errc-grid

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.