Creating NEW market spaces © Kim & Mauborgne

Blue Ocean Strategy

Creating New BRANDED Export Market Spaces

Presented by : Ravi Fernando

© Kim & Mauborgne

March 2015

RED OCEAN TRAPS

May 2015

BLUE OCEAN LEADERSHIP

© Kim & Mauborgne

Is Sri Lanka in a RED OCEAN ‘Commodity’ TRAP? Mental Assumption – Export Brand market spaces, NO WAY !!

© Kim & Mauborgne

• 90% + of exports

•TEA

•APPAREL

•CINNAMON

•RUBBER

•COCONUT

•NATURAL RESOUCES

- ILMENITE Titanium

- GRAPHITE

Rewarded Operations

Loadstar

Dilmah

Virtusa Rewarded creativity

Trap 1: Seeing Market-Creating Strategies as Customer-Oriented

Approaches

© Kim & Mauborgne

• A focus on the demands of existing customers tends to drive organizations

to come up with better /lower cost solutions than what competitors

currently offer – but this keeps them moored in Red Oceans

Better!

More!

Existing Customers

© Kim & Mauborgne

Red Ocean of Commodity suppliers

Margins & Share

R.A. Fernando © RAF SCS 2015

© Kim & Mauborgne

Apparel

Rubber

Cinnamon

Tea

Graphite

Ilmenite

Value add FOR BRANDS!

Close to Consumption

Industrial 3D printers

Amazon

Creating New Market spaces

RED OCEAN TRAPS - Is Sri Lanka in One?

Blue Ocean Strategy and global impact

Blue Ocean Strategy concept & 3 tools

Creating New Market spaces – Cases

Opportunities for SL Export Market spaces !

© Kim & Mauborgne

SL Branded

© Kim & Mauborgne

Sold over 3.5 Million Copies !

BOS in 1,800 universities in over 110 countries

584

North America 584

South America 164

Africa 45

Europe 581

Asia 334

Oceania 32

Middle East 60

© Kim & Mauborgne

Sri Lanka?

© Kim & Mauborgne 2020 Advanced nation

US$ 10,796- 15,000

The Eleventh Malaysia Plan used

Blue Ocean strategy tools & frameworks ..

• 60 NBOS initiatives

• 80 ministries & agencies

• Data: 150 blue ocean Moves , in more than 30 industries, over 100 years (1880-2000)

– Hotel, cinema, retailing, airline, energy, computer, broadcasting, construction,

home, automobile, steel manufacturing, chemicals, cosmetics, software, etc.

• Variables considered: industrial, organizational, strategic

39% 61% Profit Impact

62% 38% Revenue Impact

14% 86% Business Launch

Launches within red oceans Launches into blue oceans

The basis of Blue Ocean Strategy

© Kim & Mauborgne

Red Ocean Approach Blue Ocean Approach

Differentiation

OR

Low Cost

BOS

Low Cost

Differentiation

© Kim & Mauborgne

New Market Spaces & BOS tools

© Kim & Mauborgne

Eliminate Raise

Reduce Create

BOS ERRC GRID 3 TIERS OF NON CUSTOMERS

Astra/ Tea/Coffee Low Cost High Value

Value Innovation in Hospitality

Hyatt – Mkt.cap 8b

-Mkt.cap13b

Low cost, High Value

levering existing rooms!

5y more room nights than

Hilton

Truly global. Present

in 190+ countries

and 30,000 cities

Longer average stay than in hotel (5.5

days vs. 3.5). Higher total spend per trip.

© Kim & Mauborgne

Soon to be non customer &…

• Ownership • Options

• Cost • New Market space

ERRC Grid

ELIMINATE

REDUCE

RAISE

CREATE

blueoceanstrategy.com | @blueoceanstrtgy

© Kim & Mauborgne

© Kim & Mauborgne

Low cost Creating high value

© Kim & Mauborgne

2012

Red Ocean Approach Blue Ocean Approach

Created New Market Spaces Competing in the

Existing Value Space

Competitiveness Creativity

© Kim & Mauborgne

© Kim & Mauborgne

© Kim & Mauborgne

© Kim & Mauborgne

© Kim & Mauborgne

Rev. 38% vs. 22%

Profit 61% vs. 51% with 4% Volume Share

Apple vs Microsoft Huge payoffs of market creation

2015 1998

Market Value (US$)

Year

$244.8 bn

$4.3 bn

iPod

iMac

iPhone

iPad

A series of successful market-creating moves

$742 bn

iTunes

AppStore

Apple Watch

$347 bn

Lack of compelling market-creating moves

© Kim & Mauborgne © Kim & Mauborgne

BOS Six Paths Framework

© Kim & Mauborgne

1 3 2

4 6 5

Alternative industries Strategic groups

within industries

Different chain

of buyers

Complementary

products

Look across functional

and emotional appeal

to buyers

Look across time

Product attributes

Functional benefits

Emotional benefits

Influencers

Costa Rica – World leader in ‘ecotourism’ Created a new Blue Ocean Market space!

Leveraged existing rich biodiversity !

• Government /Private sector jointly created an ‘ECO TOURISM NATION’ to

drive the economy

• New legislation to protect nature and the environment

– 1987 arrivals 329,000 to 2.34 million in 2012, Now 2.5!

– Avg. stay 10-12 days vs. 4-6 days / US $ 250 vs. US $ 80 per night

• Ranks 3rd on Environmental Performance Index out of 163 economies

– Goal to be carbon neutral ,100% Renewable energy by 2021

– Tourism 14 percent of GDP © Kim & Mauborgne

SpaceX

Tesla Motor Tesla Gigafactory

SolarCity

R.A. Fernando © RAF SCS 2015

© Kim & Mauborgne

© Kim & Mauborgne

70,000 to 500,000 Tesla’s & Power wall units !

Biggest building on Earth? 24 Million Sq.ft

© Kim & Mauborgne

Electric Super Charger station network

ERRC of Tesla Motors

Eliminate Raise 1. Fossil Fuel usage

2. Automotive Carbon emissions

3. Car dealership

1. Driving range of EV’s

2. Car’s design and image

3. Battery Manufacturing capacity

Reduce Create

1. Vehicle options

2. Battery charge time vs old EV’s

1. Sustainable automobiles

2. Supercharger station network

3. Dual Energy Solution – Home & Auto

© Kim & Mauborgne

SL Opportunities to create

branded export market

spaces!

The 3 tiers of Non-customers

3rd Tier: Unexplored

Noncustomers (Applications)

2nd Tier: Refusing

Noncustomers (Application)

1st Tier: Soon-to-be

Noncustomers Retail brands

Existing

Market

© Kim & Mauborgne

Sri Lanka’s Natural Black Gold!

Bulk Exporter -200y @ Peak 32,000mt

99% Pure Vein graphite

Strongest material on the planet

Avg.US $ per ton 300

Export 3-10,000 Mt.

Global Market US $ 2b +

Processed US$ 4 - 20,000

EV Batteries - Space shuttle

Graphene US$ 150 M by 2020 -11y

Monolayer pack on quartz 4” wafer $ 849

SL Graphene brand

Salt water Fresh water

© Kim & Mauborgne

Blue Oceans ‘wash’ it ashore!

Titanium (Ilmenite)

9th largest global resource

75% pure

US $ 300-500 per Mt

60-100,000mt Ilmenite

SL Brand Of Titanium

- Application specific

- Nano Titanium US $ 2,000-20,000 per Mt.

© Kim & Mauborgne

Blue Ocean mind set

JVs’/Collaborations

-Distribution

-Innovation capability

-Technology /R&D

-Marketing

Non Value adding costs

Compete as a ‘supplier’

Global mind set teams

Scale –up

- Processing capability

Take risks & Invest

Can Sri Lanka create NEW export market spaces ?

ELIMINATE

Commodity /Bulk mind set

No we can’t Assumptions!

REDUCE

RAISE

CREATE

blueoceanstrategy.com | @blueoceanstrtgy

© Kim & Mauborgne

© Kim & Mauborgne

Low cost Creating high value

Blue Ocean mind set -Creating vs. Competing

- Non – Customers

- Time –Future

Global mind set - China

© Kim & Mauborgne

© Kim & Mauborgne

Blue Oceans ahead!

Thank you

Creating Blue Ocean Market spaces in Sri Lanka

© Kim & Mauborgne

• Vision• To re-position Sri Lanka as a

‘smart’ nation by developing

Sustainable Nanotechnology solutions to increase the ‘Global Competitiveness of its Strategic industries’

‘

• Economic Sustainability - Differentiation to compete globally

• Environmental Sustainability- Must not impact the ecology

negatively and contribute to ‘more

from less for more’

• Social Sustainability- Minimize risk of negative societal

impact in terms of ‘nano safety’

RAF SEPT 2009

Blue Ocean Strategy

NBOS

To date, more than 60 NBOS initiatives have been formulated and executed successfully by over 80 ministries & agencies

High Value Low Cost

Blue Ocean

Policing

1AMAN Campaig

n

CRP

Military Building Rural

Infrastructure

Health Fairs in Sabah & Sarawak

High-value Farming on

Unused Land

1MWISE Blue Ocean

Communication of GST

1Malaysia Social

Entrepreneurs

VIP VIBE

Tourist First

Repositioning

Teachers

1Malaysia Discount

Card

Certified Security Guards

1MBEON

Military Adventure

World

MICRO PPP

1Malaysia Civil Service Retirement

Support

Military-Police Collaboration

CTC

1Malaysia Youth Cities

1Malaysia Customer Service of Civil Servants 1ASEAN

Entrepreneurship Summit

1Malaysia Support for Housewives

My Beautiful Malaysia Day

Reposition-ing of police

Key NBOS Initiatives

Confidential © Kim & Mauborgne

BOL

© Kim & Mauborgne

mSLNBOS T To Create global Blue Ocean Market

spaces for Sri Lankan branded exports

© Kim & Mauborgne

SLBOSI

T Purpose - To Create global Blue Ocean Market

spaces for Sri Lankan brand exports

How - A SL Private sector driven platform to identify key focus sectors

to drive Sri Lankan brand export growth with public sector

involvement when needed.

Focus sectors

Nanotechnology driven (Tio2/Graphite/Graphene)

Tea / Rubber/Cinnamon

IT

Apparel body fit garments

Process – Select and engage key sector players with established export

business and all relevant and strategic players to ‘identify and create

new blue ocean market spaces’

Can Sri Lanka create new market spaces ?

Top 10 National Geo. Eco –destinations

Dubai /Costa Rica/ Laos

Eco- Tourism –small to medium destination Sustainable Nano Materials - Titanium & Graphite

© Kim & Mauborgne

Sri Lanka can create a New Market space!

Titanium (Ilmenite)

9th Global

75% pure

US $ 2,000 per Mt 150,000Mt

If we CREATE a NEW Market

space….investing in processing!

US $ 25,000 per Mt.

US$ 250,000 per kg!

© Kim & Mauborgne

Sri Lanka can create a New Market space!

© Kim & Mauborgne

Global Competitiveness Index sustainability adjusted

GCI 2012 – 2013 GCI 2012 – 2013

Sustainability adjusted GCI

Country/Economy Rank Score Score

Switzerland 1 5.72 6.85

Germany 6 5.48 6.14

United States 7 5.47 5.31

United Kingdom 8 5.45 5.82

Japan 10 5.40 5.76

Korea Republic 19 5.12 4.89

Australia 20 5.12 5.46

Malaysia 25 5.06 5.14

China 29 4.83 4.44

India 59 4.32 3.73

Sri Lanka 68 +10 = 78 4.19 3.96

Venezuela 126 3.46 3.28 © Kim & Mauborgne

Nations ‘Create Market spaces’

Wine Industry Automobile Industry Electronic Industry

Apparel Industry

Made in France

Made in Australia

Made in Germany

Made in Japan

Made in The England

Made in Korea

Designed in

Italy

Designed in

Spain

Made in

The UK

Made in China

Fashion Industry

© Kim & Mauborgne

50% OF THE WORLDS FORESTS DESTROYED IN THE LAST 30 YEARS!

52% of the Worlds animal species have been destroyed in the past 40years

R.A. Fernando © RAF SCS 2015

© Kim & Mauborgne

R.A. Fernando © RAF SCS 2015

© Kim & Mauborgne

Global carbon emissions & carbon

concentrations 1992-2014

1992 2014 %

• Global Carbon emissions 21 Gt 32 Gt +52

• Global ‘Air Pollution’ PPM 250ppm 400ppm +60

• Its 22y since all World leaders met at the Rio Earth summit!

Many declarations, commitments, agreements, 20 COP meetings later and

after the 20th anniversary ………..

• WHAT HAS THE UN AND ALL WORLD LEADERS ACHIEVED FOR THE PLANET?

R.A. Fernando © RAF SCS 2015

© Kim & Mauborgne

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