Design thinking and Blue Ocean Strategy

Accounting Ahead | Original study resource | accountingahead.com.au

Design thinking and Blue Ocean Strategy

MODULE 4 | 4.5.1 | STUDENT COMPANION

Design thinking puts people at the centre of innovation, bringing together what people need, what

technology makes possible and what makes sense for the business. It starts with empathy, is

collaborative and iterative, and alternates between divergent thinking (opening up possibilities) and

convergent thinking (narrowing them down), so diverse teams with permission to experiment do it best.

Five stages of design thinking

1. Discovery

Research the

challenge; gather

inspiration

2. Interpretation

Share stories; find

meaning; frame the

opportunity

3. Ideation

Generate ideas, then

refine them

4.

Experimentation

Make prototypes;

seek feedback

5. Evolution

Track what was

learned; move

forward

Human-centred, collaborative and iterative: open up, then narrow down

Case note: GE Healthcare's 'Adventure Series'

Doug Dietz, an industrial designer at GE Healthcare, watched a frightened young girl being led towards one of

the scanners he had designed; many children had to be sedated because a scan only works if the patient lies

still. After training in design thinking at Stanford University's design school, he asked how a scan could feel to a

child. Working with children, parents and staff, his team turned scanner rooms into adventures, such as a pirate

ship or a jungle, with stories for staff to tell. The machine barely changed; the experience did. At the Children's

Hospital of Pittsburgh, sedation for children's CT scans fell from more than 80% to under 3% (results have varied

between hospitals).

Sources: GE Healthcare; Milwaukee Journal Sentinel, 2016; published design thinking case studies.

Another version of the process: four questions

Jeanne Liedtka and colleagues organise design thinking around four questions. Despite its creative reputation,

design thinking is a highly structured process.

Question What happens

What is? Research the current reality; turn insights into design criteria

What if? Generate ideas that challenge those criteria

What wows? Choose the most promising concepts; surface the assumptions behind them

What works? Test those assumptions with real customers until a concept proves itself

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Accounting Ahead | Original study resource | accountingahead.com.au

Cheap prototypes, staged money: three-dimensional printing can turn a design into a physical prototype in

hours. For CPAs, design thinking means funding a series of small experiments and releasing more money as

each key assumption is confirmed, rather than approving one large budget up front.

Red oceans and blue oceans (Kim and Mauborgne)

Red ocean Blue ocean

Rivals fight for customers in a crowded, familiar market A market space nobody else serves yet

The aim is to outperform competitors The aim is to make rivals irrelevant, for a while

Firms split up the demand that already exists New customers are drawn in who weren't buying before

Choose more value at a higher cost, or less value at a

lower cost

Raise value and cut cost at the same time (value

innovation)

A strategy canvas

Low

High

Price Shampoo and

shave

Massage and hot

towels

Appointments Time per visit Hygiene Convenient

locations

Wait-time signal

Traditional barbers QB House

Price is always the first factor; a new factor appears only on the new curve

The buyer utility map

Test every stage against every lever. Each empty cell is a question, such as: could buying be simpler, could

using it be more fun, could disposal be greener?

Six stages of the buyer's experience Six levers of utility

Purchase; delivery; use Customer productivity; simplicity; convenience

Supplements; maintenance; disposal Risk; fun and image; environmental friendliness

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Accounting Ahead | Original study resource | accountingahead.com.au

The four actions framework

Eliminate

The shampoo, the shave, the massage and hot towels, and

appointments

Reduce

The visit, to about ten minutes; and the price, to a fraction of

the traditional level

Raise

Hygiene: fresh disposable items and a vacuum hose instead

of washing. Convenience: shops in stations and busy centres

Create

Coloured lights outside each shop showing roughly how long

the wait will be

New value curve

The three tests: divergent, focused, and summed up as 'ten minutes for a thousand yen'

Case note: QB House

QB House, a Japanese barbershop chain that opened its first shop in 1996, faced an industry that competed on

long, relaxing visits with a shampoo, shave, hot towels and massage, often by appointment. It eliminated those

extras, reduced the visit to about ten minutes and the price to a fraction of the norm (1,000 yen at launch; 1,400

yen since February 2025), raised hygiene and convenience, and created signal lights showing the likely wait.

Busy workers who had never had time for a traditional barber suddenly had a reason to go. By June 2026 it had

about 612 shops in Japan and 155 overseas.

Sources: QB House (CUTBASE) company information, 2026; W. C. Kim and R. Mauborgne, Blue Ocean Strategy, 2005.

Three tests of a good Blue Ocean strategy

No blue ocean stays blue forever: successful moves attract imitators, so keep watching the value curve.

Test Question

Divergence Is the new value curve clearly different from the industry's?

Focus Does it concentrate on a few factors rather than everything?

Compelling tagline Can customers and staff grasp it instantly?

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Practice questions

MODULE 4 | 4.5.1 | TRY THESE BEFORE THE WORKED ANSWERS

Question 1 - Five stages

Activity in an imagined library redesign Stage

(a) Watching how teenagers use the library after school

(b) Interviewing parents about homework routines

(c) The team sharing stories and spotting that teens want to study together

(d) Reframing the challenge as 'how might we make this the best place to

study with friends?'

(e) Brainstorming sixty ideas

(f) Shortlisting three concepts

(g) A two-week pop-up study zone with movable furniture

(h) Collecting feedback cards and counting visitors

(i) Tracking use over a term, then rolling out to two branches

(j) Recording lessons for the next project

Question 2 - Four actions for a gym

Imagine a new gym for busy beginners. The industry competes on long contracts, large equipment floors,

personal trainers, pools and saunas, price, opening hours and group classes.

Action Your factors

Eliminate

Reduce

Raise

Create

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Question 3 - Test the strategy

Imagine an airline proposes a new 'premium economy plus' seat that offers slightly more legroom, slightly better

meals, slightly more baggage and slightly faster boarding than its rivals, at a slightly higher price. Test the

proposal against the three tests of a good Blue Ocean strategy, and suggest how it could be improved.

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Accounting Ahead | Original study resource | accountingahead.com.au

Worked answers

MODULE 4 | 4.5.1 | WORKED ANSWERS - ATTEMPT THE QUESTIONS FIRST

Question 1 - Library redesign

Stage Activities

Discovery (a), (b)

Interpretation (c), (d)

Ideation (e), (f)

Experimentation (g), (h)

Evolution (i), (j)

Question 2 - Gym for busy beginners (example)

Action Factors

Eliminate Lock-in contracts; pools and saunas

Reduce Size of the equipment floor; price

Raise Opening hours; beginner support and friendliness

Create Twenty-minute guided circuits; an app that tracks progress and books sessions

Question 3 - Premium economy plus

Divergent? No: the new curve sits just above rivals' on every factor. Focused? No: it improves everything a

little, which raises costs without standing out. Tagline? Hard to sum up: 'slightly better at everything' won't excite

anyone. Improvement: pick a few factors that matter to a target segment, such as business travellers on short

flights, and raise them sharply (fast boarding, a guaranteed quiet zone, flexible changes), while eliminating or

reducing others (meals, lounge access) to keep costs down.

GLOBAL STRATEGY AND LEADERSHIP | M4 | 4.5.1 | WORKED ANSWERS

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