Entrepreneurs are innovative as always, meaning they can have big ideas but have scarce resources. Blue Ocean Strategy: Winning through Value Innovation Like so many big ideas, Blue Ocean Strategy was not new when its founders conceived it. Blue Ocean Strategy and Value-Innovation - YouTube Cola Pepsi needs to not only redefine the value proposition it is providing to existing customers (clients) but also needs to create new value proposition for target segments (customers) that at present are not Cola . A key aspect of the Blue Ocean Strategy is the concept of value innovation which as originally presented by the two authors in the 1997 article "Value Innovation - The Strategic Logic of High Growth" (HBR 75: 103-112). Make the competition irrelevant. An Introduction to Blue Ocean Strategy - MBA Knowledge Base ∗Blue Ocean Strategy is a: ∗Value Innovation Strategy - competes in an uncontested market space ∗"Combination Strategy ": pursue differentiation while controlling costs. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Blue oceans refer to all the unexplored or unknown markets. Value innovation is distinctively different from the competitive strategic approach that takes an . Portfolio analysis / ambidexterity 5:50. Figure 3: Red Ocean versus Blue Ocean Strategy. Figure 4: Strategy Canvas of Casella´s [yellow tail] Figure 5: The Four Actions Framework. Value Innovation is the cornerstone of the blue ocean strategy. The cornerstone of blue ocean strategy is "value innovation", a concept originally outlined in Kim & Mauborgne's 1997 article "Value Innovation - The Strategic Logic of High Growth". Continuous Value Innovation 15 15. Boston: Harvard Business School Publishing, 2005. Red Oceans The red ocean represents the existing market space. Blue Ocean strategy overview / Value innovation 6:33. This is a key principle of blue ocean strategy which sees low cost and differentiation being pursued simultaneously. The objective of this note is to help students understand the criteria according to which they can identify value innovations, that is, products or services suitable for implementation of a Blue Ocean Strategy. . W. Chan Kim is a professor of strategy and management at INSEAD and codirector of the INSEAD Blue Ocean . The Body Shop was in a Blue Ocean for a decade, but didn't reach out for a new innovation. In this context, value innovation is built around the break down of the cost-value trade-off. Figure 9: Strategic Canvas A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. Therefore, with this proposal, the aim is to take the Spanish port system to a blue ocean, where a suitable strategy and innovation generate leaps in value that make competitors irrelevant because customers compare different products and services. Blue oceans, where a market space is new and uncontested, and strategy centers around value innovation. Value Innovation emphasizes on both Value and Innovation. Taught By. The co-authors of the article have applied inductive reasoning to the theory, which examines many pieces of specific information derived from case studies and relevant business literature in . Now, let's talk in more detail about applying the blue ocean . Create uncontested market space. The cornerstone of Blue Ocean Strategy is - "Value Innovation". Michael Porter's Five Forces And Corporate Strategy. forbes.com For almost three decades, Tang Yiu quietly built a multibillion-dollar business in Hong Kong selling women's shoes across the Greater China region. But much of W. Chan Kim And the cost-value trade-off is broken. Obviously with each idea generated, more analysis would be necessary to validate whether those specific ideas were valuable to customers but the Blue Ocean Strategy approach provides a fast and . The cornerstone of Blue Ocean Strategy is - "Value Innovation". Value Innovation Value Innovation is a key principle of Blue Ocean strategy which was first coined in a 1997 article in Harvard Business Review by W. Chan Kim and Renée Mauborgne, who would later write the book called 'Blue Ocean Strategy' in 2005. Value Innovation emphasizes on both Value and Innovation. The concept of Value Innovation is developed by W. Chan Kim and Renée Mauborgne and is the cornerstone of market-creating strategy. It's not just about technology innovation or being first to market in a new category. Blue Ocean Strategy vs. Value Innovation puts equal emphasis on both Value and Innovation. Its methodology provides companies with an escape route from the intense competition over the same market space, as we just discussed. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation. W. Chan Kim (The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. Figure 1: Value Innovation framework by Kim and Mauborgne (2016e) from the Blue Ocean Strategy website. Dengan mengandalkan studi pada 150 perusahaan dalam 30 industri lebih . In addition, you also analyze the offerings of competitors within the industry. Value innovation is the foundation of a Blue Ocean Strategy. It should be emphasized that, in the blue ocean strategy, value innovation includes both value improvement and innovation. Now you can enter the consumer data within the coordinate system. It also helps in recognising opportunities. Menurut Kim dan Maugborgne (2005:26), dalam penelitiannya berjudul "value innovation: a leap into the blue ocean" menjelaskan blue ocean strategy adalah cara strategi perusahaan yang menciptakan pasar yang tidak terbantahkan ruang yang membuat kompetisi tidak relevan. It opens up new possibilities that are not available to organizations operating within the existing cost-value structure. Figure 7: Stores Opening Worldwide from 1958 - 2013. The video clip also explains why is it important to value-innovate. BOS is advocating the creation of a new market space (a blue ocean) as a mean for achieving profitable growth. The Blue Ocean Strategy framework evolved from a framework called Value Innovation developed by Kim and Mauborgne in the late 90s. Value innovation is about offering unprecedented value, not technology or competencies. VI is closely connected to the Four Actions Framework (FA), as defined by Kim and Mauborgne (2016b) as the latter expands VI, which can be seen in Figure 2. Not every innovation will represent a value innovation. Blue Ocean Strategy Mayra Garcia Cory Logan Gary Taylor Nick Watkins Lindsey Pacatte Garrett Matthews David Hayward Red Oceans vs. Blue Oceans What are Red Oceans? Blue Ocean Case Study: Formule1 16. It shows how you can get out of a red ocean of . Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored… The cornerstone of Blue Ocean Strategy is 'Value Innovation'. With Blue Ocean strategy, innovators are able to systematically think through ways to create value for their target customers versus the competition. Value innovation is a strategic move that allows a market player to create a blue ocean and help companies make giant leap in the value provided to customer through the simultaneous pursuit of differentiation . Blue Ocean Strategy is a business term that first appeared in the book (of the same name) by W. Chan Kim and Renee Mauborgne. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. . In this case, it was W Chan Kim and Renée Mauborgne. Value innovation is achieved only when the whole system of utility, price, and cost is aligned. Value Innovation | Blue Ocean Tools and Frameworks Value Innovation Value Innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. To cut the long story short, the blue ocean strategy suggests business owners focus on their idea, perform a blue ocean market research to find something that differentiates the company from other propositions and create a catchy tagline that communicates the product's value. 13. Traditional Competitive Strategies. The seminal book Blue Ocean Strategy has sold over 4 million copies globally and is in print in 46 languages. Blue Ocean = Innovation in Value. This article is based on their book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005).) Create and capture new demand. Source: Harvard Business Review , C. Kim, R. Mauborgne (1997) If you are interested in elevating your organization to Excellence in both Strategy and Innovation, take a look at our Stream offerings below: Figure 8: Value of imported furnitures in 2012. [yellow tail] did, and is now in a clear blue ocean. It opens up new possibilities that are not available to organizations operating within the existing cost-value structure. The real opportunity is to create blue oceans of uncontested market space that makes the competition irrelevant. Oceans. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. On the other side, the red ocean follows trends and create comparative value. Zara Color.fashion needs to not only redefine the value proposition it is providing to existing customers (clients) but also needs to create new value proposition for target segments (customers) that at present are . The concept of the value curve is a key concept that can be applied directly to compare your offering to one of your competitors, helping you to visualize potential opportunities for blue oceans. A Blue Ocean Strategy • The first question the value curves answer is whether a business deserves to be a winner. 21 May, 2018 Rodrigo Cordero Leave a comment. 8 Blue Ocean Strategies enable fundamental transformations in mentality. Acquire an in-depth understanding of Blue Ocean Strategy tools and concepts; Learn to engage colleagues in a Blue Ocean Strategy process; Start developing a Blue Ocean Strategy for their organisation in order to break away from the competition through 'Value Innovation', the simultaneous pursuit of differentiation and low cost. In short, you create a blue ocean by focusing on the factors that customers really care about, while discarding factors they don't. In Blue Oceans, demand is created rather than fought over. Their basic proposition is that many successful companies have built their competitive advantage by redefining their product offering through value innovation and, in essence, creating a new market space. Through different data driven tools it provides road map and visual guidance to companies for . It is conventionally believed that companies can either: 1️⃣ Create greater value to customers at a higher cost; or. In effect, Blue Ocean strategy involves market-creating innovation. Instead, it's about redefining the problem, crossing market boundaries, and unlocking exceptional value for buyers. You will learn how to come up with new value offerings for your customers by applying blue ocean thinking to create value propositions. "Value Innovation" is nothing but creating a leap in Value offerings to buyers/users, thereby creating new uncontested market space, making competition irrelevant. 3 min read Unlike blue ocean strategy, innovation is a very broad concept that is based on an original and useful idea regardless of whether that idea is. Now, the Blue Ocean enunciation, based on long years of research, claimed that both serenity and profitability can be amply found in Value Innovation, which creates, via a new business model and new products, a "Virgin territory devoid of me-too brand propositions and cutthroat pricing" (BusinessWeek). Blue Ocean Strategy is a great exploration of frameworks and tactics for discovering opportunities to create "blue ocean value innovations." The book combines theory with practical tools and case studies that allow the reader to explore the myriad ways of creating value for customers. The main difference between the Value Innovation strategies and competitive ones lies in the former's orientation towards customers, creating and capturing new demand, recognising new demand potential in 'non-consumption' and aiming for a 'value breakthrough' (1). Department . Value Innovation puts equal emphasis on both Value and Innovation. Blue ocean strategy seeks to replace competitive advantage with value innovation as its primary goal in an environment where firms seek to create consumer demand and exploit untapped market space . A. business must shift its strategic focus from competition to. , - Single case study, Nintendo, which strategy is being confronted with the strategies of the two competitors, Sony and Microsoft. What is value innovation. Blue ocean strategy and value innovation Competing in over crowded industries is no way to sustain competitive advantage. ∗Achieved via the delivery of features that have a highest marginal benefit to customer needs . Value Innovation: The Cornerstone of Blue Ocean Strategy Defy the Dogma: The Cost-Value Trade-Off. Industries that are already in existence Limited demand Firms compete to capture more market share Limited room for growth Limited outlook for profit growth Most strategy is developed to compete in Red Oceans Red Oceans vs. Blue . To break the trade-off between differentiation and low cost in creating a new value curve, the framework poses four key questions, shown in the diagram, to challenge an industry's strategic logic. The cornerstone of the blue ocean strategy is value innovation. "Value Innovation" is the cornerstone of Blue Ocean Strategy. Value Re-Innovation. If a company can identify what consumers currently value and then rethink how to provide that value, differentiation and low cost can both be achieved. Rather than concentrating on beating the competitors, the company must actually prioritize on making the competition irrelevant. Research Paradigm: The Blue Ocean Strategy/Value Innovation Technique presented in the article is based on inductive study, rather than deductive study. In essence, the Blue Ocean strategy is based on creative thinking on . In creating new markets, value to customers comes from the offering's utility minus its price. It's possible that after some decades, or years a blue ocean transforms into a red one. The weather had turned cool and the experience of burning a few logs on our back patio for the first time in two years was exciting to us. 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