industry Vs. Strategic Move
• Basic unit of analysis is strategic move,

not the company or industry
̶ No company or industry is perpetually excellent
or wrong-headed (rise and fall)
̶ Strategic move is required to create and sustain
excellence in performance
Two Ways to Create Blue Oceans
• Explore completely new industries,

as eBay did with online auction
industry
• From within a RO when a company

alters the boundaries of an existing
industry, example: Netflix
BO Has Been Created Over Time
A snapshot of creating BO in computer industry
1914 1952 1978 1990s 2018
CTR IBM 650 Apple PC Compaq PC Apple iMac

Machine Electronic and Dell
Machine Computer
8
Examples of Creating BO
• Cirque du Soleil (1984)
̶ Dramatic mix of circus arts and street
entertainment
̶ No star performers and animals
̶ Showed artistic richness of the theatre
• Southwest Airlines
̶ Offered the speed of air travel with the
cost and flexibility of bus travel, using
secondary airport
̶ Reduced prices due to the elimination of
additional services
̶ Improved check-in times
̶ Increased flight frequency
Value Innovation:
The Cornerstone of BOS
• VI is all about
̶ Driving costs down AND driving
value up for buyers and the firm
• Focus on sustainable value
The Simultaneous Pursuit of

Differentiation and Cost Minimization
Cost savings
are made from
eliminating and
reducing
the factors an
industry
competes on VI must affect the both favorably
Buyer value is
lifted by raising
and creating
elements the
industry has
never and ever
offered
9
Equally Important: Value and Innovation
• Value without innovation??

̶ Value creation on an incremental scale
̶ Not sufficient to stand out
• Innovation without value??

̶ A technology-driven, market pioneering,
or futuristic product
̶ As if technology innovators lay eggs but
hatched by others
Aligning Value Innovation with 3 Levers
VI creates a leap in value for both buyers and the firm
Value Innovation
Utility Price Cost

Create new Set a price that Set the structure
buyer attracts a mass based on a
utilities of buyers target
Align innovation with 3
List Down at Least Four Factors or

Attributes in Each Category to Create BO
Factors to Factors to Factors to Factors to

Eliminate Reduce Add Create
1. 1. 1. 1.
2. 2. 2. 2.
3. 3. 3. 3.
4. 4. 4. 4.
10
Red Ocean Vs. Blue Ocean
Sustainability and Renewal of BOS
• Not sustainable and renewed

• Not a one-time process or static
achievement
• A dynamic process
̶ Powerful performance consequences
will be known
̶ Eventually imitators jump your ship
Sustainability and Renewal of BOS
• When should a firm reach out

to create another BO?
• Decide on:
̶ How to create barriers to
imitation?
̶ When to value-innovate again?
11
Barriers to Imitation
• BOS brings with considerable

barriers to imitation
̶ Operational and cognitive barriers
̶ Sustainability can be traced to some

imitation barriers
̶ Most BOS will go without credible

challenges for 10-15 years
A VI move doesn’t make sense based

on conventional strategic logic
̶ NBC, CBS, and ABC ridiculed the idea of
24×7, real time news without star
broadcasters
̶ Referred to as ‘Chicken Noodle News’
Brand Image Conflict

̶ Chanel, CD, etc could not imitate
‘The Body Shop’ as it would signal
an invalidation of business models
̶ ‘The Body Shop’ left cosmetic
houses actionless for years
Network Externalities
̶ eBay’s Online auction market advantage
Significant Change Requirements

̶ Operational and cultural changes; politics
̶ Major revisions in routing planes, retraining,
changing marketing/ pricing/culture
Leap in Value and First to Market

̶ Earns brand buzz and loyal following in
marketplace
̶ Microsoft failed to dislodge Intuit’s ‘Quicken’
12
Natural Monopoly
̶ Market size cannot support a second
player
̶ Megaplex business in Brussels
Economies of Scale
̶ High volume generated by a VI leads
to rapid cost advantages
Patents or Legal Permits

̶ Exclusive rights granted by a sovereign
state to an inventor
Conclusions: Barriers to Imitation
• Eventually imitators will:

̶ Imitate BOS and grab a share of your BO
̶ Occupy the center of your strategic thought
and actions
̶ You launch offenses to defend your hard-
earned customer base and fall into the trap of
competing
When to Value-Innovate Again?
• Always monitor the shape Comparing VC with those of competition
your VC on ‘strategy canvas’

̶ If your VC converges with those
of competition, you have value-
innovate
̶ Because of coexistence of VCs,

firms must succeed in both
oceans and master the
strategies for both
13
The Strategy Canvas
• A diagnostic tool and an action framework

for building a compelling BOS
̶ Shows the ‘current state of play’ in the known
The
market space
Strategy
Canvas ̶ Allows you to understand….
̶ Enables to take BO move (4-action framework)
Value Curve Southwest Airlines on

Strategy Canvas
BOS-41
Four Actions Framework: ERRC Grid

Reduce
The key to discovering a
What factors should
new VC lies in answering
be reduced well
four basic questions
below the industry
standard?
Eliminate Create/Add
Creating What factors that the
What factors that the
new markets: industry has never
industry has taken for
A new value and ever offered
granted should be
curve should be created or
eliminated?
added?
Raise
What factors should
be raised well above
the industry
standard?
14
Value Curve of Cirque du Soleil on
Strategy Canvas
High Eliminate Reduce Raise Create
Ringling Brothers
Cirque du Soleil
offering level
Smaller Regional
Circus
Low
Multiple Show Thrills & Multiple
Price Animal Shows Theme
Arenas Danger Productions
Star Performers Aisle Fun & Humor Unique Refined Viewing Artistic Music
Concessions Venue Environment & Dance
Value Curve of C Yellow Tail’s on Strategy

Canvas
Raised Eliminated Reduced Created
Test for the Compelling Value Curve
Resist the temptation

• Diverges from
to value-innovate
competition
again, when the
company’s value
curve still has focus,
divergence, and a
Divergence compelling tagline
• Focuses on few key

value attributes • The tagline of YT’s
Compelling strategic profile is
• Does not diffuse Focus clear (fun and
efforts across many tagline
simple)
15
How to Draw Strategy Canvas?
Drawing X Company’s “AS IS” Strategy Canvas
Six Principles for

Formulating and Executing
Blue Ocean Strategy
Six Principles of BOS

Formulation Principles Risk Factors
1. Reconstruct market boundaries 1. Search risk
2. Focus on the big picture, not the 2. (Strategic)
numbers Planning risk
3. Reach beyond existing demand 3. Scale risk
4. Get the strategic sequence right 4. Business model risk
Execution Principles
5. Overcome key organizational 5. Organizational risk
hurdles 6. Management risk
6. Build execution into strategy
Key Challenge: How to identify commercially compelling BO opportunities?
16
Reconstruct Market Boundaries
Path-1: Look Across the Industry
Head-to-Head Competition Creating New Market Space
• Define their industry similarly • Compete not only with players in

and focus on being the best own industries but also with
within it players in other industries
producing alternative products or
services
̶ Alternatives are broader than
substitutes
̶ Examples: Cinema vs. Restaurant
• Focus on factors that lead buyers

to trade across alternative
industries
Path-2: Look Across Strategic Groups

Within Industries
• Look at their industries • Break out the tunnel vision

through the lens of generally ̶ Figure out which factors determine
accepted SGs, and strive to customers’ decisions to trade up or
stand out in the SG they are down from one group to another
in
̶ Ranking of SGs
̶ Ignoring other SGs
17
Path-3: Look Across the Chain of
Buyers
• Focus on a single buyer • Redefine the chain of buyers and

group (purchaser or user or design unique VC for each
influencer) and try to serve ̶ Example: Corporate purchasing
them with single VC agent, corporate purchasing user,
̶ No recognition of chain of retailer
buyers • Create BO by shifting buyer
group and designing unique VC
Path-4: Look Across Complementary

Product and Service Offerings
• Define the scope of the • Untapped value is hidden in

products offered by their complements (other products)
industry similarly
• Look at the total solution a buyer
• Maximize the value of the seeks while buying a product
offering within the bounds of ̶ Look at what happens before, during
its industry and after the product is used
̶ Never recognize that other • Identify the pain points and
products can affect their value
overcome them through
̶ Example: Movie theaters complements
Path-5: Look Across Functional or

Emotional Orientation to Buyers
• Accept the industry’s • Acknowledge that appeal is

orientation and focus on rarely intrinsically one or the
maximizing either utility or other
feeling ̶ Emotion: Strip away many extras
̶ Rational appeal: Price and utility to offer lower-priced, lower cost
business model (The Body Shop)
̶ Emotional appeal: Feeling
̶ Function: Infuse products with
new life through a dose of
emotion and stimulate demand
18
Path-6: Look Across Time
• Focus on the same point in • Look at these trends with right

time in framing strategy perspective
̶ Participate in shaping external trends
• Project the trends and then
take passive actions to adapt ̶ How the trend will change value to
to external trends as they customers and impact company’s
business model
unfold
• 3 principles to assess trends
̶ Must have a high probability of
impacting your industry
̶ Must be irreversible
̶ Must evolve in a clear trajectory
Focus on Big Pictures, Not the Numbers
CHALLENGE
• How to align SPP to focus on
the big picture and draw SC to
arrive at a BOS?
̶ How to get out of the box and
number goals?
̶ Example: Salesman increasing
sale, ignoring costs
Preparing the Typical Strategic Plan
OUTCOME
• Current industry conditions and • No plan, no strategy!

competitive situations • Full of jargons, operational
details, and tactics with no
• How to achieve number goals future directions
• Full of budgets, graphs, • No direction for employees
spreadsheets
• Plans make sense
• Data from various depts. having individually, not collectively
conflicting agendas and poor • Don’t deep down in company
communication strategy
• Don’t get out of the box
19
Drawing Your Strategy Canvas
• Visualize a company's current strategic position

• See the dynamics of your entire industry
• Chart future strategy
• Go beyond the scope of your own
responsibilities
• Get the big picture
Drawing Strategy Canvas is Awfully

Hard
• Difficult to identify KCFs

• Difficult to assess to what extent
you and your competitors offer
KCFs
̶ Your company is easy
̶ The whole industry is hard
Four Steps of Visualizing
1. Visual 2. Visual Exploration 3. Visual 4. Visual

Awakening Strategy Fair Communication
•Overcome the •Go into the field to •Draw your “to •Distribute your
reluctance to explore the 6 paths to be” canvas before-and-after
the need of creating BOs based on insights strategic profiles
change from field on one page for
•Talk to your high-valued
observations easy
•Compare your customers, competitors’
comparison
business with customers, and •Get feedback on
your noncustomers alternative •Support only
competitors’ by strategy those projects
•Observe the distinctive
drawing your canvases from 3 and operational
advantages of alternative
“as is” canvas groups moves that allow
products and services
your company to
•See where your •Use feedback to
•See which factors you close gaps and
strategy needs build the best “to
should eliminate, reduce, actualize the
to change be” future
raise or create new strategy
strategy
20
Visual Strategy Fair
Using the Pioneer-Migrator-Settler (PMS) Map
• Helps visualize, plan, and

predict a company's future
growth and profit
• Better to shift the portfolio

toward pioneer
• If current and planned

portfolios mainly consist of
settlers, the company has
low growth trajectory
Reach Beyond Existing Demand

• How to maximize the size of BO you are creating?
̶ Challenge 2 conventional strategy practices
Shift FOCUS
from from finer

customers segmentation
to to
noncustomers desegmentation
21
Engage the Three Tiers of Non-Customers
Tier 2
• Are aware of but don’t
use your industry
offerings Tier 3
• Stay far away
• Use alternative offerings
from your market
that serve the same
function • Don’t consume
even the
Tier 1 alternatives
• On the edge of your
market, waiting to jump • Usually not
ship thought of as
potential
• Buy industry offerings out
of necessity customers
Which tier should be focused on and when?
• No hard and fast rule—‘Go for the biggest

catchment’
• Don’t focus on single tier and explore
overlapping commonalities across all 3 tiers
• Expand the scope of latent demand
• If no opportunities exist, focus on existing
customers
Get the Strategic Sequence Right
How to build a robust business

model on BO ideas?
• Reduce business model risk

through:
a. Knowing the right strategic sequence
of adding BO ideas
b. Assessing and validating the BO ideas
to ensure commercial viability
22
Sequence of
Blue Ocean
Strategy
Testing for Exceptional Buyer Utility
• Failing to create exceptional

CV: Being obsessed by the
novelty
• VI is not the same as TI
̶ Philips’ CD-i failed to offer people a
compelling reason to buy it
̶ The player was promoted as the
“Imagination Machine” because of
its diverse functions
Testing for Exceptional Buyer Utility
• Create a strategic profile that passes test

̶ of being focused
̶ of being divergent
̶ of compelling taglines that speak to buyers
• Create a buyer utility map

̶ Helps managers look at things in the right perspective
23
Buyer Utility Map
The Profit Model of BOS
The Price Strategy A business model, built

in the sequence of 3
levers will produce VI
The Target Profit
This model shows how
VI maximizes profit by
The Target Cost using 3 levers
Streamlining and Partnering

Cost Innovations
Pricing Innovation
Adoption of Business Model
• An unbeatable ‘business model’ may

not guarantee the commercial success
because
̶ It threatens the status quo
̶ It provokes fear and resistance among 3
main stakeholders
• Overcome the fears by educating the

fearful
24
Creating An Aligned Set of Strategy Propositions
VALUE
PROPOSITION
Utility ̶ Price
PEOPLE PROPOSITION
PROFIT
PROPOSITION Employees, Partners
and Other
Revenue ̶ Cost
Stakeholders
Blue Ocean
Strategy
Differentiation
AND Low Cost
Blue Ocean Idea (BOI) Index
BOI Index Tata Nano
Utility Is there exceptional buyer Safe, comfortable, reliable,

utility in your business + environment friendly vehicle that
idea? met Indian families’ desire for
upward mobility at low cost
Price Is your price easily + Priced at Rs 1 lac ($1,984) against
accessible to the mass of two wheelers; the cheapest car then
buyers? was priced at Rs2.5 lac ($4,960)
Cost Can you attain your cost + Tata Nano team achieved the target
target to profit at your cost through cost innovations and
strategic price? partnering
Adopt Have you addressed + Employees and partners were
ion adoption hurdles up front? motivated; the public was ready to
accept the product
Blue Ocean Idea (BOI) Index

BOI Index DoCoMo
Philips Motorola
i-mode
CD-I Iridium
Japan
Utility Is there exceptional buyer -
utility in your business - +
idea?
Price Is your price easily - - +

accessible to the mass of
buyers?
Cost Can you attain your cost - - +
target to profit at your
strategic price?
Adoption Have you addressed - -/+ +
adoption hurdles up
front?
25
Executing Blue Ocean Strategy
Overcome Key Organizational Hurdles
• Managers face 4 organizational

hurdles
• Steep execution challenges

̶ Significant departure from status quo
• Flip conventional wisdom

̶ “The greater the change, the greater
the resources and time.”
• Apply ‘tipping point leadership’
Tipping Point Leadership (TPL) in Action
• Overcomes any hurdles fast and

at low cost, while winning
employees’ backing in executing
a break from the status quo
• Transforms the extremes to
change the mass
̶ The extremes have disproportionate
influence on performance
26
Conditions Before Feb 1994
• Severe odds were stacked • Budget was frozen

against him
• Morale of cops reached
• NY veering toward anarchy rock-bottom
– Murders were at an all-time high
• A cash-strapped dept.
– Muggings, mafia hits, vigilantes,
and armed robberies filled the • Disgruntled customer
daily headlines base
– NY Post: “Dave do something!” – Declining performance
Social scientist’s comments indicators: crime, fear,
disorder
– New Yorkers were under siege
During Bratton’s Tenure: Feb 1994 —1996
Bratton turned NYC into the safest large city in the US
• Organization won • He was featured on

– Felony crime fell 39% the cover to the Time
– Murder 50% magazine
– Theft 35%
• Crime rate continued
• Customers won to fall after his
– Public confidence leaped from departure (GE)
37% to 73%
• Employees won
– Job satisfaction and motivation
increased (one comment)
Four Organizational Hurdles to Strategy

Execution
27
Break Through the Cognitive Hurdle
• Make people aware of • Don’t rely on numbers

the need for a strategic ̶ Figures can be manipulated
shift and agree on its and misleading
causes ̶ Stretch goals and abuse in
the budgetary process
• Two performance
̶ Comm. with numbers hardly
alternatives:
ever sticks with people
̶ Make the performance ̶ The case for change feels
targets abstract and create different
̶ Beat them outcome
Break Through the Cognitive Hurdle
• Get managers out of the • Research finding

office to witness the
̶ Seeing is believing
operational horror
̶ Positive and negative
• Make people see and stimuli
experience the harsh • Apply the strategies
reality firsthand ̶ Ride the “Electric
̶ It’s shocking and inescapable, Sewer”
but actionable ̶ Meet with the
̶ Don’t let them hypothesize
disgruntled customers
Ride the “Electric Sewer”
NYC Subway in 1990s

• Revenues tumbled
Bratton started riding
• NYC subway system reeked of
electric sewer day and
fear
night that helped
– Patrolling cars, jumping turnstiles, sensitize bosses and
aggressive begging, winnow's
sprawling, graffiti on walls change their mindset
• Epithet ‘electric sewer’

• Numbers are disputable and
uninspiring (3% major crime)
28
Ride the “Electric Sewer”
MBTA’s small squad cars

• Inviting MBTA’s GM for a tour
of his unit to see the district
• Strategies
– Driving over every pothole
– Putting on belt, cuffs, and gun for
the trip
– Jamming seats upfront
• Result in 2 hours
Meet with Disgruntled Customers
1970’s Boston Police
• Get the managers out of • A serious surge of crime

the office to listen to • Selling their houses and
most disgruntled leaving in droves
customers firsthand • Feeling: Doing a fine job
based on performance
• Don’t rely on surveys indicators
and numbers • Meetings between his
officers and the residents
helped find out the gap
perceptions
Jump the Resource Hurdle
• Stark reality of limited resources

• Predecessors’ comment
• What typical leaders do:
̶ Set ambitious plan and fight for
more money
̶ Cut ambitions, cutting the morale
of workforce
29
HOT SPOTS
• Multiply value of existing

resources COLD SPOTS
• 3 factors help free up

resources and multiply
HORSE TRADING
their value
Redistribute resources to Hot Spots
Target hot spots

• Sharp drop in crime,
1. Subway officers changed from fear and disorder with
patrolling every line and station the same number of
to just those in need of most police force
attention
2. Narcotics unit was prioritized to • Meeting with NYPD’s

chiefs : 50% Crime
appropriate time and number
rate vs. 5% staff
of officers it really required
• Modus operandi
Proved wrong: ‘Lower crime means increasing costs’
Redirect resources from Cold Spots
• Target cold spots to free up

resources for use in hot spots
• The bottleneck of processing

criminals in court is replaced by using
“bust buses” right outside the
subway stations
̶ Cutting time spent from 16 hours to
just one
30
Horse Trading
• NYPD:
Transit Department’s Division of Parole’s
surplus of vehicles excess office space
• Dean Esserman, Chief of NY Transit Police & Bratton’s policy

counsel, in 1990 skillfully played a Horse Trading role
• The deal stoked Bratton’s credibility within the organization
but he was known to his bosses as ‘a man who could solve
problems’
Jump the Motivational Hurdle
How to motivate quickly and inexpensively?
• Alert employees about need for a

strategic shift
• Identify how to achieve with

limited resources
• Seek massive concentration
• Use 3 key factors

̶ Kingpins, fishbowl management, and
atomization
31
Zoom in on Kingpins
• Key influencers in the • Easier to move fewer

organization
• Use ‘the ripple effect’
• Natural, well-respected
and persuasive leaders • Concentrate on kingpins
and don’t spread your
• Have ability to use or
efforts thin
unlock key resources
– “Hit the kingpins” in bowling
and “use the ripple effect”
– Need not tackle everyone
– Bratton zoomed in on only 76
precinct heads
Place Kingpins in a Fishbowl
Fishbowl management
• Motivates kingpins by making
their actions and inactions
visible to others Bretton’s biweekly crime
– Exposes those lagging behind strategy review meeting
and those are fairly well
– Questioning in front of peers
– Must establish a level playing and superiors
field
– Giving an opportunity for
achievers to gain the
recognition
– Must be based on
transparency, inclusion and
fair process
Atomize to Get the Organization to Change Itself
• Break the task into bite-

Atomization size atoms that officers
at different levels could
• Framing the strategic challenge relate to
attainable
– Assigning duties “block by
• Making employees at all levels block, precinct by
think that it is doable and precinct, and borough by
borough.”
worth working for
– Responsibility of BOS
execution shifted from the
top to each of 36,000
officers
32
Knock Over the Political Hurdle
• Politics are everywhere!

• Overcome the powerful vested
interests who resist changes and
disrupt the strategy execution
process
̶ Youth and skill may not win over age
and treachery
̶ The best and brightest are eaten

alive by politics, intrigue, and
plotting
Knock Over the Political Hurdle
• Consigliere is a politically
• 3 ways to knock down
adept but highly
political hurdles
respected insider who
̶ Get the consigliore on the knows who will fight or
top management support you
̶ Leverage your angels ̶ Timoney (a cop’s cop)
̶ Silence your devils knew the political game
in NYPD and used to
report to Bratton
Leverage Your Angels and Silence your Devils
Ask yourself two sets of questions
• Who are my angels?
• Who will naturally align

with me? • Who are my devils?
• Who will gain the most by • Who will fight me?

the strategic shift?
• Who will lose the most
by the future blue
ocean strategy?
33
• Identify your detractors and

supporters—forget the middle
̶ Create a win-win outcome for both
• Isolate your detractors by

building a coalition with angels
before a battle begins
̶ Discourages the war from even
starting
• Don’t fight alone

̶ Get the higher and wider voice to fight
with
• Win over detractors/devils by

̶ Knowing their angles of attack
̶ Building up counterarguments backed by
facts and reasons
Build Execution into Strategy
• Create a culture of trust,

• Everyone must commitment & voluntary
support and be execution
aligned with strategy ̶ This motivates people to
execute the agreed strategy
̶ Frontline employees
must be involved in ̶ To build this commitment,
creating strategy build execution into strategy
from the start
̶ Fair process is a key variable
that distinguishes BO moves
34
Poor Process Can Ruin Strategy Execution
• Poor process leads to poor

decisions
 Execution needs
̶ Countless mistakes
̶ Significant changes
̶ Issues can be misidentified or
̶ A well-thought-out dealt with out of order
process contributed
̶ Process can be too complex
by every one
with too many steps
̶ Process is so short and simple
that important facts or
opinions may be ignored
Use the “Fair Process”

Engagement Explanation Expectation
Clarity
Fair process aligns • Involve • Everyone • Managers
people’s minds and everybody understands conveys the
why strategic rules of the
hearts with the new • Ask for decisions are game
strategy by building input made
a culture of trust, • Employees
• Allow • Employees know the
commitment, and dialogue are confident standards
voluntary execution, and can trust and clear
as well as support managers’ consequenc
for the leader intentions es
• Managers get
feedback
Respect Empathy Fairness
The Power of Fair Process
• People care about the • Inspires everyone to

process as well as cooperate voluntarily
outcome in executing strategy
̶ Voluntary Cooperation
• Employees trust that
>> Mechanical
everyone has an input in Execution
the process
̶ Employees go beyond
the call of duty
35
Figure 8-1 pg.174
How Fair Process Affects Attitudes and Behaviors
Fair Process
Strategy Formulation Engagement
Explanation
Process Expectation clarity
Attitudes Trust and Commitment

“I feel my opinions count.”
Voluntary Cooperation
Behavior “I’ll go beyond the call of duty.”
Exceed Expectations
Strategy Execution Self-initiated
Why Does Fair Process Matter?
• Comes down to intellectual

and emotional recognition
• Intellectually
̶ Their ideas are sought after
and given thoughtful
reflection
• Emotionally
̶ Recognition of their value
Reconstruct Focus on Big Reach Getting the Overcoming Building

Market Picture– Not Beyond Strategic Organizatio Execution
Boundaries Numbers Existing Sequence nal Hurdles into Strategy
Demand Right
Search Risks Planning Risks Scale Risks Business Organizational Management
Model Risks Risks Risks
6 Paths Strategic Market Business Organizational Management

Approach Planning Sizing Model Hurdles Hurdles
•Alternative •Prepare •Challenge •Sequence the •Tipping •Poor process
industries strategic plan convention business point can ruin
al practices model to leadership to strategy
•Strategic •Draw
groups strategy •Consolidat capture tackle 4 •Use fair
canvas e demand newly created hurdles process and
•Buyer groups value follow 3-E
•Follow by (a)Cognitive
•Complementa focusing of •Test utility hurdles principles
ry product visualizing (engagement,
process non- using buyer (b)Resource
offering explanation,
customers utility map hurdles
•Use PMS map and
•Functional/E (3 tiers) •Use price and (c) Motivation
to identify expectation
motional profit models clarity)
orientation current and al hurdles
future •Check (d)Political •Power of fair
•Time orientation of potential process
hurdles
business adoption •Fair process
model maters
36
Thank you!
37

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Harvard Business School Press, Boston, Massachusetts BOS-1

Harvard Business School Press, Boston, Massachusetts BOS-2

• Published in a series of articles in HBR

Harvard Business School Press, Boston, Massachusetts BOS-3

• Market universe consists of 2

• Many companies are swimming

Harvard Business School Press, Boston, Massachusetts BOS-4

Central Message of BOS

• BOS is a strategic approach

Harvard Business School Press, Boston, Massachusetts BOS-5

Central Message of BOS

b) the fundamental basis of

Harvard Business School Press, Boston, Massachusetts BOS-6

• Turns the way we think of

Harvard Business School Press, Boston, Massachusetts BOS-7

Central Message of BOS

• A company cannot be perpetually

• Don’t compete head-on using

Harvard Business School Press, Boston, Massachusetts BOS-8

Central Message of BOS

• Create market by applying

• Tap into unsatisfied consumer

• Create win-wins, not win-lose

Harvard Business School Press, Boston, Massachusetts BOS-9

• Value innovate by linking innovation

• Minimize risks while maximizing

• Pursue both cost minimization AND

• Make products and services as

Harvard Business School Press, Boston, Massachusetts BOS-10

Central Message of BOS

• Use a “strategy canvas”

Harvard Business School Press, Boston, Massachusetts BOS-11

Central Message of BOS

• Focus more on bringing

• Look for de-segmentation rather

Harvard Business School Press, Boston, Massachusetts BOS-12

• See the possibilities not the

• Don’t accept the rules of the

• Define and solve new problems

Harvard Business School Press, Boston, Massachusetts BOS-13

Central Message of BOS

• Use ERRC model to create BO

• Builds execution into strategy

Harvard Business School Press, Boston, Massachusetts BOS-14

A Quick Check of RED or BLUE

Do you focus on cost Do you blame slow Do you see outsourcing

Is merger or Is it easier to follow Do you now start to

Harvard Business School Press, Boston, Massachusetts BOS-16

Michel Poter‘s Competition

Harvard Business School Press, Boston, Massachusetts BOS-17

Attack on Michel Porter

• “Five forces” model is the best

• Apply both cost minimization AND

• Competing is simply a red-ocean

Harvard Business School Press, Boston, Massachusetts BOS-18

• Represents all the industries in

• Known market space is crowded and

• Spends most time, efforts, and

Harvard Business School Press, Boston, Massachusetts BOS-19

What is Blue Ocean?

• Represents all the industries NOT in

Harvard Business School Press, Boston, Massachusetts BOS-20

Impact of Creating Blue Oceans

• Basic unit of analysis is strategic move,