ICT622 IT Strategy

Workshop Topic 5
Paradigm Shift
Today’s Schedule

• Blue Ocean Vs Red Ocean Strategies

• Choose Your Own Adventure Activity
• Porter’s Value Chain Discussion
• Homework Briefing

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“In our quest to see how the Internet is different, we have failed to see how the
Internet is the same. While a new means of conducting business has become
available, the fundamentals of competition remain unchanged. The next stage of
the Internet's evolution will involve a shift in thinking from e-business to business,
from e-strategy to strategy. Only by integrating the Internet into overall strategy
will this powerful new technology become an equally powerful force for
competitive advantage.”- Michael Porter

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Paradigm Shift

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Paradigm Shift

• In its simplest form, a paradigm shift occurs when the usual and accepted way of
doing or thinking about something changes.

• A monopoly is enjoyed by the currently reigning paradigm which is then

completely superseded in a quantum leap by the new paradigm

• There is no middle ground, no smooth transition from one pattern to the other

• The change is rapid and unstructured

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Paradigm Shift

Examples:

• The paradigm that the Earth was flat was embraced by all respected scientists of
the day. Adopting the notion that the world was round quickly and completely
invalidated the previous mind set – the earth couldn’t be ‘sort of flat’ or ‘a bit
round’.

• The paradigm shift in the manufacture of cloth - prior to the industrial revolution it
was manufactured in cottages, after the advent of steam power, it was only made
in factories.

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Paradigm Shift

• Tech-push innovation is often disruptive – the old is tossed aside for the new.
Automobiles replaced horse and carts.

• Disruptive innovations provide the basis for paradigm shifts

• Often provide 5-10 times improvement in performance
• And a 30-50% reduction in cost and or performance

• Two disruptive technology scenarios

• The ‘low-end disruption’
• The ‘new market disruption’.

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Low-End Disruption

• In low-end disruption, the consumer who has been barred from using technology
either by cost or access

• A lower cost, lower performing alternative is offered

• While its performance may fall significantly short of that of established

competitors, it still surpasses the demands and expectations of the intended
consumer base.

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New Market Disruption

• In new market disruption, an often costly new technology is introduced to serve a

new market segment

• When first introduced, the petrol motor car was far more expensive than the horse
and cart and appealed to only a small market segment.

• As time passes, the disruptive influence of a new technology diminishes. What

was once unique and the source of disruptive change (e.g., the Sewing machine,
internal Combustion engine, the car and the Internet) becomes ordinary and
ubiquitous

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Red Oceans vs Blue Oceans

Red Oceans represent all industries in existence today.

They have defined:

• Technologies

• Rules

• Competitors

• Markets

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Red Oceans vs Blue Oceans

Blue Oceans represent all industries NOT yet in existence today.

This is undefined market space, otherwise known as OPPORTUNITY.

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Red Oceans vs Blue Oceans

Most blue oceans are created from red ocean companies expanding
industry boundaries.

For example, Cirque du Soleil and Yellowtail wines (USA)

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Red Oceans vs Blue Oceans
Some industries that appeared since 1900 include:

• Automotives
• Aviation and air travel (and travel agencies)
• Health care
• Plastics
• Digital devices (computers, PCs, DVD…)

All of these industries created new market space.

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Red Oceans vs Blue Oceans

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Red Oceans vs Blue Oceans

The blue ocean premise is simple:

The winning strategy in the future is to stop competing

The only way to beat the competition is to stop trying to beat the competition.

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 Red Oceans vs Blue Oceans

Value innovation only occurs when strategies align technology with utility,
price and costs.

The market must be ready to accept the product, meaning that timing is
key.

The focus is on both differentiation and low cost to provide value to both
customers and the organization.

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Red Oceans vs Blue Oceans

Value innovation is the “new” strategic logic behind Blue Ocean

Strategy.

Instead of focusing on beating the competition, you focus on making it

irrelevant by creating a leap in value for buyers and creating
uncontested market space.

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ERRC Framework
• Eliminate: Identify and remove unnecessary or less valuable
elements.

• Reduce: Minimize or scale back aspects that are non-

essential or overly costly.

• Raise: Enhance the value or quality of specific elements.

• Create: Innovate by introducing entirely new and unique

elements.

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Choose Your Own Adventure Activity

• Introduction & Overview

• Group Work on Decision Point 1
• Class Discussion
• Group Work on Decision Points 2 & 3
• Final Discussion & Reflection

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Introduction and Overview

• Learning Outcomes: By the end of this activity, you will:

• Apply strategic frameworks to real-world decision-making.
• Understand how each strategic decision influences the next.
• Evaluate and justify your group’s decisions through critical thinking and collaboration.
• Instructions:
• Work in Groups: You will collaborate in groups of 4-6 students to discuss and choose the
best course of action at each decision point.
• Class Participation: After each decision, your group will share its choice, and we will discuss
the rationale behind your decisions as a class.
• Use Strategic Frameworks: Ensure that each decision is supported by the frameworks
you’ve learned in class, such as SWOT, Ansoff’s Matrix, and Porter’s Value Chain.

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First decision

Which strategy (cost reduction or differentiation) will best position GreenFarm for
long-term success in a competitive market, given its current strengths,
weaknesses, opportunities, and threats?
• Cost Reduction Path
• Product Differentiation Path

Factors to Consider:
1. What are GreenFarm’s key weaknesses that could be addressed by cost reduction?
2. Can GreenFarm effectively leverage its strengths (reputation, customer loyalty) through
differentiation?
3. What are the potential opportunities and threats in the market, and how will each strategy
impact GreenFarm’s ability to respond to them?
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Decision One Vote

Option A Option B
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Decision One Vote

Option A Option B

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Second Decision (A)

Which cost reduction strategy (shifting to online sales or improving in-store efficiency)
will most effectively reduce GreenFarm’s operational costs while maintaining customer
loyalty?
• Shifting focus to online sales
• Improving in-store efficiency

Factors to Consider:
1. Customer Impact: How would each option affect GreenFarm's relationship with its loyal customers?
2. Cost Savings: Which strategy offers more immediate and long-term cost savings?
3. Operational Challenges: What challenges or risks might GreenFarm face in implementing each
option (e.g., logistics for online sales, tech investments for in-store efficiency)?

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Decision Two Vote

Option C Option D

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Decision Two Vote

Option C Option D

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Final Decision (C)

Which strategy (nationwide delivery service or personalised shopping app) will better
support GreenFarm’s online business and drive customer engagement?
• Launch a Nationwide Delivery Service
• Develop an App for Personalised Shopping

Factors to Consider:
1. Customer Reach: Which strategy would allow GreenFarm to expand its customer base more
effectively?
2. Customer Loyalty: How would each option improve customer loyalty and repeat purchases?
3. Operational Costs: What investments (infrastructure, technology) would be needed for each
strategy?
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Decision Three Vote

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Final Decision (D)

Which strategy (self-checkout systems or reducing product range) will deliver the
most significant operational efficiency improvements for GreenFarm?
• Implement Self-Checkout Systems
• Reduce Product Range for Efficiency

Factors to Consider:
1.Customer Experience: How would each option impact the in-store customer experience?
2.Cost Savings: Which strategy would provide the greatest cost savings for GreenFarm?
3.Operational Feasibility: How easy would it be to implement each strategy, and what are the
potential challenges?

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Decision Three Vote

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Second Decision (B)

Which differentiation strategy (expanding product offerings or investing in community

engagement) will create the most value for GreenFarm and attract new customers?
• Expand Product Offerings
• Invest in Community Engagement
F: Invest in Community Engagement

Factors to Consider:
1. Customer Value: Which strategy adds more value for GreenFarm’s existing and potential
customers?
2. Brand Impact: How would each option enhance GreenFarm’s brand and its commitment to
sustainability?
3. Cost and Resources: What resources (e.g., partnerships, new product development) would be
required for each option?
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Decision Two Vote

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Decision Two Vote

Option E Option F

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Final Decision (E)

Which strategy (nationwide delivery service or personalised shopping app) will better
support GreenFarm’s online business and drive customer engagement?
• Launch a Nationwide Delivery Service
• Develop an App for Personalised Shopping

Factors to Consider:
1.Customer Reach: Which strategy would allow GreenFarm to expand its customer base more
effectively?
2.Customer Loyalty: How would each option improve customer loyalty and repeat purchases?
3.Operational Costs: What investments (infrastructure, technology) would be needed for each
strategy?

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Decision Three Vote

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Final Decision (F)

Which strategy (self-checkout systems or reducing product range) will deliver the
most significant operational efficiency improvements for GreenFarm?
• Implement Self-Checkout Systems
• Reduce Product Range for Efficiency

Factors to Consider:
1.Customer Experience: How would each option impact the in-store customer experience?
2.Cost Savings: Which strategy would provide the greatest cost savings for GreenFarm?
3.Operational Feasibility: How easy would it be to implement each strategy, and what are the
potential challenges?

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Decision Three Vote

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Thoughts?

• How did earlier decisions limit or expand your options?

• Do you think your final decision leads to long-term success for GreenFarm?

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Porters Value Chain Discussion

• Each group will cover 1-2 primary activities of Porters Value Chain per company

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Your Group Workshop Task
• For each student in your group*, list a company which successfully used Blue
Ocean Strategy in the launch of one of their products.
• List using the table below, note what were the product changes
BLUE OCEAN
COMPANY/PRODUCT
NAME

ELIMINATE

REDUCE

RAISE

CREATE

*if you have 5 people in your team list 5 companies, or if you have 6 people in your team list 6 Companies
etc. ICT622 Information Technology Strategy 40