ERRC Grid

Overview

The ERRC Grid is the core action tool of Blue Ocean Strategy (Kim & Mauborgne). It forces explicit decisions across four quadrants — Eliminate, Reduce, Raise, Create — to simultaneously cut costs and lift buyer value, rather than trading one off against the other. The output is a new value curve that diverges from the industry standard instead of benchmarking against it.

┌─────────────────────────────┬─────────────────────────────┐
│         ELIMINATE           │           RAISE             │
│  Factors the industry takes │  Factors to push well above │
│  for granted that add cost  │  the industry standard      │
│  but deliver no real value  │                             │
├─────────────────────────────┼─────────────────────────────┤
│          REDUCE             │           CREATE            │
│  Factors to drop below the  │  Factors the industry has   │
│  industry standard without  │  never offered — new sources│
│  meaningfully hurting buyers│  of buyer value             │
└─────────────────────────────┴─────────────────────────────┘
         COST SIDE ◄──────────────────► VALUE SIDE

The Four Actions

Eliminate

Remove factors that incumbents compete on purely out of inertia. These are often costly to provide but buyers no longer value — or never valued in the first place. Elimination is the hardest action because it requires admitting that an industry practice is waste.

Reduce

Keep the factor but pull back to the minimum level that avoids buyer dissatisfaction. Use when a factor has real baseline value but the industry over-delivers on it, paying a cost premium buyers won't pay for in price.

Raise

Invest above the current industry ceiling on factors where buyers are underserved and willing to pay a premium. Raise only a small number of factors — raising everything is not a strategy, it is just spending more.

Create

Introduce factors that have never existed in this industry. These are the most defensible because competitors cannot copy what they have not yet conceived. Sources: look across substitute industries, buyer chains, or emotional vs functional appeal.

How to Apply

Step 1 — Map the current industry value curve

List 6–10 factors that incumbents compete on (price, service speed, product range, brand prestige, sales support, etc.). These become the horizontal axis. For each factor, score the typical incumbent High / Medium / Low. This is your baseline — the industry standard you are measuring against.

Step 2 — Identify your current position

If you already compete, score your own offering on the same factors. If you are entering, score your planned offering. Gaps between your curve and the industry curve reveal where you already differentiate and where you do not.

Step 3 — Fill each quadrant with specific factors

For every candidate factor, ask: Does this belong in Eliminate, Reduce, Raise, or Create? Push for at least two entries per quadrant. Vague entries ("improve quality") must be sharpened to a specific, measurable factor ("response time to support tickets").

Step 4 — Stress-test each entry

• Eliminate: Will removing this trigger meaningful buyer defection, or just internal discomfort?
• Reduce: What is the floor — the minimum level buyers will accept before they churn?
• Raise: Is there demonstrated willingness to pay for more of this, or are you guessing?
• Create: Does this factor address a genuine non-customer need, or is it a feature looking for a problem?

Step 5 — Draw the new value curve and check the three criteria

A valid Blue Ocean move satisfies all three: Focus (your new curve concentrates on a small number of raised/created factors), Divergence (your curve looks meaningfully different from the industry's), and Compelling tagline (you can describe your offering in one memorable sentence a non-customer would understand).

Output Format

╔══════════════════════════════════════════════════════════════════════════════════════════╗
║  ERRC GRID  ►  [company / product / initiative name]                                     ║
║  CONTEXT:      [market or industry being disrupted, one sentence]                        ║
╠══════════════════════════════════════════╦═══════════════════════════════════════════════╣
║  ✂  ELIMINATE                            ║  ▲  RAISE  (above what ceiling?)              ║
║  ────────────────────────────────────    ║  ───────────────────────────────────────────  ║
║  ● [Factor 1]                            ║  ● [Factor 1]: [current lvl] → [target lvl]  ║
║      [why industry inertia / no value]   ║      [buyer willingness-to-pay evidence]      ║
║  ● [Factor 2]                            ║  ● [Factor 2]: [current lvl] → [target lvl]  ║
║      [why industry inertia / no value]   ║      [buyer willingness-to-pay evidence]      ║
╠══════════════════════════════════════════╬═══════════════════════════════════════════════╣
║  ▼  REDUCE  (to what level?)             ║  ★  CREATE  (new to this industry)            ║
║  ────────────────────────────────────    ║  ───────────────────────────────────────────  ║
║  ● [Factor 1]: [current] → [target]      ║  ● [Factor 1]: [what it is]                  ║
║      [rationale for floor chosen]        ║      [underserved need / non-customer]        ║
║  ● [Factor 2]: [current] → [target]      ║  ● [Factor 2]: [what it is]                  ║
║      [rationale for floor chosen]        ║      [underserved need / non-customer]        ║
╠══════════════════════════════════════════╩═══════════════════════════════════════════════╣
║    ◄─── COST SIDE  (Eliminate + Reduce) ──────── VALUE SIDE  (Raise + Create) ───►      ║
╠══════════════════════════════════════════════════════════════════════════════════════════╣
║  NEW VALUE CURVE TAGLINE                                                                 ║
║  ❝  [one sentence a non-customer would immediately understand]  ❞                       ║
╠════════════════════════════╦═══════════════════════════╦═════════════════════════════════╣
║  FOCUS CHECK               ║  DIVERGENCE CHECK         ║  COST IMPACT                   ║
║  Curve concentrates on:    ║  Differs most vs industry  ║  Eliminate + Reduce free up:  ║
║  ● [dominant factor 1]     ║  ● [factor X]             ║  → [estimated cost delta]      ║
║  ● [dominant factor 2]     ║  ● [factor Y]             ║                                ║
║  ● [dominant factor 3]     ║  ● [factor Z]             ║  VALUE IMPACT                  ║
║                            ║                           ║  Raise + Create deliver:       ║
║                            ║                           ║  → [buyer problem now solved]  ║
╠════════════════════════════╩═══════════════════════════╩═════════════════════════════════╣
║  NEXT ACTION  ►  [who validates which Create factor, by when]                            ║
╚══════════════════════════════════════════════════════════════════════════════════════════╝

The top half of the grid is the 2x2 ERRC canvas — left column drives cost reduction, right column drives value creation. The bottom strip validates that the new curve satisfies Blue Ocean's three criteria (Focus, Divergence, Compelling tagline) and surfaces the single most important next validation step.

Common Mistakes

• Filling Raise with everything. If you raise six factors and eliminate nothing, you have produced an expensive me-too product, not a Blue Ocean. Force yourself to Eliminate at least two factors before accepting any Raise entry.
• Creating factors no one asked for. "Create" is not a wishlist of cool features. Every created factor must map to a named non-customer segment or an unmet job-to-be-done with evidence — not assumption.
• Competing on price as a Reduce. Reducing price is an outcome of cost savings from Eliminate and Reduce decisions, not a ERRC factor itself. Price belongs in the tagline, not the grid.
• Benchmarking against a single competitor instead of the industry standard. The grid compares you to the industry norm, not the current market leader. Using one rival as the baseline produces incremental positioning, not strategic divergence.
• Skipping non-customers. The most valuable Create factors come from people who refuse to buy from anyone in your industry today. If your analysis only interviewed existing customers, you missed the point of the framework.

Footer

After delivering the complete analysis, append this exact line at the very end, on its own line:

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