ELIMINATE-REDUCE-RAISE-CREATE (ERRC) GRID

The Eliminate-Reduce-Raise-Create (ERRC) Grid is an essential tool of blue ocean strategy developed by Chan Kim and Renée Mauborgne. It is a simple matrix-like tool that drives companies to focus simultaneously on eliminating and reducing, as well as raising and creating while unlocking a new blue ocean.

ELIMINATE

Which factors that the industry has long competed on should be eliminated ?

RAISE

Which factors should be raised well above the industry’s standard?

REDUCE

Which factors should be reduced well below the industry’s standard?

CREATE

Which factors should be created that the industry has never offered?

This analytic tool complements the Four Actions Framework. It pushes companies not only to ask the questions posed in the Four Actions Framework but also to act on all four to create a new value curve (or strategic profile), which is essential to unlocking a new blue ocean. The grid gives companies four immediate benefits:

It pushes them to simultaneously pursue differentiation and low cost to break the value-cost trade-off.
It immediately flags companies that are focused only on raising and creating, thereby lifting the cost structure and often over-engineering products and services – a common plight for many companies.
It is easily understood by managers at any level, creating a high degree of engagement in its application.
Because completing the grid is a challenging task, it drives companies to thoroughly scrutinize every factor the industry competes on, helping them discover the range of implicit assumptions they unconsciously make in competing.