Blue Ocean Strategy - Chapter 4 - The Strategy Formulation Process
This chapters deals with the nuts and bolts of how you create the blue ocean strategy in practice. The approach as such is not ground breaking - it is a variant of typical design thinking approaches consulting companies generally facilitate customized for the Blue Ocean thinking steps. One of the things the author say is how this intuitive approach gives better results than traditional data driven approaches that leads to lot of data crunching but limited insights. I understand most first principle problem solvers do not appreciate a data driven approach. But my personal opinion is some synergy has to be found between them like lean six sigma. While lean approaches problems from fundamentals in an intuitive manner, six sigma approaches them from a highly data and statistic oriented manner. Lean Six Sigma managed to tie these two together. Data based approaches have the limitation of bring black boxed requiring lot of work and a single wrong categorization of data can mess up everything. Pure fundamentals driven approaches can become theoretical models that might be missing one or two critical assumptions which could lead you to wrong conclusions.
The first step here is to map out as is product strategy canvas and the current company strategy with all the key stakeholders. The authors expect this to bring out the internal contradictions and lead to certain awakening. This feels similar to the value stream mapping exercise.
The second step is to interview existing as well as potential customers to check their views and map it out on the strategy map. This feels similar to the voice of customer exercise. The authors say this exercise is expected to highlight the disconnect between what the company offers and what customers want.
The third step is to have company employees from different groups come up with blue ocean strategies by exploring the six paths and then present their ideas at a visual fair of sorts where existing and potential customers participate. Make it a competition and have judges from customers rate the strategy canvases. Identify features that do not matter and eliminate them. Identify the strategy map that gets the best score. I see a risk here in not selecting the right indicative sample of customers.
The fourth step is to share the value canvas with all the employees and ensure that every activity or initiative undertaken is a step towards achieving the strategy map - adding or increasing a feature or reducing or removing a feature to move towards the blue ocean
The authors indicate companies should have most of their product portfolio in the blue ocean stage. A new framework is given to map each product in a company's portfolio. Pioneer ,Migrant, Settler. Settlers are in red ocean competing at increasing existing features to compete with other players with similar profile products. Migrants are moving from red to blue ocean. Pioneers are already in blue ocean. A company with lot of settlers has opportunity to move the products towards migrants and pioneers. For high growth, a company must have more products as pioneers and migrants.