Blue Ocean, Network Effects

Platform Business

an enterprise that creates value by matching external producers and consumers in a way that creates value for all participants, and the depends on the infrastructure of platform that the enterprise manages.

Blue Ocean Strategy

create a new value curve

indirect network externalities

hardware technology standards that depend on software

buyers

path to blue ocean: Look across chain of ___

functional, emotional

path to blue ocean: look across ___ appeal and ___ appeal to buyers

complementary

path to blue ocean: look across ____ products & services

customer groups

path to blue ocean: look across strategic ___ ___

community feedback

platforms benefit form ___ ___

Blue Ocean Strategy

represent untapped market space, the creation of additional demand, and the resulting opportunities for highly profitable growth.

Direct Network Externalities

social networking products

complements

strategy for winning platform wars: Ensure a supply of ___

license

strategy for winning platform wars: ___ the format

marketing

strategy for winning platform wars: aggressively ___ - price promotions - advertising

competitors

strategy for winning platform wars: cooperate with ___

applications

strategy for winning platform wars: leverage killer ___

Red Ocean

Any market share gain comes at the expense of other competitors in the same industry.

value innovaiton

Implementing a blue ocean strategy requires making competition irrelevant and creating a new market space, otherwise known as ___ ___

alternative

Path to blue ocean: look across ___ industries

businesses, consumers

Platform business creates value for both the ____ and for ___

scale

Platforms ___ more efficiently than pipelines by eliminating gatekeepers.

value creation, supply

Platforms unlock new sources of ___ ___ and ___

Red Ocean

Products become commodities, and competition is focused mainly on price

pipeline

The business structure that is linear and has producers at one end and consumers at the other

Red Ocean

The known market space of existing industries. The rivalry among existing firms is cut-throat because the market space is crowded and competition is a zero-sum game.

Create

Value Innovation- Increase Perceived Consumer Benefits Which factors should be created that the industry has never offered?

Raise

Value Innovation- Increase Perceived Consumer Benefits Which of the factors should be raised well above the industry's standard?

Eliminate & Reduce

Value Innovation- Lower Costs

Reduce

Value Innovation- Lower costs Which of the factors should be reduced well below the industry's standard?

Eliminate

Value Innovation- Lower costs Which of the factors that the industry takes for granted should be eliminated?

Raise & Creat

Value Innovation- increase perceived consumer benefits

stuck in the middle

When a blue ocean strategy goes bad, a firm has neither a clear differentiation nor a clear cost-leadership profile. This situation is referred to as

network externalities

When products become more valuable to all users when another user adopts it. Competing technologies languish.

Blue ocean strategy

a business-level strategy that successfully combines differentiation and cost-leadership activities using value innovation to reconcile the inherent trade-offs in those two distinct strategic positions