Blue Ocean Strategy For Personal Finance

May 12 2008

Published by Ricky at 5:56 pm under My Profile, Strategy

The blue ocean strategy is more than just a fad. It’s influencing how businesses made their strategic planning for years to come. Its various strategic tools and models, such as the four actions framework, are extremely useful to create blue ocean strategy business.

The blue ocean strategy is not only applicable to businesses, but in other contexts as well, though we can’t apply everything directly in those settings. In particular, the four actions framework is useful in planning our own personal life.

Whether we like it or not, everyone of us is a Me Inc., and we are the CEO of our own life. We do have a mission to complete on this earth in this life. And to achieve this, we have been bestowed with resources such as time and money.

The four actions framework can be used to differentiate ourselves (or our business) from others yet at a lower cost. It asks four main questions - what to Eliminate, what to Reduce, what to Raise and what to Create (ERRC)? Let’s take an example how I might want to plan my expenses:

Eliminate - In recent years, I have developed a habit of eating out in expensive restaurants with others, that now I patronize these places even when eating alone! I don’t have to spend so much when eating by myself. I need to cut this expense completely!

Reduce - I need to reduce buying seemingly useful but actually unnecessary items such as books and magazines. I don’t have so much time to read all of them!

Raise - I should spend more on high-leverage expenses which give good returns in long term. For example, taking classes to educate myself in business, finance and technology can go a long way toward success in life.

Create - I may want to consider some investment instruments such as shares, which as a risk-averse person I never tried. Of course, getting educated first in these is essential to avoid losses.

I find it helpful to that many things in business and life can be applied through this ERRC model. Is there anything you want to get ERRC’d too?