blue ocean and co creation conference english
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Patricio Guitart Professor, Management and Control Systems
IAE Business School
Blue Ocean Strategy The New Paradigm in Innova2on
January 2012, Barcelona, Spain
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What’s Going On?
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The Economic Crisis Created a New Consumer
Unemployed or Overqualified
Educated
Owner of Goods
His/Her purchasing power decreased but not his/her aspirations
Adapted: AcHng in control. Saving in expenses such as vacaHons,
clothing and entertainment but do not sacrifice in terms of food,
hygiene and personal care. Brands are now funcHonal.
Melancholic: Behaving erraHcally and dispersed. They want to
maintain their previous consumpHon paNerns. They do not sacrifice any
category but start cuOng off different products randomly. They hold onto the brand with a sense of
idenHty
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Changes in Post-‐Crisis ConsumpDon
SituaDon
• Consumers “walk more”. Convenience now is a lower price
• More raHonal. Try more. Verified quality over perceived quality
• ANempHng to maintain consumpHon on selected products
• AppreciaHon for brands supporHng them in the crisis
Consequences
• Greater channel compeHHon
• More promoHonal acHvity
• Small quality manufacturers and second brands had their chance
• Small capacity containers, returnable and cheaper.
• Brands that adapted kept their sales levels and grew exponenHally aVer the crisis
The World Moves Beyond the Crisis
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The ExpectaHon Economy
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• The ExpectaHon Economy is an economy inhabited by experimented and well informed consumers, with a long list of high expectaDons that they apply to every product, service or experience offered to them.
• Their expectaHons are based in many years of “self-‐training” under the hyper consumerism years and in all the available informaHon sources that help them to know and expect not only the basic quality standards, but the “best of the best”
The ExpectaDon Economy
What are the consequences?
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Indifference DissaHsfacHon
Decreasing MarkeHng ROI Customer saHsfacHon declines in many Industries
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CommodiDzaDon
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CompeDon without Boundaries
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Informed and connected consumers. Creators of their own markets
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What is the Blue Ocean Strategy?
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Source : Michael E. Porter, “What’s Strategy?” Harvard Business Review, Nov–Dec 1996
Before that, what is strategy?
According to Michael Porter, strategy is: – Means to realize your vision and mission – A unique compeHHve posiHon as a company
– OpHons and alternaHves in front of the compeHHon
– Strategy tells you what you should and shouldn’t do
Strategy describes the way the organizaHon will CREATE VALUE
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ü Wal-‐Mart ü Dell ü McDonalds
ü Apple ü Mercedes ü Intel
ü IBM ü Goldman Sachs ü Mobil
ü MicrosoR ü eBay ü Mastercard
Strategic PosiDoning … Generic…
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What do innovaDve companies do differently?
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Source: Kim & Mauborgne
Industry A
Industry B Industry C
They discover new unexplored market spaces
? ?
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How do you discover a new value curve?
New Value Curve
Which aNributes that the industry is not appreciaHng can be
eliminated?
Eliminate
Which aNributes could be increased over the industry standard?
Increase
Which aNributes could be created that the industry
has never offered?
Create
Which aNributes could be decreased below the industry standard?
Reduce
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Advantages due to large volumes
copyright Kim & Mauborgne
Costs savings through Eliminate and Reduce
Superior value from Create and Increase
The Concept of Value InnovaDon
Costs
Value InnovaHon
Shopper Value
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Yellow Tail
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The Australian Yellow Tail Wines in the American Market
High
Low
Leve
l of O
ffer
Easy drinking
Vineyard prestige and
legacy
2
1
3
4
5
Budget Wines
Yellow Tail
Price Aging quality
Consumer view
Image Use of enological terminology and distinctions in
wine communication
Wine complexity
Ease of selection
Fun and adventure
Wine range
Premium Wines
Attributes of product, service and delivery
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• Enological terminology and disHncHons • Aging qualiHes • Above-‐the-‐line markeHng
Eliminate-‐Reduce-‐Raise-‐Create Matrix
ELIMINAR
La industria tradicional hacía foco en dos cualidades que inHmidaban al consumidor novel: -‐ Años de la cosecha y de guarda -‐ Taninos
INCREMENTAR
La diversión y el humor El suspenso y el peligro
REDUCIR
Un solo escenario
CREAR
Un tema Un ambiente refinado MúlHples producciones Música y danza arlsHca
• Wine complexity • Wine range • Vineyard presHge
ELIMINATE
REDUCE
• Price versus budget wines • Retail store involment
• Easy drinking
• Ease of selecHon • Fun and adventure
RAISE
CREATE
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Analyzing six paths as innovaDon sources
1. Through subsHtute industries
2. From strategic groups
3. From the shopper chain
4. Through complementary
offerings
5. By funcHonal and emoHonal connecHons
6. Trends over Hme
copyright Kim & Mauborgne
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INCA Paints Case
• Leader in market share and yop of mind in the wall paints sector in Uruguay.
• Part of a mulHnaHonal company that enables best pracHces in innovaHon, operaHons and management.
• Well developed capabiliHes in product innovaHon on a regional basis.
• There challenge was to innovate in a mature and impoverished market with increasing compe22on
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SubsDtutes Paper Smooth Cement
Clean PracDcal
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Strategic Groups
“Wedding Planner”
Comprehensive Guidance
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Design Advice The Painter’s Happiness Pill
Shoppers Value Chain
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Complementary Offering
The “Dust Sucker”
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FuncDonal -‐ EmoDonal
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Time / Trends
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Final Value Curve for INCA Paints NUEVA CURVA DE VALOR INCA
INCA Hoy
INCA New
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
Acce
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Geo
gráf
ica
Calid
ad (C
ob, D
ur,L
av,E
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Conf
ianz
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espa
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e En
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tegr
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Pers
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izad
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RIBU
TO
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InnovaDon IniDaDves Before
ARer “We work with all Firm XYZ por<olio: interior, exterior, decoraAves, water repelents, enamels and more.
We have a colorful space designed thinking of your comfort where you can select from our paleFe (XYZ Color Service) to
decorate your home.
Besides, if you bring a digital picture of the room or rooms that plan to paint, we can advice you on color selecAon thorugh the ROOM COLOR SIMULATOR of XYZ COLOR
SERVICE.
Specialized staff trained by XYZ will be with you along the way.”
Space at the Point of Sale
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Results
• Closer understanding by non-‐commercial areas of the company to customers, distributors and final shoppers
• Discovering the gap between internal percepHons and market realiHes related to consumer preferences
• New paradigm for the company from being product oriented to improving customer experiences
• AddiHon of new aNributes and innovaHve aNributes to INCA paints value proposiHon
• Renewed sense of urgency to change current markeHng and communicaHon strategy
They were focused on innova2ng on new paints when the consumer wanted solu2ons to improve the before-‐
and-‐aFer the pain2ng process
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What is Value Co-‐CreaDon?
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Product & Service Offerings
TheFirm
Suppliers MarketingChannels
Customer Firm
SCM
ERP
CRM
Today, customers are very acDve, informed and connected
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Co-‐CreaDon of Experiences with Customers and Consumers
Experience Environment
Differentiated Experience to
Customers
Lower Cost to Customer
Lower Cost to Firm
Greater Value to Firm
Customer/ Consumer Firm
EXPERIENCE
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Principles of Experience Co-‐CreaDon
Access
Risk Management
Dialog
Transparency
How can we grant access to all required information?
How can we engage individuals in significant conversations?
How can we reduce the opacity of the current
process?
How can we reduce risk for both parties?
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Nike Case
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The tradiDonal shoe maker considers that value is generated along the whole value chain
Processes of a traditional shoe manufacturer
Shoe Shopper (passive)
Shoe Design
Supply
Manufacturing
Marketing
Store Sales
Store Distribution
Shoe Manufacturer
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But runners have their own value chain
Runner Processes
Runner (customer)
Exchanging advice with colleagues
Running in groups
Setting improvement
goals
Recording distances and times
Define own
routes Listening
music Running
alone Buying outfits
Looking for outfits
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Customers and NIKE have few overlapping processes
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Co-‐CreaDng Outside-‐In
How can we create corporate
processes that impact customers’
processes?
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NIKE let runners co-‐create their own experience from the “outside in”
43
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Record of Runs
44
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fgouillart@eccpartnership.com
Challenge others
45
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Map and share routes
46
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Co-‐CreaDng Inside-‐Out
How can we make corporate processes
transparent to our customers?
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Nike iD – Personalized Running Shoes
48
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Establish the customizaDon process
49
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Save Individual Designs
50
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Toilet Paper Case
Shopper Value Chain
SubsDtutes
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Time / Trends
GeneraDon
Z
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What do we need to innovate?
Capabilities to execute
Employees with innovation tools
Employees motivated to innovate
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Features of a Good Blue Ocean Strategy
FOCUSED
ORIGINAL
SIMPLE MESSAGE
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Welcome to the Blue Ocean World
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Blue Ocean Strategy References
Renée Mauborgne is one of the world’s preeminent experts on business strategy, innovaHon and wealth creaHon in the knowledge economy. Renée is a very impressive presenter—engaging, energeHc and intelligent, with substanHve material that can significantly impact your organizaHon’s performance. She is the highest placed woman on Thinkers 50, the global ranking of business gurus. In 2007, 2009 and again in 2011, Thinkers 50 placed Mauborgne among the top ten most influenHal business thinkers in the world. Her book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the CompeHHon Irrelevant (Chan Kim, coauthor), is an internaHonal bestseller. Blue Ocean Strategy has sold over two million copies and is being published in 41 languages, breaking Harvard Business Press’s historical record of most foreign language translaHons ever achieved. Blue Ocean Strategy won the Best Business Book of 2005 Prize at the Frankfurt Book Fair and was selected as the number one Strategy Gook of 2005 by Strategy + Business and as a Top Ten Business Book of 2005 by Amazon.com. With Blue Ocean Strategy, Renée brings business audiences a genuinely important breakthrough in strategic business thinking, which is changing the business lexicon across the globe. Renée Mauborgne is The DisHnguished Fellow and a professor of Strategy and Management at INSEAD in Fontainebleau, France, the world's second largest business school. She is Co-‐Founder and Co-‐Director of the INSEAD Blue Ocean Strategy InsHtute and is a Fellow of the World Economic Forum. Her Harvard Business Review arHcles, coauthored with W. Chan Kim, are worldwide bestsellers and have sold more than half a million reprints. Their "Value InnovaHon" and "Fair Process" arHcles were selected as among the best classic arHcles ever published in HBR. She has published numerous arHcles on strategy and managing the mulHnaHonal corporaHon in a host of other first-‐Her business journals. Mauborgne has received a number of presHgious awards for her contribuHons to business thought leadership and has been widely praised in the internaHonal business media.
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Value Co-‐CreaDon References
Francis Gouillart is President and one of the two founders of the Experience Co-‐CreaHon Partnership (ECC Partnership), a consulHng firm built to implement co-‐creaHve management processes and organizaHonal capabiliHes with corporate clients around the world. Francis is co-‐author, with Venkat Ramaswamy, of the newly published book The Power of Co-‐CreaHon: Build It with Them to Boost Growth, ProducHvity, and Profits (Simon & Schuster Free Press, October 2010) and the Harvard Business Review arHcle “Building the Co-‐CreaHve Enterprise” (October 2010). He previously co-‐authored (with James Kelly) the book Transforming the OrganizaHon (McGraw-‐Hill), which reached the top of BusinessWeek’s best-‐seller list in 1995. He is also co-‐author (with Frederick Sturdivant) of the arHcle “Spend a Day in the Life of Your Customers,“ published by Harvard Business Review (January-‐February 1994). He also authored Stratégie pour une Entreprise CompéHHve (EdiHons Economica, Paris), which was named “Best Strategy Book of the Year” by the French AssociaHon of Strategic Planners (AFPLANE) in 1989. Francis is considered a leading authority on the topics of strategy, innovaHon, transformaHon, and capabiliHes-‐building and is a recognized speaker, lecturer, and advisor on Experience Co-‐CreaHon, Blue Ocean Strategy, and OrganizaHonal TransformaHon. He works across the United States, Europe, and Asia, and has experience in most industries. Francis has been quoted in the Wall Street Journal, BusinessWeek, and Fortune, among other publicaHons, and has been featured on CNBC. He is currently working with global management consulHng firm PRTM to use co-‐creaHon concepts and methods to transform enterprise operaHons and business models across industries globally. Francis received his MBA from the University of Chicago’s Graduate School of Business, and resides in Concord, MassachuseNs.
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