Following are three analytical tools used in the formulation of a Blue Ocean Strategy. The three tools we will look at are:

• Strategy Canvas
• Four Actions Framework
• Eliminate-Reduce-Raise-Create Grid

The Strategy Canvas

The Strategy Canvas is both a diagnostic tool and an action framework. From a diagnostic point of view, it is used to capture what is happening in the existing market space. The following example from the book describes the US wine market prior to Casella Wines introduction of Yellow Tail.

This paints a picture of where the competition is currently investing and the factors they compete on in products, services, delivery and what customers receive from the existing offerings.

Four Actions Framework

The Four Actions Framework asks four key questions to challenge an industry’s preexisting norms.

The eliminate and reduce questions lead you to gaining an insight into how to drop your cost structure while the create and raise questions lead you to gaining an understanding into how to increase customer value and generate new customer demand.

Eliminate-Reduce-Raise-Create Grid

The third tool supplements the second encouraging action. The example below shows how Casella Wines answered those four key questions.

This resulted in a strategy canvas that looked like the following for Casella Wines’ new Yellow Tail brand in the US wine market.

You can see from the above picture, Yellow Tails curve has three very important characteristics.

1. Focus: efforts were not diffused across all key factors of the competition
2. Divergent: the value curve diverges from the competition
3. Compelling Tagline: ‘a fun and simple wine to be enjoyed every day’