The Four Actions Framework, also known as the ERRC Grid (Eliminate, Reduce, Raise, Create), is a strategic tool introduced by W. Chan Kim and Renée Mauborgne in their groundbreaking book “Blue Ocean Strategy“. This framework challenges us to rethink our product offerings by asking four critical questions:
- What factors should be eliminated?
- What factors should be reduced well below the industry’s standard?
- What factors should be raised well above the industry’s standard?
- What factors should be created that the industry has never offered?
These questions might seem simple at first glance, but their power lies in their ability to push us beyond conventional thinking and into new territories of innovation.
Why the Four Actions Framework Matters
In my years as a product manager, I’ve seen countless products fail because they were simply “me too” offerings – products that didn’t differentiate themselves from the competition. The Four Actions Framework provides a structured approach to breaking out of this trap.
By systematically examining what we can eliminate, reduce, raise, and create, we open up possibilities for true innovation. It’s not just about incremental improvements; it’s about reimagining our entire value proposition.
Breaking Down the Four Actions
Let’s explore each of the four actions and see how they can be applied in product management.
1. Eliminate
The first question we need to ask ourselves is: “Which of the factors that the industry takes for granted should be eliminated?”
This is often the most challenging action for product managers. We’re used to adding features, not taking them away. But elimination is crucial for two reasons:
- It forces us to confront our assumptions about what customers really value.
- It creates room for innovation by freeing up resources.
In my experience, the “eliminate” action often reveals features or processes that we’ve been holding onto out of habit or fear, rather than because they provide real value to our customers.
Example: When Apple introduced the iPhone, they eliminated the physical keyboard that was standard on smartphones at the time. This bold move allowed for a larger screen and paved the way for the touchscreen interface we now take for granted.
2. Reduce
The second question is: “Which factors should be reduced well below the industry’s standard?”
This action challenges us to look at features or attributes that we’ve been over-serving. Sometimes, in our quest to outdo the competition, we end up providing more than what customers actually need or are willing to pay for.
Reducing these over-served attributes can lead to cost savings, simpler products, and often, happier customers.
Example: Budget airlines like Southwest in the US or Ryanair in Europe reduced many traditional airline services (like assigned seating, free meals, and baggage allowance) to offer much lower prices. This strategy opened up air travel to a whole new segment of customers.
3. Raise
The third question asks: “Which factors should be raised well above the industry’s standard?”
This is where we look for opportunities to truly excel and differentiate ourselves. What aspects of our product or service could we improve to create significantly more value for our customers?
The “raise” action often involves investing more resources into areas that we believe will have the biggest impact on customer satisfaction and loyalty.
Example: When Netflix started, they raised the convenience factor of renting movies well above the industry standard by eliminating late fees and allowing customers to keep DVDs as long as they wanted. This move revolutionized the movie rental industry and laid the groundwork for their later transition to streaming.
4. Create
The final and perhaps most exciting question is: “Which factors should be created that the industry has never offered?”
This is where true blue ocean innovation happens. We’re not just improving on existing offerings; we’re creating entirely new sources of value for our customers.
The “create” action often involves the biggest risks, but also offers the potential for the biggest rewards.
Example: When Amazon introduced AWS (Amazon Web Services), they created a whole new category of service – cloud computing infrastructure. This move not only opened up a new revenue stream for Amazon but also revolutionized how businesses think about IT infrastructure.
Applying the Four Actions Framework in Product Management
Now that we’ve explored each of the four actions, let’s look at how we can apply this framework in our day-to-day work as product managers.
Step 1: Analyze Your Current Offering
Start by listing out all the factors that your product or service competes on. This could include features, pricing, customer service, user experience, etc. Be as comprehensive as possible.
Step 2: Apply the Four Actions
Now, go through each factor and ask yourself:
- Can we eliminate this?
- Should we reduce this below the industry standard?
- Do we need to raise this above the industry standard?
- Is there something new we should create?
Be ruthless in your analysis. Remember, the goal is to create a divergent value curve, not to make incremental improvements.
Step 3: Create Your ERRC Grid
Based on your analysis, create a grid with four quadrants:
- Eliminate
- Reduce
- Raise
- Create
Fill in each quadrant with the factors you’ve identified. This visual representation can be a powerful tool for communicating your strategy to stakeholders.
Step 4: Validate Your Ideas
The Four Actions Framework is a tool for generating ideas, not a substitute for customer validation. Once you’ve created your ERRC grid, it’s crucial to test your hypotheses with real customers.
Use techniques like customer interviews, surveys, and prototypes to validate whether your proposed changes truly create value for your target market.
Step 5: Implement and Iterate
Based on your validation results, start implementing the changes. Remember, this isn’t a one-time exercise. The market is constantly evolving, and so should your product strategy. Regularly revisit your ERRC grid and update it based on new market insights and customer feedback.
Real-World Examples of the Four Actions Framework
To better understand how the Four Actions Framework can be applied, let’s look at a couple of real-world examples.
Cirque du Soleil
Cirque du Soleil is often cited as a classic example of the Blue Ocean Strategy and the Four Actions Framework in action. Here’s how they applied the framework to reinvent the circus:
- Eliminate: Animal shows, star performers
- Reduce: Thrills and danger, humor
- Raise: Unique venue, artistic music and dance, multiple productions
- Create: Theme, refined environment, artistic music and dance
By eliminating traditional circus elements like animal shows and reducing the focus on star performers, Cirque du Soleil freed up resources to create a more theatrical, artistic experience. This allowed them to attract a whole new audience who were willing to pay premium prices for this unique form of entertainment.
Nintendo Wii
When Nintendo launched the Wii, they used a strategy that aligned closely with the Four Actions Framework:
- Eliminate: Cutting-edge graphics, complex game controllers
- Reduce: Game complexity, focus on hardcore gamers
- Raise: Ease of use, family-friendly content
- Create: Motion control, focus on physical activity
By eliminating the arms race for the most powerful graphics and reducing the focus on complex games for hardcore gamers, Nintendo was able to create a console that appealed to a much wider audience. The creation of the motion control system opened up entirely new ways of interacting with games, attracting people who had never considered themselves “gamers” before.
Common Pitfalls and How to Avoid Them
While the Four Actions Framework is a powerful tool, it’s not without its challenges. Here are some common pitfalls I’ve encountered and how to avoid them:
1. Focusing on Too Many Factors
It’s tempting to try to change everything at once, but this can lead to a lack of focus and diluted efforts. Instead, prioritize the factors that will have the biggest impact on your value proposition.
2. Ignoring Industry Constraints
While the framework encourages us to think outside the box, it’s important to be aware of regulatory, technological, or economic constraints that might limit what’s possible.
3. Neglecting Customer Needs
In our excitement to innovate, we might forget to consider whether our changes actually solve real customer problems. Always tie your actions back to customer needs and pain points.
4. Failing to Communicate the Strategy
The Four Actions Framework can lead to significant changes in your product strategy. Make sure you clearly communicate these changes to all stakeholders, including your team, executives, and customers.
5. Not Following Through
Creating an ERRC grid is just the first step. The real challenge lies in implementing these changes and staying committed to your new strategy, even when faced with resistance or setbacks.
Integrating the Four Actions Framework with Other Product Management Tools
The Four Actions Framework doesn’t exist in isolation. As product managers, we have a whole toolkit at our disposal. Here’s how you can integrate this framework with other common product management tools:
User Personas and Journey Maps
Use your user personas and journey maps to inform your Four Actions analysis. Where are the pain points in the current journey? Which persona is underserved by current offerings? These insights can guide your decisions about what to eliminate, reduce, raise, or create.
Jobs to be Done (JTBD)
The Jobs to be Done framework focuses on understanding the progress that customers are trying to make in their lives. Use JTBD insights to inform your Four Actions decisions. What “jobs” are currently underserved? Which ones are overserved?
OKRs (Objectives and Key Results)
Once you’ve created your ERRC grid, use OKRs to track the implementation of your new strategy. Set objectives for each of the four actions and define key results to measure your progress.
Agile and Scrum
The Four Actions Framework can inform your product backlog and sprint planning. Use your ERRC grid to prioritize features and guide your roadmap.
The Future of Product Management and the Four Actions Framework
As we look to the future, I believe the Four Actions Framework will become even more relevant. In a world of rapid technological change and increasing customer expectations, the ability to rethink and reinvent our products continuously will be crucial.
Moreover, as we face global challenges like climate change and resource scarcity, the “eliminate” and “reduce” actions of the framework align well with the growing need for sustainable and responsible product development.
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Conclusion: Embracing the Four Actions Framework
The Four Actions Framework is more than just a strategy tool; it’s a mindset shift. It challenges us to question our assumptions, think beyond incremental improvements, and reimagine what’s possible.
As product managers, our job is not just to build products, but to create value. The Four Actions Framework gives us a powerful way to do that. It pushes us to eliminate the unnecessary, reduce the excessive, raise the exceptional, and create the innovative.
I encourage you to try applying this framework to your own products. You might be surprised at the insights and opportunities it uncovers. Remember, some of the most successful products in history came from asking these four simple questions:
What can we eliminate? What should we reduce? What do we need to raise? What can we create?
The answers to these questions could be the key to your next breakthrough innovation.
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