1	BLUE OCEAN STRATEGY Institute of Company Secretaries 34 th National Convention September 8, 2006 Dilip M. Sarwate Ph.D. CMC FIMC
2	Management literature is full of innovative thoughts, tools and techniques
3	12 Innovations that shaped Modern Management Scientific management ( Time & motion studies) Cost accounting and variance analysis The commercial research laboratory the industrialization of science) ROI analysis and capital budgeting Brand management Large scale project management (PERT/CPM) Divisionalization
4	12 Innovations that shaped Modern Management (cont.) Leadership development Industry consortia ( Multi company collaborative structures) Radical decentralization (Self organization) Formalized strategic analysis Employee driven problem solving (Quality Circles, Kaizan) Reference: The Why, What and How of Management Innovation by Gary Hamel February 2006 Harvard Business Review
5	How about some more? Business Process Re-engineering Core competency Balance Score Card Emotional intelligence Competitive intelligence Knowledge management Intrapreneurship Theory X, Y & Z and many others
6	Now comes one more new theory
7	Blue Ocean Strategy
8	W. Chan Kim and Renee Mauborgne are the faculty members at INSEAD The second largest B-School in Europe
9	The Red Ocean versus Blue Ocean
10	Red Ocean Well explored and crowded with competitors New ways to cut costs and grow revenue (Outsourcing, value engineering) Take away market share from competitors (Offer incentives)
11	For Red Ocean strategy, there are many advocates. Notably, Igor Ansoff, Michael Porter, Kenichi Ohmae & others Generic growth strategies Competitive advantage Competitive strategy Competitive advantage of nations And many others
12	Strategy Strategy is King The word comes from Military It is all about red ocean competition It is about confronting an opponent and driving him off a battlefield of limited territory Competitive advantage is at the helm of strategy Decision variables to fulfill the organizational objectives
13	Blue ocean Denotes all the industries not in existence today-the unknown market space, untainted by the competition. Here the demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. Two options are, Give rise to completely new industries From within a red ocean, when a company alters the boundaries of an existing industry
14	Some illustrations Entertainment electronics- Sony Walkman, Flat TV’s Mutual funds Cellular telephones Biotechnology Express package delivery – Federal Express Coffee bars- Star Bucks Home videos e-Bay- Consumer to consumer selling Hybrid passenger cars- Toyota and Honda
15	Some more avenues Child restraints (Baby car seats) e-Learning Digital books (Stephen King) Optic fibers I-pod Animation films (Shrek, Cars) Mortgage Mantra (Internet based software for buying property) Fuel cells and many others
16	A Comparison Red ocean strategy Compete in existing market space Beat the competition Exploit existing demand Make the value/cost tradeoff Align the whole system of a company’s activities with its strategic choice of differentiation or low cost Blue ocean strategy Create uncontested market space Make competition irrelevant Create new demand Break value/cost trade off Align the whole system of a company’s activities in pursuit of both differentiation and low cost
17	Six steps for Blue Ocean Strategy Reconstruct market boundaries. Strategically examine your industry’s key competitive drivers Focus on the big picture and not merely the numbers. Consider the competitive environment through your customer’s eyes so that you stay focused on what matters to them Reach beyond existing demand. Do not just focus on your current customers. Look for your potential customers.
18	Six steps for Blue Ocean Strategy Get strategic sequence right. Technological innovation does not guarantee marketing success. The technology must be made relevant to customer and provide value Overcome key organizational hurdles Build execution into strategy. Link engagement, explanation and expectation with the actual process of developing the strategy. Executing a blue ocean strategy will require a trust among your team
19	So what is new in Blue Ocean Strategy? Perhaps nothing. Is it just the “ old wine in new bottle’’?
20	Blue ocean soon becomes red ocean. That means, The opportunities attract competitors
21	As a Strategy, every company keeps on looking for, More consumption New users New usage New geographical markets New applications Product innovation – Maximization or minification
22	Remember, its not mere R&D, but Marketing R&D
23	And Modern Marketing Concept means, Customer orientation Integrated marketing Generating customer satisfaction Achieving organizational and social objectives
24	What is in it for Company Secretaries? As members of Strategic Management Team, They have to look for new market opportunities on their own or through strategic alliances globally Encourage product innovation keeping in view the Intellectual Property Rights They must come with a Competitive Strategy which will not infringe the Competitive Act. Aim at creating excellence as viewed from the eyes of all stake holders Enforce Corporate Governance Invest in Competitive Intelligence on global markets Create a Competitive Advantage for their Company
25	Thank you