Presented by: Pakar Perunding Pergigian Kesihatan Awam, Jabatan

Presented by:
Dr. Ling Kwok Sung, BDS (Mal), DDPHRCS (Eng), MBA (Aust),
Pakar Perunding Pergigian Kesihatan Awam, Jabatan Kesihatan Negeri
Sarawak at Mesyuarat Blue Oceans Strategy:- The follow-up
on 17 – 18 July 2013, Sibu
Basic Concepts of Blue Ocean Strategy
Case Study : - Cirque du Soleil
- Tourism in Malaysia
- QB (Quick Beauty) House
Government Transformation Programme and
National Blue Ocean Strategy (NBOS)
WHAT ?
HOW ?
WHY ?
Blue Ocean
Strategy (BOS)
The Basic Concepts
WHEN ?
WH0 ?
WHERE ?
Blue Ocean Strategy :-What?
Published in 2005 by Harvard
Business Publishing Corporation, USA.
Blue Ocean Strategy :-What?
• Professor of Strategy and
Management at INSEAD,
France.
• CO – Director of INSEAD Blue
Ocean Strategy/Institute,
France.
• Ranked 2nd in World’s Top 50
Thinkers (Year 2011)
W. Chan Kim and Renee Mauborgne
Blue Ocean Strategy :-What?
World Top 50 Thinkers
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Clayton Christensen (28)
W. Chan Kim & Renée
Mauborgne (5)
Vijay Govindarajan (24)
Jim Collins (17)
Michael Porter (11)
Roger Martin (32)
Marshall Goldsmith (14)
Marcus Buckingham (25)
Don Tapscott (39)
Malcolm Gladwell (2)
Sylvia Ann Hewlett (-)
Lynda Gratton (18)
Nitin Nohria (-)
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Robert Kaplan & David Norton (37)
Gary Hamel (10)
Linda Hill (-)
Seth Godin (-)
Teresa Amabile (-)
Rita McGrath (-)
Richard Rumelt (-)
Richard D'Aveni (26)
Jeffrey Pfeffer (-)
David Ulrich (31)
Tom Peters (19)
Rosabeth Moss Kanter (27)
(http://thinkers50.com/results/2011 accessed on 29.11.12 at 9:56 a.m)
Blue Ocean Strategy :-What?
World Top 50 Thinkers
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
Nirmalya Kumar (-)
Pankaj Ghemawat (-)
Herminia Ibarra (-)
Daniel Pink (-)
Henry Mintzberg (33)
Costas Markides (47)
Thomas Friedman (30)
Tammy Erickson (46)
John Kotter (41)
Amy Edmondson (-)
Kjell Nordström & Jonas
Ridderstråle (23)
37. Howard Gardner (16)
38. Henry Chesbrough (-)
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
Daniel Goleman (34)
Vineet Nayar (-)
Rakesh Khurana (44)
Fons Trompenaars (-)
Ken Robinson (-)
Andrew Kakabadse (-)
Stewart Friedman (-)
Adrian Slywotzky (-)
Stephen Covey (29)
Sheena Iyengar (-)
Umair Haque (-)
Subir Chowdhury (-)
(http://thinkers50.com/results/2011 accessed on 29.11.12 at 9:56 a.m)
Blue Ocean Strategy :-What?
Blue Ocean Strategy :-What?
Europe
The INSEAD Blue Ocean Strategy
Institute, Fountainebleau, France
Latin American
*Asia-Pacific
The Kimberly Clark
Blue Ocean Strategy
Institute, Sao Paulo,
Brazil
Blue Ocean
Strategy
Institutes/
Centres
The UCSI Blue Ocean
Strategy Regional
Strategy Centre, Kuala
Lumpur, Malaysia
USA
The manufacture & business
Association Blue Ocean Strategy
Centre Pennsylvania
* Asia-Pacific :- Malaysia, Australia, Canada, China, India, Indonesia, Philippines, Singapore,
Taiwan and Thailand.
Blue Ocean Strategy :-What?
Conventional Practices
• Companies engage in head-to-head competition
in search of sustained, profit-able growth.(Red
Ocean)
• Companies fight for competition advantage,
and battle over market share.
Blue Ocean Strategy :- Avoid Head to Head Competition
Blue Ocean Strategy :-What?
Conventional Practices:- Head to head competition
Blue Ocean Strategy :- Avoid Head to Head Competition
Blue Ocean Strategy :-What?
Arthurs’ Research :- A study of 150 strategic
moves in 30 industries (spanning over 100 years)
Conclusion :That companies of the future will succeed NOT
by battling competitors (Red Ocean), but by
creating ‘Blue Ocean’ of uncontested market
space through value innovation.
Blue Ocean Strategy :-What?
Red Ocean Vs Blue Ocean Strategy
Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market space.
Create uncontested market space.
Beat the competition.
Make the competition irrelevant
Exploit existing demand.
Create and capture new demand.
Make the value-cost trade-off
Break the value-cost trade-off
Align the whole system of a firm’s
activities with its strategy choice of
differentiation or low cost.
Align the whole system of a firm’s
activities in pursuit of differentiation
and low cost.
(Source : Blue Ocean Strategy Pg.18)
Blue Ocean Strategy :-What?
The term “Blue Ocean” is new,
but its EXISTENCE is NOT!
Blue Ocean Strategy :-What?
Value Innovation
Is the corner-stone of Blue Ocean Strategy
To achieve the desired results (Benefits, lowered
cost) through innovativeness.
Place EQUAL emphasis on values (Benefit, lower
cost) and innovation (creativity).
Blue Ocean Strategy :-What?
Value Innovation
Value without innovation → Value creation
with slow improvement only.
Innovation without value → Technology –
driven but customer not ready to accept or
pay.
Value + Innovation → Value Innovation
→ large and desired improvement
Blue Ocean Strategy :-What?
In a nutshell:“Is to achieve the desired
outcome at a minimum cost
through creativity and with the
avoidance of head-to-head
competition.”
Blue Ocean Strategy :- Why?
• Profit Organisations
The Profit and Growth Consequences of Creating Blue Oceans
Note: 86% of Business Launch (Red Ocean) generating only 39% of profits where as
14% Business Launch (Using Blue Ocean Strategy) creating as 61% profits.
(Source : Blue Ocean Strategy Pg.7)
Blue Ocean Strategy :- Why?
NON-PROFIT ORGANISATIONS
Reminder : Blue Ocean Strategy is about the use of creativity to achieve desired
results at a lowered cost.
The Principle of
Return on Management (ROM)
OUTCOME POSSIBILITIES
HIGH
MODERATE
LOW
LOW
MODERATE
HIGH
TIME/COST
HIGH ROM : HIGH BENEFITS-LOW TIME (COST)
LOW ROM : LOW BENEFITS – HIGH TIME (COST)
Who to use it?
When to use it?
• Anytime, all the time
• Anybody, everybody
• 5 – 105 years old
Where to use it?
•
•
•
•
Anywhere, everywhere
Private sector
Public sector
Home
Remember: The over aching focus of Blue Ocean Strategy is to achieve desired
results (benefits, lowered costs) through value innovation.
Blue Ocean Strategy :- How?
CREATIVITY:- THINK OUT THE BOX
Blue Ocean Strategy :- How?
corn
Do not limit the scope of your thinking
There must be an alternative
Blue Ocean Strategy :- How?
Steps
1. Indentify the issue/ area of concern to be addressed.
2. Construct the strategy canvas (AS-IS)
3. Apply the 4 action frame work to generate the eliminate –
reduce – raise - create grid. (ERRC)
4. Construct the new Strategy Canvas. (TO-BE)
Step 1 : - Identify the Issue
Magnitude of issue is variable, ranging from micro to
macro issues.
- e.g. Macro issue : Delivery of Health Service in
Sarawak.
- e.g. Micro issue : Counter service at Klinik Pergigian
XXXXX
Step 2: Construct the Strategy Canvas (AS-IS)
Is both a diagnostic and an action framework for
formulating Blue Ocean Strategy.
Consist of value curves which are graphic depictions of a
company’s relatives performance across its industry’s
factors of competition.
Step 2: Construct the Strategy Canvas (AS-IS)
high
Offerings
y
low
Horizontal axis:
Show the value factors the
industry competes on and
invest in.
Value factors:
- What do the provider(s) offer
to their customers
- 6 - 8 in nos.
- Always put cost (or price) as
the first value factor and rate it
on an absolute value basis.
x
Value factors
Strategy Canvas
y
high
Offerings
low
Vertical axis :
- Show the offering level
that buyer (customer)
receive across all the
key competing factors.
Offerings:
- Outside-in perspective (what
customer wants) VS inside-out
perspective (what provider
offers)
- Scale:- Low to high
e.g. 0 – 5
0 – 10
0 – 100%
x
Value factors
Value factors for Counter receptions
Cost
Personalized services
Promptness
Professionalism
Friendly service
Technology used
Communication skills
Environment
Technology used
Value factors for Service delivery at
provider – client interphase
Cost
Professionalism
Promptness
Personalized services
Communication skills
Technology used
Accurate diagnosis
Environment
Friendliness
Personal grooming
The Strategy Canvas of an Average Airline
High
Average Airlines
Low
Price
Meals
Lounges
Seating
class
choices
Friendly
Hub
connectivity service
Speed
Take a critical relook at the value factors to determine what to eliminate, reduce or raise!
(Source : Blue Ocean Strategy Pg.38)
Reduce
Which factors should be reduced
well below the industry’s standard?
Eliminate
Which of the factors that
the industry takes for
granted should be
Create
A New
Value
Curve
Which factors should be
created that the industry
has never offered?
eliminated?
Raise
Which factors should be raised well
above the industry’s standard?
(Source : Blue Ocean Strategy Pg.29)
The ERRC Grid of South-West Airline
Eliminate
Raise
• Seating class choices
• Speed
• Frequent point to
point departures
Reduce
•
•
•
•
Hub connectivity
Price
Meal
Lounge
Create
• Friendly service
What to “create”?
Some Methods
1. Brain Storming
2. Fish Bone Diagramme
3. Po (Lateral Thinking)
4. 6 Thinking Hats
Step 4: Construct the Strategy Canvas (TO-BE)
High
Southwest
Average Airlines
Car Transport
Low
Price
Meals
Lounges
Seating
class
choices
Friendly
Hub
connectivity service
Speed
Frequent
Point-topoint
departures
(Source : Blue Ocean Strategy Pg.38)
Value Innovation
Costs
Cost saving are made by
eliminating and reducing the
factors an industry competes on.
Value
Innovation
Buyer value is lifted by raising and
creating elements the industry
has never offered.
Buyer Value
(Source : Blue Ocean Strategy Pg.16)
Ideas die fast in a closed mind
The mind works just like the parachute,
only if it opens
1. The rapid growth of “Cirque du
Soleil”
2. Tourism in Malaysia
3. QB (Quick Beauty) House
A traveling circus from Canada,
created in 1984
Production seen by 40 million
people in 90 cities world wide
Cirque du
Soleil
Has attained the level of
revenues in less than 20 years
that took the global champion in
Circus Industry ( Ringling Bros
and Barnum & Bailey) more than
100 years to achieve!
Rapid growth not achieved in an
attractive industry but rather in a
declining industry e.g. Children
cry out for play stations rather
than a visit to the circus.
The Strategy Canvas of Circus (AS-IS)
High
Ringling Bros, and Barnum & Bailey Value Curve
Smaller
Regional
Circuses
Low
Price
Multiple
Thrills and
Show
danger
Unique
Aisle arenas Fun
venue
And
concessions
humor
Animal
shows
Star
performers
Eliminate-Reduce-Raise-Create Grid:
The Case of Cirque du Soleil
Eliminate
Raise
•
•
•
•
• Unique venue
Star performers
Animal shows
Aisle concession sales
Multiple show arenas
Reduce
• Fun and humor
• Thrill and danger
Create
•
•
•
•
Theme
Refined environment
Multiple productions
Artistic music and dance
(Source : Blue Ocean Strategy Pg.36)
The Strategy Canvas of Cirque du Soleil (TO-BE)
High
Ringling Bros, and Barnum & Bailey Value Curve
Cirque du Soleil
Value Curve
Smaller
Regional
Circuses
Low
Price
Multiple
Multiple
Thrills and
Theme
Show
productions
danger
Unique
Refined
Artistic
Aisle arenas Fun
venue
And
watching
music
concessions
humor
environment
and dance
Animal
shows
Star
performers
Note that Cirque du Soleil offers new and non-circus factors such as theme,
refined watching environment and artistic music and dance
• Usual circus
• Cirque du Soleil
Usual Circus
Cirque du Soleil
Case Study 2:
Strategy Canvas (AS-IS) on Tourism Malaysia
Thailand
AS-IS
ERRC Grid on Tourism in Malaysia
Eliminate
Ownership requirement for
2-3 star hotel
Raise
•All-in-one shopping mall/ resort city
concept (ala Sunway or the Mines)
comprising shopping, hotel & theme park
•More regional airlines to operate from
cities in the targeted region to cities in
Malaysia
•Technology content in service offering.
Reduce
Create
•Hassle for travelers
•Selling Eco and nature
tourism packages
•Focus on emerging middle-class in
Asia
•Recruitment of tour agencies
•Building massive 2-3 star hotels
Rise of emerging middle class leads to rising
demand for international travel
bil
Middle Class
International travels
(Source: World Bank, 2007; World Tourism Organization UNWTO, 2006)
Strategy Canvas (TO-BE) on Tourism in Malaysia
Raise
Create
TO-BE
Thailand
AS-IS
Reduce
Eliminate
Case Study 3:
The Strategy Canvas of QB House
High
QB House
Average Japanese Barbershop
Low
Price
Extra
Services
Reservation
Range of
(other than
desk
hair
Haircutting)
treatments
Hygiene
Time
savings
on waiting
Time savings
on haircut
Highperformance
“air wash”
system
Government Transformation Programme (GTP)
(Adapted from Government Transformation Programme Annual Report 2011)
Government Transformation Programme (GTP)
• Launched by Prime Minister in 2010
• Purpose:1. Address key areas of concern to people (People 1st)
2. Create fundamental changes on a nation wide
basis to deliver big fast results (Performance Now!).
Big Picture: Malaysia to be a high-income and developed nation by 2020
Timeframe:Horizon 1 : 2010 – 2012
Horizon 2 : 2012 – 2015
Horizon 3 : 2015 – 2020
Government
Transformation
Programme
(GTP)
Initiative led by the Prime
Minister and his cabinet and
supported by the Chief
Secretary to the Government
and the civil service.
The Performance Management
and Delivery Unit (PEMANDU)
in the Prime Minister’s
Department is tasked with
driving this initiative.
The National Key Result Areas (NKRA) :
The Pillars of GTP
No.
NKRA
Lead Minister/ Minister
1
Reducing crime
Minister of Home Affairs
2
Fighting corruption
Minister in Prime Minister Dept.
Law & Parliamentary Affair
3
Improving student outcomes
Minister of Education
4
Raising living standard of lowincome households
Minister of Women, Family and
Community Development
5
Improving urban public transport
Minister of Transport
6
Improving rural basic
infrastructure
Minister of Rural & Regional
Development
*7
Addressing the rising cost of living
Deputy Prime Minister
* New NKRA introduced in July 2011.
(Adapted from Government Transformation Programme Annual Report 2011)
1. None for Ministry of Health.
2. Reviewed by Prime Minister every 6 monthly.
National Blue Ocean Strategy (NBOS)
Desired
Results
NKRA
Methodology :- Blue Ocean Strategy
National Blue Ocean Strategy (NBOS)
• Najib said the blue ocean strategy way of
thinking involved thinking out of the box
through the application of creative and
innovative methods but at minimum cost.
( http://www.themalaysiainsider.com/malaysia/article/apply-blue-oceanstrategy
accessed on 17th July 2012 at 4:23p.m)
“Blue Ocean Strategy:The Key to Najib’s Tranformation Plan
• “…..Malaysia is on the path of maximising on
effective outcomes while minimising the cost
incurred”
• “Blue ocean thinking strategy involves thinking
out of the box through the application of creative
and innovative methods but at minimum cost.”
( http://www.malaysiadigest.com.opinion/20372-blue-ocean.strategy accessed on
17th July 2012 at 4:19p.m)
“GTP accomplished the impossible. And it
did this without an overly large budget or
expansive resources. Instead, it took the
passionate and committed civil service,
supported by the right action plans, resultoriented goals and a people-centric focus, to
make a difference.”
(Source : Message from Prime Minister Malaysia 2 April 2012 as reported in
Government Transformation Programme Annual Report 2011)
NBOS 1 & 2
Enabled the government to save cost as it
did not have to build new prisons costing
between RM50 – 60 millions each
NBOS 3
National Blue Ocean
Strategy (NBOS)
Activities & Achievement
Sarawak
• Build houses for selected families at Kg.
Bunan Gega and Kg. Bunan Pondok in
collaboration with the army
NBOS 4 & 5
• Involve Rural Transformation Centres
(RTC)
• e.g. 1Malaysia Health Clinics
(Adapted from: The Sunday Post, 14th Oct. 2012, Pg.20)
NBOS 6
• Collaboration among various government
departments and agencies for the benefits
of the people and country
• e.g. Health Fairs in Sarawak & Sabah
• Urban Transformation Centres (UTC)
National Blue Ocean
Strategy (NBOS)
Activities & Achievement
NBOS 7
• Harness the benefits of RTC and Urban
Transformation Centre (UTC) to market food
and agricultural products.
• Aims to reduce rural- urban migration
• e.g. 1Malaysia Family Care
(Adapted from: The Sunday Post, 14th Oct. 2012, Pg.20)
The Basic Concepts
Blue
Ocean
Strategy
Summary
Case Study:
Cirque du Soleil
Tourism in Malaysia
Government
Transformation
Programme (GTP) and
National Blue Ocean
Strategy (NBOS)
1
A creative way of
thinking to achieve
desired results at a
minimum cost.
Avoid head-to-head
competition (Red
Ocean)
Corner stone:- Value
innovation
2
Why ?
Profit organisation:Generates large profit
3
Who?
Anybody
5 – 105 years old
4
5
What ?
Where ?
Anywhere
When ?
All the time
6
How ?
Step:
1.Identify the issue
Blue Ocean
Strategy
The Basic
Concepts
2.Construct strategy canvas
(AS-IS)
3.Formulate ERRC Grid
4.Construct Strategy Canvas
(TO-BE)
Blue
Ocean
Strategy
Summary
Case Study
on Cirque
du Soleil
Blue
Ocean
Strategy
Summary
Case Study
on Tourism
in Malaysia
Aim
Address people concern
To achieve a developed
and high-income nation
by 2020
NBOS
1
NBOS 1
2
NBOS 2
3
NBOS 3
Blue
Ocean
Strategy
4
NBOS 4
Summary
5
NBOS 5
6
NBOS 6
7
NBOS 7
Government
Transformation
Programme &
NBOS
NKRAS
1 Reducing Crime
2 Fighting corruption
3 Improving student
outcomes
4 Raising living standard
of low-income
households
5 Improving urban
public transport
6 Improving rural basic
infrastructure
7 Addressing the rising
cost of living