How can you use the Four Actions Framework to create a new market space?

1 What is the Four Actions Framework?

The Four Actions Framework is a strategic tool developed by W. Chan Kim and Renee Mauborgne, the authors of the best-selling book Blue Ocean Strategy. It helps you create a new value curve for your product or service by asking four questions: What can you eliminate? What can you reduce? What can you raise? What can you create? By applying these four actions to the factors that influence your industry, you can eliminate the trade-offs between value and cost, and create a blue ocean of uncontested market space.

2 How to apply the Four Actions Framework?

To apply the Four Actions Framework, you must first identify the key factors that shape your industry and determine how your competitors compete on them. Utilizing a tool like the Strategy Canvas can help you visualize the current value curve of your industry and compare it to others. Afterward, you need to apply the four actions to each factor and examine how it can alter the value curve to create a new market space. For instance, you can eliminate factors that are no longer valued by customers or create unnecessary costs, such as Netflix eliminating physical stores, late fees, and limited selection in the video rental industry. You can also reduce factors that are overdesigned or overdelivered in an industry and lower costs without compromising value (e.g., IKEA reducing furniture materials quality and offering self-assembly/self-service options). Additionally, you can raise factors that are underdelivered or undervalued in an industry and increase value without increasing costs (e.g., Starbucks enhancing coffee quality and creating a unique ambience/experience). Lastly, you can create factors that are new or different in an industry and generate new demand or attract customers (e.g., Cirque du Soleil creating a form of entertainment combining circus and theater elements).

3 What are the benefits of the Four Actions Framework?

The Four Actions Framework can help you reap numerous rewards for your business, such as differentiating yourself from competitors, improving customer satisfaction and loyalty, reducing costs and increasing profitability, expanding your market potential, and innovating and disrupting your industry. By avoiding competing on price alone, offering a superior value proposition, eliminating or reducing unnecessary factors, creating or raising factors that appeal to new customers, and challenging conventional assumptions and practices, you can maximize the advantages of the Four Actions Framework.

4 What are the challenges of the Four Actions Framework?

The Four Actions Framework is not a guaranteed success, and requires creativity, research, and experimentation to apply it effectively. Achieving the right balance between the four actions is one of the challenges you may face, as well as understanding your customers' needs and preferences, and evaluating the feasibility and viability of your new value curve. Additionally, you must communicate and convince stakeholders, partners, and customers about your new value proposition, while also adapting to changes in the market conditions and customer expectations.

5 How to use the Four Actions Framework effectively?

To use the Four Actions Framework effectively, you need to begin with a clear vision and purpose for your business and market space. Gather data and insights from multiple sources to gain a better understanding of your industry and customers. Involve your team and stakeholders in the brainstorming and decision-making process. Experiment with ideas and prototypes before launching them. Monitor and measure your results, feedback, and adjust your strategy as needed. The Four Actions Framework is a valuable tool to create a new market space and gain a competitive advantage. By applying it to your industry and product or service, you can discover new ways to deliver value to customers and differentiate yourself from rivals. However, understand the challenges that come with using this tool, be ready to adapt and evolve your strategy as needed.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?