Blue

Ocean
Strategy
 THE TCS What you are deeply
HEDGEHOG passionate about?
We carry customer emotions not
shipments & we are fanatical when it
comes to delivery on time no matter
what the situation is

What you can be the What drives your

best in the world at? DELIVERING Economic Engine?
BEYOND
Moving anything & Profit per delivery
EXPECTATIONS
everything, to & from, on time
within Pakistan & for
Pakistanis locally &
globally
AGENDA
• Rules of Engagement
• Why are we here?
• Lets learn together “Blue Ocean
Strategy”
• Lets strategize
• The execution framework
• Promise and a prayer

6
RULES OF ENGAGEMENT

You have
been
Mugged!

7
RULES OF ENGAGEMENT
• Rule 1: No cell phones and no watches
• Rule 2: Conference by agenda and not time
• Rule 3: You need to be active mentally and physically
• Rule 4: If you are tired (and you will be) you can get
up and stretch and walk around in the room, as long
as you are still focused
• Rule 5: I am the facilitator of this meeting and in that
capacity will make the final call on how it will work
• Rule 6: You can ask questions anytime ( Parking lot )
• Rule 7: Positive body language and sparkling eyes
are a must
(Continued…)
8
RULES OF ENGAGEMENT
(…continued)

• Rule 8: Whoever you are, however senior you are,

you will let go and participate in all activities free of
your title and ego
• Rule 9: You will be back on exact time when asked to
take a break as all other participants will wait till you
are not!
• Rule 10: Don’t take extensive notes except key
thoughts or ideas, I need your attention and not your
notes

9
 Dive into the BLUE OCEAN
Make Competition Irrelevant
In December 2015, TCS commenced a strategic move towards
learning & implementing Blue Ocean strategy in the Company. The
idea behind the initiative is to identify areas where the profits and
growth are and the competition isn’t, at every level
Aaaaa
Why are we here?
Dive into the BLUE OCEAN
Make Competition Irrelevant
The Blue Ocean Strategy
Go where the profits and
growth are…
and the competition isn’t
Blue Ocean
Tomorrow’s leading companies will
succeed not by battling in the
bloody “red ocean” of rivals,
but rather by creating “blue oceans”
of uncontested market space, ripe for
growth
Red Ocean Strategy VS Blue Ocean Strategy
Compete in existing Create uncontested
market space market space
Make the competition
Beat the competition
irrelevant
Exploit existing Create & capture new
demand demand
Make the value cost Break the value-cost
trade off trade-off
Impact of Creating Blue Oceans
The Profit & Growth consequences of
creating Blue Oceans
Business Launch
86% 14%
Revenue Impact
62% 38%
Profit Impact
39% 61%

Launches within red oceans Launches for creating blue oceans

3 Characteristics of Blue Ocean Strategy
Focus
A company’s strategic profile, or value curve,
should clearly reflect focus
Divergence
It is the differentiation of Company’s profile from
the industry’s average profile
Compelling Tagline
A good strategy has a clear-cut and compelling
tagline
 Without these qualities, a
company’s strategy will likely be
muddled, undifferentiated, and
hard to communicate, with a high
cost structure
Analytical Tools & Framework
for Creating Blue Ocean
Strategy
Strategy Canvas

Eliminate-Reduce-Raise-Create Grid

Value Innovation
Strategy Canvas
Strategy canvas captures, in one
simple picture,
the current strategic landscape
and the future prospects for a
company
Strategy Canvas
The strategy canvas serves two purposes:
• To capture the current state of play in the known
market space, which allows users to clearly see the
factors that the industry competes on and where
the competition currently invests
• To propel users to action by reorienting their focus
from competitors to alternatives and from
customers to noncustomers of the industry
Strategy Canvas
Zappos
Aaaaa
Strategy Canvas of Zappos Zappos Online Stores

High

Low
Price Best price Shipping Hassle & Frequency Frequency Information Variety of Delivery 24-hr Personal &
offer cost of Shipping of of richness of choice speed dedicated emotional
order cost of Stockouts clearance selection customer touch
returns & assistance
promotion
Strategy Canvas

Eliminate-Reduce-Raise-Create Grid

Value Innovation
Eliminate – Reduce – Raise – Create Grid

Which of the factors Which factors

that the industry should be reduced
takes for granted well below the
should be industry’s
eliminated? Eliminate Reduce standard?

Which factors
Which factors
should be
Create Raise should be
created that the raised well above
industry has never the industry’s
offered? standard?
Eliminate – Reduce – Raise – Create Grid: Zappos
ELIMINATE REDUCE
Best price offer Frequency of stock-outs
Shipping cost of order Frequency of clearances
Hassle & shipping cost and promotions
of returns
CREATE RAISE
24-hr dedicated Information richness for
customer assistance selection
Personal & emotional Variety of choices
touch Delivery speed
Strategy Canvas

Eliminate-Reduce-Raise-Create Grid

Value Innovation
Value Innovation

Eliminate Costs
Reduce
VI
Value
Innovation
Raise
Create Buyer
Value
Breaking the value-cost trade-off
Value Innovation for Zappos
Best price offer
Shipping cost of order
Hassle & shipping cost of returns
Frequency of stock-outs
Eliminate Frequency of clearances
and promotions
Reduce An
online
store with a Value
personalized
Raise touch Innovation
Create
Variety of choices
Delivery speed
Information richness for selection
24-hr dedicated customer assistance
Personal and emotional touch
 Strategic Canvas - TCS Holdings SCA:
1.2 Outsourcing the non core
Inventory Management
1
Cash Collection
Cold Chain Management
0.8
Market Research
Bureau Services
0.6
Air Charter Services

0.4 Agri Supply Chains

0.2
TCS

0
LOGISTICS
INDUSTRY
Eliminate–Reduce–Raise–Create Grid: TCS Holdings
ELIMINATE REDUCE
Non profitable logistics / Market Credit
courier Overnight parcel business
MKT credit below 10,000 Discounted pricing offers

CREATE RAISE
Value Added Services Brand
Supply Chain Advisory Reach/ Network
Yayvo Flexible Delivery Options
Product Sales Platform Quality of Services
Non-Resident Pakistanis ECom Eco System
Prepaid / Loyalty Aviation Business
Value Innovation for TCS Holdings
Non profitable logistics / courier
MKT credit below 10,000/-
Market Credit
Overnight parcel business
Eliminate Discounted pricing offers

Reduce A
Platform Value
for
Success Innovation
Raise Yayvo
Create Brand Product Sales
Flex. Delv. Opt Platform
Qlty of Services Non-Resident Pak.
Reach/ Network Value Add. Services
Aviation Business Supply Chain Adv.
ECom Eco system Prepaid / Loyalty
Formulating the Blue Ocean
Strategy
 Let us discuss
opportunity maximizing and
risk minimizing paths
to create a blue ocean
 Principle 1:
Reconstruct market boundaries

Principle 2:
Focus on the big picture, not the numbers

Principle 3:
Reach beyond existing demand

Principle 4:
Get the strategic sequence right
1. Reconstruct Market Boundaries
Look across Alternative
Industries
Look across Strategic Groups
within Industries
From Look across the Chain of To
Competing Buyers Creating
within Look across Complementary Across
Product and Service Offerings
Look across Functional or
Emotional Appeal to Buyers
Look across Time
1. Reconstruct Market Boundaries – Blue Ocean Creation
HEAD 2 HEAD COMPETITION BLUE OCEAN CREATION EXAMPLE
Focus On Rivals Within Its Look Across
INDUSTRY Net Jets
Industry Alternative Industries
Focus On Competitive Focus On Competitive
STRATEGIC Curves
Position Within Strategic Look Across Strategic
GROUP
Group Group Within industries
BUYER Focus On Better Serving Redefines The Industry Novo
GROUP The Buyer Group Buyer Group Nordisk
SCOPE OF Focus On Maximizing The Look Across Nabi,
PRODUCT OR Value Of Product Or Service Complementary Product Philips
SERV. OFFERING Offerings Within Industry Or Service Offerings
Focus On Improving Price Cemex,
FUNCTIONAL Rethink The Functional
Performance Within The Swatch,
EMOTIONAL Emotional Orientation
Functional Emotional The Body
ORIENTATION Of Its Industry
Orientation Of Its Industry Shop
TIME Focus On Adapting External Shape External Trends
Apple
Trends As They Occur Over Time
2. Focus on the big picture, not the numbers
Four Steps of Visualizing Strategy
1. Visual 1. Visual 4. Visual
3. Visual Strategy Fair
Awakening Exploration Communication
• Compare your •Go into the field to •Draw your “to be” •Distribute your
business with explore the six paths strategy canvas based on before-and-after
your to creating blue insights from field strategic profiles
competitors’ oceans. observations. on one page for
by drawing easy comparison.
your “as is” •Observe the •Get feedback on
strategy distinctive alternative strategy •Support only
canvas. advantages of canvases from those projects and
alternative products customers, competitors’ operational moves
• See where and services. customers, and that allow your
your strategy noncustomers. company to close
needs to •See which factors the gaps to
change you should •Use feedback to build actualize the new
eliminate, create, or the best “to be” future strategy.
change. strategy.
3. Reach beyond existing demand
How do you maximize your blue ocean?
Companies should challenge two conventional practices
 Focus on existing customers
 Drive for finer segmentation to accommodate buyer
differences
Companies should concentrate on
• Noncustomers instead of existing customers
• Similarities in what Customers value
 Three Tiers of Noncustomers
Customers of your
industry.
Tier 3:
“Unexplored”
“Soon-to-be”
noncustomers who are Tier 2:
on the hedge of your “Refusing”
market waiting to jump
ship. First Tier:
“Refusing” “Soon-to-
noncustomers who be”
consciously choose
against your market.
Current
“Unexplored” Market
noncustomers who are
in markets distant from
yours.
 Three Tiers of Noncustomers
First Tier – “Soon-to-be” noncustomers
• Minimally use the current market as they search for
something better.

• Noncustomers tend to offer far more insight into

how to unlock and grow a blue ocean than existing
customers.

• Focus on reasons people want to leave your

industry and not on the differences between them.
 First Tier – “Soon-to-be” noncustomers
Pret A Manger-fast food company (1988)
Expanded their blue ocean by “tapping into the huge latent
demand of their first-tier noncustomers.”

Shared three commonalities

1. They wanted lunch fast

2. They wanted it fresh and healthy

3. They wanted it at a reasonable price

 First Tier – “Soon-to-be” noncustomers
Pret A Manger-fast food company (1988)
 In addition to offering healthy alternatives, Pret A Manger
speeded up the customer ordering experience.
• On average, customers spend 90 seconds from the time they
get in line to the time they leave the restaurant.

• These three commonalities were a huge hit for customers

who wanted their lunch on the go.

 Over 25 million sandwiches a year from its 130 stores in the U.K.
 Its growth potential even made McDonald’s buy a 33% share of
the company.
 Three Tiers of Noncustomers
Second Tier – “Refusing” noncustomers

• They consciously choose against the market.

• People who either do not use or cannot afford the

current market offerings because they find the offerings
unacceptable or beyond their means. So, they find other
ways of dealing with their needs or leave them
unsatisfied.
 Second Tier – “Refusing” noncustomers
JCDecaux-Outdoor advertising

 Outdoor advertising was expensive and offered limited space.

 JCDecaux expanded their advertising to actual bus stations and

billboards located in downtown cities.

 JCDecaux used outdoor/street furniture to:

 Increase the average exposure (time)

 Richer contents
 Three Tiers of Noncustomers
Third Tier – “Unexplored” noncustomers
• Farthest away from the industry’s existing consumers
• The industry has always assumed their needs belonged to
other industries.
 Third Tier – “Unexplored” noncustomers
Teeth Whitening Industry
 A long held assumption was that tooth whitening was a service
provided exclusively by dentists.

 Oral care companies until recently never looked at the needs of

these customers.

 When they did, they found that high-quality, low-cost teeth

whitening solutions was the need of the customers, and the
market exploded.
By focusing on key commonalities
across these noncustomers and
existing customers, companies can
understand how to pull them into
their new market.
4. Get the Strategic Sequence Right
Companies need to build their blue ocean strategy in
the following sequence:

• Buyer utility
Revenue
• Price side

• Cost Profit side

• Adoption Hurdles
The Sequence of Blue Ocean Strategy
Rethink
• At each step Buyer Utility
there are only Is there any exceptional buyer utility in your business idea? No
two options: a
“yes” answer, in Yes
Rethink
which case the
Price
idea may pass to
Is your price easily accessible to the mass of buyers? No
the next step, or
“no”. Yes
Rethink
Cost
• If an idea
receives a “no” Can you attain your cost target to profit at your strategic price? No
at any point, the
Yes
company can Rethink
either park the Adoption
idea or rethink it What are the adoption hurdles in actualizing your business idea?
until you get a Are you addressing them upfront?
yes. No
Yes
A COMMERCIALLY VIABLE BLUE
OCEAN IDEA
Adoption
 A blue ocean idea threatens the status quo, and for that reason
it may provoke fear and resistance among a company`s three
main stakeholders:
• Employees
• Business Partners
• The General Public

 Before plowing forward and investing in the new idea, the

company must overcome such fears by educating and
communicating.
Adoption
Major Adoption Hurdles of a Business Idea

• Employees can be skeptical and disaffected.

• Partners can be unconvinced and uncooperative.

• The general public can be resistant and critical.

Sequence of Blue Ocean Move
Rethink
Buyer Utility
Is there any exceptional buyer utility in your business idea? No
Yes
Rethink
Price
Is your price easily accessible to the mass of buyers? No

Yes
Rethink
Cost
Can you attain your cost target to profit at your strategic price? No

Yes
Adoption
What are the adoption hurdles in actualizing your business Rethink
idea?
Are you addressing them upfront? No
Yes
A COMMERCIALLY VIABLE BLUE
OCEAN IDEA
Thank You