Use of ERRC Grid in Blue Ocean Strategy
According to economic times, the definition of blue ocean strategy is:
"Blue Ocean Strategy is referred to a market for a product where there is no competition or very less competition. This strategy revolves around searching for a business in which very few firms operate and where there is no pricing pressure."
The Eliminate-Reduce-Raise-Create (ERRC) Grid (aka. ERRD Matrix) is an essential tool of blue ocean strategy. Developed by Chan Kim and Renée Mauborgne, ERRC Grid is a grid-like model that drives firms to focus on eliminating and reducing, as well as raising and creating while unlocking a new blue ocean.
So what does 'E', 'R', 'R', 'C' stands for?
Eliminate (E)
Factors that have been competitive in the industry for a long time but people take for granted should be eliminated because they no longer add value.
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
Reduction (R)
The factors that should be reduced are far below industry standards because they bring high costs, but provide little competitive advantage or profit.
Question: Which factors should be reduced well below the industry standard?
· Factors which are pushed too hard to stay competitive but yield little or no gain over the competition
· High development costs but little or no profit
Raise (R)
The factors that should be improved should be much higher than industry standards to increase the value of existing customers.
Question: which factors should be raised well above the industry standard?
· Eliminate compromises your industry forces consumers to make
Create (C)
Create factors that can attract new customers that the industry has never provided before.
Question: 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
ERRC Template
Here is an ERRC template created with Visual Paradigm's online strategic analysis tool. You can customize this template by modifying the text, color and font, and use it in your presentations and reports.
