The Four Actions Framework
Create blue oceans by eliminating, reducing, raising, and creating across industry factors
The Four Actions Framework challenges companies to reconstruct buyer value by asking four questions that break the trade-off between differentiation and low cost: Which factors that the industry takes for granted should be Eliminated? Which factors should be Reduced well below the industry standard? Which factors should be Raised well above the industry standard? Which factors should be Created that the industry has never offered?
The first two questions (Eliminate and Reduce) drive costs down. The second two (Raise and Create) drive buyer value up. Together, they allow a company to simultaneously pursue differentiation AND low cost, which conventional strategy says is impossible. This is what Kim and Mauborgne call 'value innovation': the simultaneous pursuit of differentiation and low cost that creates a leap in value for both the company and its customers.
The framework is operationalized through the Strategy Canvas, a diagnostic tool that plots how competitors currently invest across industry factors. By redrawing the value curve, companies can visualize exactly how their blue ocean strategy differs from the competition and ensure they are not simply doing more of the same.
- The best way to beat the competition is to make competition irrelevant
- Value innovation simultaneously pursues differentiation and low cost
- Look at alternatives and noncustomers, not competitors and existing customers
- Eliminate and reduce to cut costs while raising and creating to lift value
- Map the Strategy CanvasPlot your industry's key competing factors on the horizontal axis and the offering level on the vertical axis. Draw the value curves of major competitors. You will likely discover that despite apparent diversity, most competitors have remarkably similar strategic profiles. This convergence reveals the red ocean: everyone competing on the same factors in the same way.Pro tipInclude both premium and budget players to see whether they simply compete at different price points with the same basic strategy shape.
- Apply the Four ActionsFor each industry factor, ask: Should it be eliminated entirely? Reduced below the standard? Raised above the standard? Then ask: What factors should be created that the industry has never offered? Focus especially on looking across industry alternatives and noncustomers. What do noncustomers value that the industry ignores?Pro tipThe most powerful moves come from the Eliminate and Create actions because they change the factors themselves rather than just adjusting levels on existing factors.
- Redraw Your Value CurveUsing insights from the four actions, draw a new strategic profile that diverges sharply from the industry standard. Your new value curve should have a different shape, not just a different altitude. Test it by asking: does it focus (not spread across all factors), does it diverge (not follow the industry shape), and does it have a compelling tagline?Pro tipShare the new strategy canvas with noncustomers of your industry and gauge their reaction. If they get excited, you have found a blue ocean.WarningEnsure the entire system of utility, price, and cost activities is aligned. A blue ocean strategy only works when the whole system is properly integrated.
The US wine industry was intensely competitive with over 1,600 wineries competing on complexity, aging quality, vineyard prestige, and wine range. Casella Wines asked why noncustomers (beer, spirits, and cocktail drinkers who outnumbered wine drinkers 3:1) were not buying wine. Answer: wine was intimidating and pretentious. Casella eliminated complexity and prestige, reduced range to two wines, raised ease of selection, and created fun and adventure as new factors.
Kim and Mauborgne spent over fifteen years studying more than 150 strategic moves across 30 industries spanning 100 years, from 1880 to 2000. Their research revealed that the creators of blue oceans never used competition as their benchmark. Instead, they made competition irrelevant by creating a leap in value for both buyers and the company itself. The Four Actions Framework was developed and refined through working directly with companies pursuing blue ocean strategies.