An analogy for using the Blue Ocean Strategy framework

If you’re a strategy guy, I’m sure you’re familiar with the , where you set out to create new value by not competing but rather creating and capturing new demand (new market) where you’re the only guy holding the flag.

In a nutshell, here’s what Blue Ocean Strategy proposes:

blue ocean strategy red versus blue

Sounds pretty damn good. But, the problem is it’s difficult to imagine and do. Worse yet, is it’s difficult to understand if you’re someone who’s not a CEO, strategist, consultant or marketer. To tackle this problem, I thought I’d uncover the hidden truth behind some of the key ideas of the approach.

Blue Ocean Strategy has two important tools: the strategy canvas and the 4 actions framework. I’ll explain both of these in big picture terms to help you understand how these concepts interact with and build on one another to help you get a better idea of your strategic position relative to your market, and then how to break out of it by finding or creating holes in it.

The Strategy Canvas

To understand the strategy canvas, imagine a music equalizer and think about it’s function: to get the desired overall frequency response for the sound you want to hear. Got it!

music equalizer

Now look at an example of the strategy canvas from one of the use cases in the book:

strategy canvas

See the similarities?

Just like an equalizer lets a band see how their sound is tweaked, the strategy canvas let’s you visualize what your business strategy is and also see where you converge with competitors. If your strategy converges with competitors that means that you’re playing in the same market head on with no ‘distinction’ whatsoever between you and them, this means you’re engaged in a red ocean where the rules of competition are set and profits are scarce.

To break out you need to tinker with the existing rules and create your own, the second tool in Blue Ocean Strategy points you in that direction.

4 Actions Framework

So how do you find and create blue oceans of uncontested market space? You use the 4 actions framework or ERCR, see below:

4 actions framework

*The competitive ‘factors’ in question are the key value generating attributes that the industry competes on from the customers perspective.

Now look at the which can be used to create new products or services by creating something new, improve something that already exists, reducing to the bare essentials and eliminating something entirely.

substractive thinking framework

 

See the similarities?

Again, just like music bands have a different sounds because they’ve added, removed, raised or created new things to their musical spectrum, your business can also differentiate itself by adding, removing, eliminating or improving stuff in its product or service.

Putting it all together…

As you can see these two concepts (equalizer + subtractive thinking) combine to produce a very potent creative framework to develop strategy,they can help you can visualize the current state and look for the holes where you can play by your own rules to create new value and demand. To do this you need to do two things:

  • Define the rules

Discover the factors by which the rules of the industry are defined, this will require some research and field work as it’s not as easy as it seems. Once you get an idea of what those factors are, use the 4 actions framework (aka subtractive thinking) to tinker with the rules and try to uncover new opportunities for growth.

  • Get tone and tweak it

The book’s authors suggest your strategy be focused, divergent and have a compelling tagline which means you have to tweak your current strategy like you would tweak the sound of music with an equalizer. For example look at the strategy canvas above and see how Yellowtail’s strategy has a different value curve than the rest. Now think about your business strategy, if it converges with what other’s are doing then you’re trapped in a head to head battle for position.

Closing thoughts

If you made it all the way down here and still don’t get it, I’ll drill it home some more with this statement:

Do you know how every pioneering musical band in the world had or has a distinct sound of their own? (Beatles, Zeppelin) Well, the same thing goes for your organizations business strategy. Your strategy has to be different from your competitors, and that means it must not only look different, but sound different too.

There’s more to it than just this, but hopefully I’ve uncovered some insight of how these two tools can help you fine tune your strategy, and put them to use right away. Please let me know what you think, and also what do you think of BOS? Do you have any experience using these tools? What did you think of the analogy?

—-> P.S. For a real live use case I and a thorough explanation of BOS I suggest you read , it’s worth the read!

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  • The Blue Ocean Strategy authors use graphs to help readers understand BOS tools and frameworks.

  • Good post

  • William Storage

    Really?

    If there is “hidden truth” behind keys ideas of Blue Ocean strategy that needs to be uncovered, the strategy is obviously poorly expressed, or, worse, poorly designed. The tools described here would better be called diagramming techniques than strategic approaches. The first, Strategy Canvas, uses a graphical equalizer as a metaphor for business strategy. The metaphor seems a very poor one. To start, the divisions  between sliders on an equalizer represent frequency bands that have a natural relationship between them. The bands are ordered from low to high, and the shape of a properly “tuned” curve of the sliders is a natural consequence of external factors, e.g. room materials and geometry.

    There is no natural ordering of the business strategy elements, e.g., Easy Drinking and Wine Complexity, shown in the Yellow Tail wine example. Reordering them arbitrarily yields a radically different curve, one that might not ascend toward the right – imagery generally used to indicate something desirable. More importantly, the attributes along the X axis of this Strategy Canvas are not strategy elements, they are product attributes. The tool seems to confuse features with elements of business strategy; they’re obviously related, perhaps strongly in the Yellow Tail example, but only loosely in many businesses.

    The first graphic of the Actions Framework tells us, with bold arrows, to add or remove factors, based on comparison with the current industry, in order to create a new value curve. Are these factors product features? Business strategy components? What is a value curve? Presumably it is competition points vs. value for your offering compared to those of your competitors. Such a curve is a great tool, but it’s one that every student learned in Business 101 and wouldn’t seem to need the relatively abstract “Actions Framework” to create.

    The third graphic is even more abstract, and seems to boil down to a representation of the fact that plus and minus signs indicate addition and subtraction; I have no clue what kind of flow is indicated by the
    two large curved arrows.

    I cannot begin to see how these two concepts (tools) combine to “create a very potent creative framework to develop strategy.” It appears to me that such tools instead provide trite graphical representations of some fundamental concepts. As presented the approach seems to ignore issues of substance, such as how you conceive of new features/factors and how you evaluate or implement them.

    There’s a bit of humor there. Blue Ocean, as applied to business strategy, is a strained metaphor. Originating in the military, their use for the term indicated the deep water where things were relatively calm (absence of competitors). It’s use here brings to mind the Will Rogers anecdote where, when presented with the question of how to deal with German U-boats, he replied, “boil the ocean.”  On being asked how this might be done, he replied that he was merely the idea man. The Blue Ocean strategy tools seem to leave their practitioners with the same advice and same challenge.

    William Storage

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