Blue Ocean Strategy (Part 1)

*In this post this week, I will post about what I learned regrading the Blue Ocean strategy. Over the next 2 weeks, I will show examples of companies and institutions that managed to be successful by using the Blue Ocean Strategy.

Today, I went for another Soft Skills Competency Programme workshop. The title of the workshop was Innovative Marketing Tools from Blue Ocean Strategy. The speaker was Mr. Kenth Teh from Strategic Titans Consulting Group. There, I learned about the meanings of Blue Ocean and Red Ocean. The workshop was based on the book "Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant" penned by W. Chan Kim and Renée Mauborgne.

Red Ocean and Blue Ocean represents the situation in the marketplace a company is currently competing in. A company utilising the Red Ocean strategy will be competing in an existing marketplace, exploiting existing demand and making the value-cost trade off. As a result, the company will most likely be in the red as a result of trying to beat the competition by one-upping them. Hence, the term "Red Ocean" alluding to the "blood" spilt by all the competitors.  This strategy is commonly taught at traditional marketing courses at universities.

Companies using the Blue Ocean Strategy, on the other hand, seek to create an uncontested market space by introducing a new and unique product. They aim to make the competition irrelevant as the competitors have yet to enter the new space created by the innovating company. Thus, a company utilising the Blue Ocean strategy will be able to create and capture new demand, as well as break the never-ending cycle of value-cost trade off. The "Blue" Ocean gives the mental image of a vast, unexplored and exiting market.

There are 4 basic steps in the process of using the Blue Ocean strategy: Visual Awakening, Visual Exploration, Visual Strategy Creation, and Visual Strategy Fair.

In Visual Awakening, a company will attempt to determine what their as-is strategy canvass is. They will do this through a buyer utility map. The reason why the people at a company will want to do this is to determine which category of businesses they belong to. There are 3 types of businesses: pioneers, migrators, and settlers. Pioneers are businesses that offer customers unprecedented value and are most likely Blue Ocean businesses. Migrators are businesses that offer improved but not innovative value over their competitors to customers. They give customers more for less. Settlers are businesses that offer more or less the same as their competitors and are often Red Ocean businesses. These businesses will likely be bankrupt in the future as they have failed to innovate.

By understanding which type of business a company is running, the company can attempt to turn a certain "migrator" business into a "pioneer" business. To do this, they will need to construct a chart called an as-is strategy canvass. First, a company must identify the key competing factors (KCF) for their industry. For example, the KCF for a company manufacturing game consoles will be cost, processor power, quality of games on the console, backwards compatibility, HD videos, and so on.

Next, the company will identify one key competitor. They will then start comparing itself and the competitor by ranking their relative performance against their key competitor. The result will be 2 different lines on a chart depicting the relative performances of the 2 companies.This chart will help the company identify definitively where its strengths and weaknesses lie.

Another important step in Visual Awakening is the construction of a buyer utility map. It is basically a table where the first horizontal row lists the six stages of buyer experience cycle: purchase, delivery, use, supplements, maintenance, and disposal. The first vertical column will list the six utility levers: customer productivity, simplicity, convenience, risk, fun & image, and environmental friendliness. Using this table, a company may then identify what a customer's pain points are. For example, if there are significant risks for a customer using the product produced by the company, a cross will be place on the box on the table representing "risk" and "use". The cross indicates a pain point.

The next step in using the Blue Ocean strategy is Visual Exploration. This means a company will attempt to explore the 3 tiers of non-customers of the company. This allow a company to look beyond its traditional customers, the core market. The first tier of non-customers are "soon-to-be" customers. They may be customers who are dissatisfied customers who rarely use the current products offered by a company and are considering switching to a better alternative. The second tier of non-customers are "refusing" customers who knew of the products but did not choose to use the product or can't afford the product. The third tier of non-customers are "unexplored" customers who are distant from a company's market and have never even considered the company's offerings as an option.

After knowing who the new, potential customers are, a company have 6 paths to reconstruct the market boundaries of their product such that the non-customers might become interested in using the company's products. I will explain the paths using various examples next week.

The third step in using the Blue Ocean strategy is Visual Strategy Creation. This is done by creating the ERRC grid. The letters in ERRC stands for Eliminate, Reduce, Raise, and Create respectively. The ERRC grid is used to demonstrate how a company may create value innovation by reducing cost while increasing value of a product or service.

Firstly, a company choose which elements to eliminate form a product to make it more appealing to new customers. Some of these elements may actually be factors that the industry takes for granted and thought to be a "sacred cow". Next, the company will choose to reduce certain aspects of the product. After that, they will select some aspects of the product that should be raised well above the industry standard. Finally, the company will be able to create a new type of product that the industry has never offered.

After determining what exactly to eliminate, reduce, raise, and create, the company will have to construct another strategy canvass. This time, the strategy canvass will be a "to-be" canvass. In other words, the company will have a new line atop the 2 lines representing its old self and its key competitor. The new line will highlight the changes to be made regarding the degree of importance given to the different Key Competitive Factors.

The final step in utilising the Blue Ocean strategy is to present the idea to the company's board of directors or investors. This stage is known as Visual Strategy Fair. The team tasked with creating the new strategy will have to explain clearly what their strategy is about. This is important as a great idea have to be presented clearly to be considered a great idea. A supposedly great idea that can't even be understood by others is not a great idea in actuality.

After attending the workshop, the most important thin I learned is this: we must always value innovation and never stop thinking about new solutions. The most important thing is not just to be creative, but to be innovative. To be innovative is to create something that is practical and useful. As an example, a person who is creative may design a car that has 7 doors. The extra 3 doors will be front and back windscreens, as well as the roof. This concept is certainly creative, but it is not innovative at all, since it is not practical. No car users will climb into a car through the back windscreen.

The return of investment from a product using the Blue Ocean strategy is much greater than that of a product using the Red Ocean strategy. This is proven by a research conducted by W. Chan Kim, the co-author of the book Blue Ocean Strategy. Both the revenue generated and the profits earned from a product following the Blue Ocean strategy is much greater than the same type of product following the more traditional Red Ocean strategy.

In conclusion, we should all strive to be innovators rather than to be imitators.

Thinking Out-Of-The-Box , Board Game Idea Presentation and Cooler Lumpur Festival

Last Sunday , I attended a workshop called Thinking Out-Of-The-Box , organised by the Utar Soft Skill Competency Department . In fact , I was one of the very few juniors from the FCI who attended the workshop . The other attendees were either seniors , from another faculty , or from another campus altogether .

During the workshop , we were divided into groups of seven . There were five groups . The speaker was Mr. Dev Kumr Sankey . Throughout the 8 hour workshop , we participated in many fun activities , including team poster designing , the nine-dots challenge , brain dominance test , idea generation using scamper method , image analysis , building an animal out of straws , and mind-mapping .

All the activities completed by groups were given marks at the end of the workshop . My group placed second overall . In the end , we were given a handout to read . Coincidentally , there was a segment about the six thinking hats discussed in class last Friday .

 Handout courtesy of Mr. Dev Kumr Sankey of Strategic Training Resources

The previous Thursday , during the tutorial part of Game Design Foundations class ,the six of us (students) were asked to present our board game ideas for the final project of this class . In the end , we voted for the idea that we thought was the best . The winning idea with 5 votes was "Conquest" .

Slides courtesy of Grace Cheng Mei Yenn

My own idea "Escape From Nightmare House" got only 4 votes .

The paper prototype of the "Conquest" board game will have to be completed by next week .

Finally , our Creative Writing class went on a field trip yesterday . The trip was to the Cooler Lumpur Festival event held at Publika . Saturday was the second day of the 3 day event . I attended 3 programmes there , namely " New Malay Literature : The Changing Face of the Malay Author " , " Should Literature Be Political? " , and " Readings " . Readings was an event where several authors read their works out loud to the audience as opposed to the readers reading through print .

Pamphlet courtesy of the Cooler Lumpur Festival organising committee

Overall , it has been quite a fun and exciting week . The Thinking Out-Of-The-Box workshop and the Cooler Lumpur Festival events in particular should be useful in my future assignments .

Just Be Yourself

Two days ago , I watched the film "Stranger Than Fiction" as part of the Narrative Design and Story Creation class . The film was a tragi-comedy about a man named Harold Crick .

At the beginning , Harold was portrayed as an extremely boring man who worked for the Internal Revenue Service . Later , he learned through the narration of his "imminent death" at the hands of an author , Karen Eiffel who is somehow controlling his life with everything she writes .

The book she is trying to complete , "Death And Taxes" will eventually end in Harold's death . After realising that he has little time left to live , Harold finally had the courage to pursue the dream he has had since childhood : learning how to play the guitar .

Apart from learning how to play the guitar , he also confessed to one of the clients he was auditing , Ms Pascal . Harold was determined to live his life to the fullest , knowing he will be dying soon . In the end , he wasn't killed off by Karen after all , after she decided not to after learning of the impact of her pen had on other people's lives .

Oftentimes , we would try to refrain from doing certain things , even if they are things we would dearly like to do , for fear of other people's opinions or prejudice . Due to this , we would often have deep regrets in the end that would haunt us for the rest of our lives .

After watching this film , I realised that we should just be ourselves .( Even though that is not really the main theme of the film. ) On a more practical level , the film also gave me an idea on how to design the 3d cube that is supposed to represent myself . In fact , I now have a very detailed idea on how to create it .

Touhou 14 Announced

Image taken from http://kourindou.exblog.jp/

Recently,the latest installment in the long-standing bullet shooter game series Touhou was announced on its creator's blog.The 14th official game was in development and should be released sometime near the end of this year.The complete title of the game would be Touhou Kishinjou~Double Dealing Character.

The Touhou series has been around since 1996.It was created by a single person,the indie game publisher Jun'ya Ota,nicknamed ZUN.ZUN was the sole designer,programmer,artist,script writer and composer of most of the Touhou games.In the indie community in general,Touhou is extremely popular.

On the image sharing site Pixiv,Touhou fan art numbers more than a million.During the world's largest indie publisher fair,Comiket,Touhou-related merchandise dominate the market.On Youtube,tens of thousands of videos containing remixes of the music in Touhou can be found.

I am currently studying game design,and to be honest,ZUN was a big inspiration to me.It is really amazing how the works of one single person can garner the support of such a large fan base over the world.In fact,I have an assignment from my Game Design Foundation class that requires me to select a game designer/programmer/artist who most inspired me to study the course,due the Thursday after the next.

Three guesses on who I would choose for that topic.

The Death of Tommy Grimes

Yesterday,I read a short story entitled " The Death of Tommy Grimes". It was posted on the UTAR WBLE site by our Creative Writing class teacher.The short story was written by R.J. Meaddough III.

In the story,a boy of twelve was trying to be like a grown man.He yearns for his father's approval and tried hard in hunting and killing a buck.In the end,he succeeded in shooting the buck right through its heart with his rifle,using all the skills he learned from his father.Thereafter,he was declared a true man by his father and his father's mates.

So why did the title of the short story read "The Death of Tommy Grimes"?Tommy Grimes did not die in the end after all.The reason was hidden in the first page of the six-pages long story.As Tommy's father said to him,"A man always dies a little when he kills something."

Before Tommy killed the buck,he had already killed a lot of other animals.At the start,when he was eleven,he did not dare to kill even a weasel,and was chided by his father for it.But in the end,his skills with a rifle got so good that he could hit targets a good way out.The moment he killed the buck,he was considered truly "dead" in his heart.

The author's use of the word "death" as the metaphor of a heart that has gone cold and merciless was interesting.It shows that when humans kill something at first,they would feel guilt in their hearts.But as time wore on and they continue killing,their own heart will be shut off to emotions like sympathy and guilt.They will have become killing machines with no sense of remorse for their actions.They would have died inside.