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business model perspective

on blue ocean strategy

In this section we blend our business model tools with the To achieve value innovation, Kim and Mauborgne propose an analytical
Blue Ocean Strategy concept coined by Kim and Mauborgne in their tool they call the Four Actions Framework. These four key questions
million-selling book of the same name. The Business Model Canvas is a challenge an industry’s strategic logic and established business model:
perfect extension of the analytical tools presented by Kim and Mauborgne.
Together they provide a powerful framework for questioning incumbent 1. Which of the factors that the industry takes for granted should
business models and creating new, more competitive models. be eliminated?
Blue Ocean Strategy is a potent method for questioning Value Proposi- 2. Which factors should be reduced well below the industry standard?
tions and business models and exploring new Customer Segments. The 3. Which factors should be raised well above the industry standard?
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Business Model Canvas complements Blue Ocean by providing a visual 4. Which factors should be created that the industry has never offered?
“big picture” that helps us understand how changing one part of a business
model impacts other components. In addition to value innovation, Kim and Mauborgne propose exploring
In a nutshell, Blue Ocean Strategy is about creating completely new non-customer groups to create Blue Oceans and tap untouched markets.
industries through fundamental differentiation as opposed to competing in Blending Kim and Mauborgne’s value innovation concept and Four
existing industries by tweaking established models. Rather than outdoing Actions Framework with the Business Model Canvas creates a powerful new
competitors in terms of traditional performance metrics, Kim and Mauborgne tool. In the Business Model Canvas the right-hand side represents value
advocate creating new, uncontested market space through what the authors creation and the left-hand side represents costs. This fi ts well with Kim and
call value innovation. This means increasing value for customers by creating Mauborgne’s value innovation logic of increasing value and reducing costs.
new benefi ts and services, while simultaneously reducing costs by eliminat-
ing less valuable features or services. Notice how this approach rejects the
traditionally accepted trade-off between differentiation and lower cost.

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