Download THE FOUR ACTIONS FRAMEWORK

September 16, 2010
Presented by: Lana Grimes,
Andrei Gololobov, & Laura McMannis
Analytical Tools & Frameworks
 Essential for development of blue ocean strategy
 Systematic & actionable as competing in red waters
 Ensure risk minimization
 How do you break out of red ocean to make
competition irrelevant?
 How do you open up and capture a blue ocean of
uncontested market space?
The Strategy Canvas
 Central to value innovation & creation of blue oceans
 Diagnostic & action framework
Purpose of Strategy Canvas
 Captures the current state of play in the known market
space
 Competition investing
 Competition factors
 Received by customers
 Reorients strategic focus
 Competitors
Alternatives
 Customers
Noncustomers
THE FOUR ACTIONS FRAMEWORK
THE FOUR ACTIONS FRAMEWORK
“QUESTION BY QUESTION”
 Which factors that the industry takes for granted
should be eliminated?
 Factors which your industry has long competed on
 Factors of competition intended for a Red Ocean
Strategy.
 Factors which we take for granted but no longer have
any value
 Which factors should be reduced well below the
industry standard?
 Factors which are pushing to hard to stay competitive
but yield little or no gain over the competition
 High development costs but little or no profit
• Which factors should be raised well above the
industry standard?
– Eliminate compromises your industry forces consumers
to make
 Which factors should be created that the industry
has never offered
 Find a new source of value for the customer
 Shift demand and/or create new demand
 Shift strategic pricing in the industry
APPLICATION TO A REAL-WORLD
EXAMPLE: CASELLA WINES
 Wine market stagnant in the US
 Few people knew how to understand and appreciate
the complexity of wines
 Competing wine yards all marketed on fineness,
quality, and prestige
 Narrow target market: difficult to understand for the
average consumer
 Expansive range of wines made it difficult for
consumers to choose
 Stereotyped by the general public as a formal upperclass drink
 The average consumer was used to something more
“drinkable” like beer or cocktails
THE FOUR ACTIONS FRAMEWORK
APPLIED TO CASELLA WINES
 Which factors that the industry takes for granted
should be eliminated?
 Promotional campaign
 Aging qualities
 Ecological terminology and distinctions (What does
tannins, oak, and complexity mean to the average
consumer?)
 Which factors should be reduced well below the
industry standard?
 Wine complexity
 Wine range (no complicated array of choices)
 Vineyard prestige (Red Ocean marketing)
o Which factors should be raised well above the
industry standard?
o Price kept above the price of budget wines
o Budget wine drinkers moved up
Which factors should be created
that the industry has never
offered?
 Create a wine that is fun and easy to drink
 Only two variants create make selection easy
 Labeling sets wine as a fun and informal drink,
appealing to more potential consumers
ELIMINATE-REDUCE-RAISE-CREATE
GRID
ELIMINATE-REDUCE-RAISE-CREATE
GRID
 Pushes companies to differentiate and reduce costs,
breaking the value-cost trade off.
 Checks companies which decide to focus on only
creating new products without reducing costs
 Easy to understand
 Every factor is scrutinized leading the company to
discover implied assumptions made unconsciously in
competition
ELIMINATE-REDUCE-RAISE-CREATE
GRID: APPLIED TO CASELLA WINES
Three characteristics of Good
Strategy
 Focus
 Divergence
 Tagline
 Why are these characteristics important?
 What will the companies achieve by adhering to these
principles?
Southwest:
 Focus on friendly service, speed, and frequent point-
to-point flights
 Divergence: Uniqueness of the value curve
 Compelling tagline: “The speed of a plane at the price
of a car – whenever you need it.”
Johnson & Johnson
 Competes in various categories of healthcare industry
 Tries to achieve divergence through constant pursuit of
innovation and the leading edge medical knowledge
 Compelling tagline: “The Family Company”
Marketing strategies and consumer
demographics
 General consumer
 Medical professionals
Innovation
 Staying ahead of the game: Inimitability and
sustainable advantage
 Technology S-Curve
 Ethics codes
Takeaways
 Strategy Canvas has two purposes:
 Captures the current state of play in the known market space: where
competition is currently investing and the factors that the industry
competes on.
 Calls for action by reorienting your focus from competitors to alternatives
and from customers to noncustomers of the industry.
 Marketing:
 By reinventing wine, Casella Wines created a whole new target market in
addition to widening the existing market for wines.
 The Four Actions Framework and the Eliminate-Reduce-Raise-Create Grid
are almost a straight-forward step-by-step strategy which offers an answer
to all four parts of the Marketing Mix.
 Importance of staying focused:
 Remember what the product that company delivers is all about. What is
the utility to the customer? Do not lose sight of self by trying to
differentiate from competitors. Strive to achieve uniqueness.