A New Value Curve

 

Jeroen Kraaijenbrink
Strategy and Leadership Consultant 

Some strategy tools are simple and useful. The “Four Actions Framework” of Blue Ocean Strategy is one of them. This is how to use it.

The Four Actions Framework is one of the core tools in the Blue Ocean Strategy toolbox that was developed by W. Chan Kim and Renée Mauborgne in 2005.

To understand how it works, let’s start with its background basics:

a) Every category of products or services can be described along a set of dimensions (factors) that create value for customers. Think of price, quality, speed, design, availability, sustainability, etc. 

b) Every product or service that a particular company offers scores somewhere on these dimensions. A high-end product, for example, may score high on price, high on quality, low on availability, etc.

c) The combination of scores on these dimensions can be visualized by what the authors have called a “value curve.” Think of it like a bar chart or line chart representing the scores of the product or service.

d) The best strategy generally (or at least what Blue Ocean Strategy tells you to do) is to create a unique value curve that is different from the competition and that speaks to a specific group of (new) customers.

Now, with this background knowledge in mind, we can move to the Four Actions Framework. As visualized, it consists of four actions that you can apply to the current value curve of a product or service:

1. Eliminate: get rid of unnecessary factors. E.g., “slow food” takes speed completely off the table.
2. Reduce: reduce your score on factors. E.g., reduce quality to allow for a lower price. 
3. Raise: raise your score on factors. E.g., improve design to make the product stand out more. 
4. Create: add new factors not used before. E.g. add sustainability as a distinctive factor.

Along these lines you can actively and intentionally redesign your company’s value proposition(s) to make them stand out more from the competition or entice your customers more.

Please note the order of the four actions: first eliminate and reduce, before you raise or create. So, simplify first and do less, before you start doing more!

Which of your company’s products’ and services’ value curves will you start redesigning next?