The four-action framework points out four key actions to take into account to refine existing products. Those are: raise, reduce, eliminate, and create. To plot the available consumer products in a marketplace against the company’s ability to provide value and thus be competitive over time.
Four Actions Framework In A Nutshell
The Four Actions Framework can be employed to alter the product in a given market.
Kim and Mauborgne, authors of Blue Ocean Strategy advocate the Blue Ocean Strategy, the framework can also be used to refine existing products.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
In pursuit of these goals, there are four points that all businesses must consider:
Raise
Can any existing product attributes (competitive factors) be enhanced in such a way that they provide extra consumer value? In other words, which attributes can set new industry standards or trends?
Reduce
Conversely, are there any such elements that can be reduced or eliminated if their relative value or cost does not justify the means? Perhaps some factors erode profits or reduce competitive advantage?
Eliminate
This means removing factors that customers pay for as part of a status quo that industry players take advantage of.
In the wine industry, the aging qualities of wine and the complex terms used to describe wine are promoted to add value to the finished product.
But what do these somewhat pretentious and superfluous terms mean to the average consumer?
Better value-adding, competitive factors may include wine club discounts or guided tours of the winemaking process.
Create
Is there an opportunity to bring something novel to the market that solves a consumer problem in a more effective way than a competitor offering?
Instead of creating complex wines with complicated descriptions, a winery could produce a wine that was fun, unpretentious, and easy to drink at an attractive price point.
Four actions framework examples
ING Savings Maximiser Four Actions Framework Example
ING is a global financial institution that started offering consumer bank accounts with interest rates that were superior to competitor rates.
This was enabled by a low-cost, direct-to-consumer business model with no branches or ATM networks to maintain.
There are also no account-keeping fees of any kind provided the user deposits a certain amount of money into the account each month.
The ING Savings Maximiser bank account is a market leader for those who desire streamlined, fee-free banking with a worthwhile interest rate. But can it be refined further? Let’s take a look:
Raise
If we refer to the name of the product, it is obvious that the primary focus of ING is to maximize the interest rate it can offer customers. This has become more difficult in the current economic climate with rates at historic lows.
Reduce
There are not many elements ING can reduce as it already has a focus on product simplicity.
However, the lack of physical branches – particularly for older consumers – may reduce its competitive advantage.
Eliminate
While ING has a low-cost businessmodel, it could have decided to charge users withdrawal, monthly, or ATM fees to boost profits.
These fees have become very much the status quo for consumers who bank with traditional financial institutions.
Create
To boost competitiveness and help consumers become disciplined savers, the company added an automated saving feature where a portion of one’s income is directed to a dedicated savings account.
NintendoFour Actions Framework Example
Nintendo struggled for many years in the 1990s to compete with better performing and more technologically advanced gaming products from Microsoft and Sony.
As a result, the company lost significant market share and ultimately realized that it needed to act to reverse its fortunes.
In 2006, it launched the Wii which redefined the prevailing logic of the market and captured consumer segments that were previously neglected.
How did this play out?
Raise
The Wii will be remembered as the product that fostered social gaming and increased interactivity.
This was achieved by releasing sports and fitness games and developing innovative accessories such as the Wii Motion Plus Controller, Dance Dance Revolution Pad, and Mario Kart Wii Wheel.
The motion controllers in particular were revolutionary as they allowed people to play games that had been almost impossible to replicate on a console.
Reduce
Nintendo opted to avoid working with third-party game developers because it tended to be a difficult relationship where the costs did not justify the results.
Instead, it focused on developing games itself while Sony and Microsoft continued to rely on third-party developer powerhouses.
Eliminate
Nintendo eliminated superfluous features from their previous consoles that were not related to gaming, such as DVD and Blu-ray integration and a hard disk drive.
Create
A natural consequence of Nintendo’s social and interactive games was inclusivity.
As we touched on earlier, the Wii appealed to an extensive but neglected audience of consumers such as families, children, and more casual gamers who were not as hardcore as the gamers Microsoft and Sony were targeting.
To date, the Wii console has over 1500 games that appeal to all ages, abilities, and interests and most do not require any experience at all.
The ADKAR model is a management tool designed to assist employees and businesses in transitioning through organizational change. To maximize the chances of employees embracing change, the ADKAR model was developed by author and engineer Jeff Hiatt in 2003. The model seeks to guide people through the change process and importantly, ensure that people do not revert to habitual ways of operating after some time has passed.
You can use the Ansoff Matrix as a strategic framework to understand what growthstrategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growthstrategy can be derived from whether the market is new or existing, and whether the product is new or existing.
The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.
The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is valueinnovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio managementmodel. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.
The McKinsey 7-S Model was developed in the late 1970s by Robert Waterman and Thomas Peters, who were consultants at McKinsey & Company. Waterman and Peters created seven key internal elements that inform a business of how well positioned it is to achieve its goals, based on three hard elements and four soft elements.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
The McKinsey Horizon Model helps a business focus on innovation and growth. The model is a strategy framework divided into three broad categories, otherwise known as horizons. Thus, the framework is sometimes referred to as McKinsey’s Three Horizons of Growth.
Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces.
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
In his 1985 book Competitive Advantage, Porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. As a result, he asserts that value chain analysis is directly linked to competitive advantage. Porter’s Value Chain Model is a strategic management tool developed by Harvard Business School professor Michael Porter. The tool analyses a company’s value chain – defined as the combination of processes that the company uses to make money.
Porter’s Diamond Model is a diamond-shaped framework that explains why specific industries in a nation become internationally competitive while those in other nations do not. The model was first published in Michael Porter’s 1990 book The Competitive Advantage of Nations. This framework looks at the firm strategy, structure/rivalry, factor conditions, demand conditions, related and supporting industries.
A SWOT Analysis is a framework used for evaluating the business‘s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
