A Simple Metric for Designing, Evaluating, and Managing Blue Ocean Projects

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1. BLUE OCEAN PROJECT MANAGEMENTA Simple Metric for Designing and Managing Blue Ocean Projects Dr. Rod KingValue Quotient (VQ) Management 2. COMPANIES THAT ARE SUCCESSFULLY EXECUTING BLUE OCEAN PROJECTSCopyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 3. WHAT IS BLUE OCEAN?Blue Ocean PLANNINGBlue Ocean StrategyBlue Ocean MissionBlue Ocean PlanBlue Ocean ProjectBlue Ocean VisionBlue Ocean Product (Design)Blue Ocean GoalBlue Ocean Service (Design)Blue Ocean ObjectiveBlue Ocean BUSINESS MODELCopyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 4. BLUE OCEAN MAP: Global View of the Value Quotientfor Determining Where You and Your Competitors Currently Are & Where You Must GoIDEAL VALUE QUOTIENT (BLUE OCEAN) Fractal Market Segmentation (Niches) of Short-haul Transportation MarketHighly differentiated and premium-priced/free value chainBLUE OCEAN Southwest AirlinesValue Quotient(VQ)Blue Ocean Plan(+):DELIGHTLowly differentiated andlow-cost value chainRED OCEAN *Average (Me Too) Airline*Car/Bus TransportationStrategicChoiceRed Ocean Plan(-): PAIN (Uncontested Experience, Market Space, or New Category) No. of Direct CompetitorsCopyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 5. WHAT IS THE VALUE QUOTIENT?A Universal Metric of Success and Decision-making+-NoteValue Quotient =Advantage/Disadvantage=Benefit/Cost=Revenue/Cost=Strength/Weakness=Opportunity/Threat=Reward/Risk=Relevant Content/Noise=Positives/Negatives=Delight/Pain=Good/BadCopyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 6. BLUE OCEAN RADAR for Southwest Airlines200,000ft View of the Value QuotientIdeal Value Quotient (Blue Ocean Transportation)Object/Core Job: Aircraft/CarsIdeal VQ = Perfect 10Look within and across industries as well as in nature for similar or analogous resolution of trade-offSouthwest (VQ = 3.4)Average Airline (VQ = 5.8/6 = 1.0)Car (VQ = 0.9)(Free)COSTValue Quotient (VQ) = Benefit/Cost = Revenue/Cost = Reward/Risk = Slope of Value Quotient LineIdeal Value Quotient (Blue Ocean)Ideal Final Result of Continuously Implementing IVQ Decisions Job To Be Done (JBTD) at No Cost & With No Negative EffectCopyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 7. STRATEGY RADAR: 40,000ft View of the Value Quotient (Factors)Southwest Airlines4 ELEMENTS OF BUSINESS MODEL:Competitive Advantage StrategiesQuality (Q) Increase speed to level 9Cost ( C )Reduce ticket price to level 1.3Differentiation (D)Reduce lounges to level 1.2 8. Reduce meals to level 2.1 9. Increase friendly service to level 8.8Personalization (P)Reduce seating choice to level 1Value Propositions (Innovative Processes)Higher speed at lower cost 10. Friendlier service at lower costTargeted Customer Segments (Niches)Frequent/Low-cost traveler 11. Early adopter/innovator; Non-customersValue Quotient (VQ)Benefit = Quality + Differentiation + Customization = (9 + 1.2 + 2.1 + 8.8 + 1)/5 = 22.1/5 = 4.42 12. Cost = 1.3 13. Value Quotient (VQ) = 4.42/1.3 = 3.4Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 14. BLUE OCEAN STRATEGIC PLAN: Strategic View of the BusinessINDUSTRY/BUSINESSIndustry: Airline/Transportation 15. Niche: Short-haul, low-cost air travel 16. Model: Point-to-point air travel with no frills to secondary city-airports (cf. hub-and-spokes model with meal)COMPANY BACKGROUNDLocation: Dallas,Texas (USA) 17. Founder(s): Herb Kelleher; Rollin King (1967 inc.; first flight in 1971) 18. Revenue: $11 Billion (2008) 19. No. of Direct Competitors:PRODUCTS/SERVICESAirline 20. Aircrafts 21. Air travel/transportationCUSTOMER VALUE PROPOSITIONThe speed of a plane at the price of acar Targeted Customer Segment: Frequent/low-cost travelersBLUE OCEAN STRATEGIC PLAN FOR: SOUTHWEST AIRLINESCUSTOMER BENEFITS/EXPERIENCEFaster travel at lower cost 22. Simple fare structureVISION (Future Headline)Do the right thing. MAIN GOAL/OBJECTIVE/STRATEGYBlue Ocean Strategic Plan for quickly reaching destination at the lowest price(See Blue Ocean Compass & Blue Ocean Map;Blue Ocean PAD; Value Chain Model; Blue Ocean Dashboard)MISSION/CORE VALUESDedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing 23. REFERENCESChesbrough, H. (2006) Open Business Models. Boston: Harvard Business School (HBS) Press. Christensen, C.; Raynor, M.E. (2003) The Innovators Solution. Boston: Harvard Business School (HBS) Press.Kim, W.C.; Mauborgne, R. (2005) Blue Ocean Strategy. Boston: Harvard Business School (HBS) Press.King, R. (2009) The Zoomable Page for Innovative Thinking in Space and Time:How Geniusesand World-class Innovators Really Think And How Anyone Can Do So in 1 Minute or Less.Fresno:Value Quotient Management.Dr. Rod KingSpeaker, Consultant, and Trainer on Business Model Analysis, Design, and Innovationrodkuhnking@sbcglobal.net & http://businessmodels.ning.comhttp://twitter.com/RodKuhnKing