Analytic tools to move from a Red Ocean Strategy to a Blue Ocean Strategy (part 2)

This is the second part of a series of posts I am writing about the different tools that you might use in your company in order to achieve a blue ocean strategy, according to what was written by W. Chan Kim and Renee Mauborgne in their book “Blue Ocean Strategy”. In my last article I wrote about the Strategic Canvas and how this tool helps diagnose a Blue Ocean Strategy. In this post I will describe the next tool you might use: Four Actions Framework.

This tool is used to incorporate new values to the Strategic Canvas value curve with the next actions: Create, Reduce, Eliminate and Raise. These actions are done in the next way.

– Create: You must create new industry factors that where not offered before and can create value for the clients and a new market

-Reduce: Some industry factors that are only the consequence of a race between the industry players in order to differentiate should be reduced.

-Eliminate: some industry factors in which is based today competition should be eliminated and that are the factors in which companies base themselves in order to compare with the other players.

-Raise: you must determine the factors that must be raised much more than what the industry is offering today

In order to determine these different actions that we should take on with the factors the industry offers today and the ones that are going to be created we might use many tools such as: Environmental Analysis, Today’s Competence Analysis, Value Inequation Analysis, Life cycle of products and Markets, among others. I think we should take into account some point before we continue. First, additional to the tools I named in order to determine the new value curve, you might use other tools, the ones you feel confortable with and you know how to apply them. Second, you should know that it isn’t going be necessary to apply always the four actions. This means that it might happen that for your product and industry you only need to create some factors and reduce others but not raise or eliminate any factor. However it must be clear that what you are trying to accomplish is a Blue Ocean Strategy where you can differentiate and generate new markets.

Before I finish I will present an example of how a new value cure would look like after you apply the Four Actions Framework.

 

Example of a Value Cure after applying the Four Actions Framework

Thereby it is possible to see how in my new product the price raised; quality and items 3 to 6 where reduced and two new items where created that only my product is going to have (at least at the beginning). With this example I finish this post but remember that in my next article I am going to present the last tool in order to shift from a Red Ocean to a Blue Ocean.

Image taken from Flickr.com