Blue Ocean Strategy Canvas

BLUE OCEAN FUNDAMENTALS

Understanding Blue Ocean

BLUE OCEAN STRATEGY OVERVIEW

RED OCEAN vs. BLUE OCEAN:

RED OCEAN (Current market):
☐ Compete in existing market space
☐ Beat the competition
☐ Exploit existing demand
☐ Make value-cost trade-off
☐ Align with differentiation OR low cost

BLUE OCEAN (New market space):
☐ Create uncontested market space
☐ Make competition irrelevant
☐ Create and capture new demand
☐ Break value-cost trade-off
☐ Pursue differentiation AND low cost

KEY PRINCIPLES:
1. Reconstruct market boundaries
2. Focus on the big picture
3. Reach beyond existing demand
4. Get the strategic sequence right
5. Overcome organizational hurdles
6. Build execution into strategy

BLUE OCEAN SUCCESS CRITERIA:
☐ Creates new market space
☐ Makes competition irrelevant
☐ Breaks the value-cost trade-off
☐ Aligns the whole system

Industry Analysis

CURRENT INDUSTRY ANALYSIS

INDUSTRY COMPETITIVE FACTORS:
(What does your industry compete on?)

1. _______________
2. _______________
3. _______________
4. _______________
5. _______________
6. _______________
7. _______________
8. _______________

INDUSTRY ASSUMPTIONS:
(What does everyone believe is required?)
☐ _______________
☐ _______________
☐ _______________
☐ _______________

INDUSTRY PAIN POINTS:
(What frustrates buyers?)
☐ _______________
☐ _______________
☐ _______________

NON-CUSTOMERS:
(Who refuses to buy from the industry?)
Tier 1 (soon-to-be): _______________
  Why they're leaving: _______________
Tier 2 (refusing): _______________
  Why they refuse: _______________
Tier 3 (unexplored): _______________
  Why they're not in market: _______________

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VALUE CURVE

Value Curve Mapping

VALUE CURVE ANALYSIS

STEP 1: LIST COMPETITIVE FACTORS
What does the industry compete on?

Factor 1: _______________
Factor 2: _______________
Factor 3: _______________
Factor 4: _______________
Factor 5: _______________
Factor 6: _______________
Factor 7: _______________
Factor 8: _______________

STEP 2: RATE EACH PLAYER (1-10 scale)

| Factor | Industry Avg | Comp 1 | Comp 2 | Us Now | Blue Ocean |
|--------|--------------|--------|--------|--------|------------|
| Factor 1 | | | | | |
| Factor 2 | | | | | |
| Factor 3 | | | | | |
| Factor 4 | | | | | |
| Factor 5 | | | | | |
| Factor 6 | | | | | |
| Factor 7 | | | | | |
| Factor 8 | | | | | |

STEP 3: VISUALIZE THE CURVE

10 |
   |    Current industry looks similar
 5 |    Blue ocean curve should look different
   |
 0 |___|___|___|___|___|___|___|___|
      F1  F2  F3  F4  F5  F6  F7  F8

CURVE CHARACTERISTICS:
☐ Focus: Does our curve have clear peaks?
☐ Divergence: Does it differ from industry?
☐ Compelling tagline: Can we describe it simply?

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ERRC FRAMEWORK

Eliminate-Reduce-Raise-Create Grid

ERRC STRATEGIC FRAMEWORK

ELIMINATE (Remove entirely):
What factors that the industry has long
competed on should be eliminated?

☐ _______________
   Why eliminate: _______________
   Cost saved: _______________

☐ _______________
   Why eliminate: _______________
   Cost saved: _______________

☐ _______________
   Why eliminate: _______________
   Cost saved: _______________

---

REDUCE (Well below standard):
What factors should be reduced well
below the industry's standard?

☐ _______________
   Current level: _______________
   Reduce to: _______________
   Cost saved: _______________

☐ _______________
   Current level: _______________
   Reduce to: _______________
   Cost saved: _______________

---

RAISE (Well above standard):
What factors should be raised well
above the industry's standard?

☐ _______________
   Current level: _______________
   Raise to: _______________
   Value created: _______________

☐ _______________
   Current level: _______________
   Raise to: _______________
   Value created: _______________

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CREATE (Never offered):
What factors should be created that
the industry has never offered?

☐ _______________
   Buyer utility: _______________
   Implementation: _______________

☐ _______________
   Buyer utility: _______________
   Implementation: _______________

☐ _______________
   Buyer utility: _______________
   Implementation: _______________

ERRC Action Grid

Action	Factor	Impact on Value	Impact on Cost
Eliminate		↓ None	↓ Decrease
Reduce		↓ Slight	↓ Decrease
Raise		↑ Increase	→ Neutral
Create		↑ Significant	→ Neutral

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SIX PATHS FRAMEWORK

Finding Blue Oceans

SIX PATHS TO NEW MARKET SPACE

PATH 1 - LOOK ACROSS INDUSTRIES:
What alternative industries do customers
choose between?
Alternative: _______________
What can we learn: _______________
Opportunity: _______________

PATH 2 - LOOK ACROSS STRATEGIC GROUPS:
What strategic groups exist in our industry?
Groups: _______________
What can we learn from moving between: _______________
Opportunity: _______________

PATH 3 - LOOK ACROSS BUYER CHAIN:
Who are the purchasers, users, influencers?
Current focus: _______________
Underserved group: _______________
Opportunity: _______________

PATH 4 - LOOK ACROSS COMPLEMENTARY OFFERINGS:
What happens before, during, after use?
Pain points in total solution: _______________
Opportunity: _______________

PATH 5 - LOOK ACROSS FUNCTIONAL/EMOTIONAL:
Is industry competing on function or emotion?
Current orientation: _______________
Switch to: _______________
Opportunity: _______________

PATH 6 - LOOK ACROSS TIME:
What trends will affect the industry?
Key trends: _______________
Project forward: _______________
Opportunity: _______________

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BUYER UTILITY MAP

Utility Analysis

BUYER UTILITY MAP

SIX STAGES OF BUYER EXPERIENCE:
1. Purchase
2. Delivery
3. Use
4. Supplements
5. Maintenance
6. Disposal

SIX UTILITY LEVERS:
A. Productivity
B. Simplicity
C. Convenience
D. Risk reduction
E. Fun/image
F. Environmental friendliness

UTILITY MAP (Mark current offerings and gaps):

| | Purchase | Delivery | Use | Supplements | Maintenance | Disposal |
|---|---|---|---|---|---|---|
| Productivity | ○ | ○ | ○ | ○ | ○ | ○ |
| Simplicity | ○ | ○ | ○ | ○ | ○ | ○ |
| Convenience | ○ | ○ | ○ | ○ | ○ | ○ |
| Risk | ○ | ○ | ○ | ○ | ○ | ○ |
| Fun/Image | ○ | ○ | ○ | ○ | ○ | ○ |
| Environmental | ○ | ○ | ○ | ○ | ○ | ○ |

○ = Gap (no one addresses)
● = Industry addresses
★ = Our blue ocean opportunity

SELECTED UTILITY OPPORTUNITY:
Stage: _______________
Lever: _______________
How we'll address: _______________

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STRATEGIC SEQUENCE

Testing Your Blue Ocean

STRATEGIC SEQUENCE TEST

1. BUYER UTILITY:
Is there exceptional buyer utility?
☐ Yes → Proceed
☐ No → Rethink

2. STRATEGIC PRICING:
Is the price accessible to mass of buyers?
Target price: $_______________
☐ Yes → Proceed
☐ No → Rethink

3. COST STRUCTURE:
Can we attain our cost target?
Target cost: $_______________
Target margin: ____%
☐ Yes → Proceed
☐ No → Rethink

4. ADOPTION HURDLES:
Have we addressed adoption hurdles upfront?
☐ Employees: _______________
☐ Partners: _______________
☐ Public: _______________

COMMERCIALLY VIABLE BLUE OCEAN:
☐ All four tests passed
☐ Ready to execute

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