| Blue Ocean, Red Ocean. Why all the fuss? And how | | | | Starbucks giving us coffee bars and the +$5 cup |
| do we look at strategy development from a Blue | | | | of joe to go |
| Ocean perspective? And why do we even want to? | | | | Cirque de Soleil with its sold out yet lion-less circus |
| This may be old news for some, but I was recently | | | | acts |
| asked about Blue Ocean Strategy, hence this article. | | | | Not to mention mutual funds, cell phones, discount retail, |
| There's nothing new to report here - just as the | | | | minivans, snow boards, home "video" and more. |
| concept wasn't new when it made the news when | | | | There are multiple benefits to having this "new mover |
| Blue Ocean Strategy: How to Create Uncontested | | | | advantage" (a.k.a. "first to market" advantage). Among |
| Market Space and Make Competition Irrelevant was | | | | them: |
| published in 2005. | | | | Higher margins in the early days; |
| W. Chan Kim and Renée Mauborgn, authors of the | | | | An opportunity to become the dominant player; |
| book, articulated something that good marketers have | | | | and |
| always known. | | | | The opportunity to set the standard (think iPod, |
| Specifically, that an excellent way for companies to | | | | iPhones, etc.). |
| realize strong growth and achieve above average | | | | The principle of looking for the sweet spot where your |
| profits is by carving out a new niche for themselves | | | | company's products and/ or services are truly |
| and creating demand in what may, for a while, be | | | | differentiated from those of anyone else doing |
| uncontested market space. | | | | business in the sector, is simply one of the key pillars |
| Kim and Mauborgn dubbed this Blue Ocean Strategy. | | | | for developing good business strategy. |
| Red Ocean is the term they associated, somewhat | | | | What are the other ones? |
| disparagingly, with the more traditional approach of | | | | From my perspective, there are 15 business strategy |
| competing head-to-head with direct and indirect | | | | pillars: |
| competitors for a larger share of a fixed size pie, (i.e. | | | | 1. Being consistent in what the brand represents - or |
| known customers in an existing industry). This | | | | making one major change to the brand's positioning, |
| traditional approach should not be dismissed out of | | | | and being prepared to stick with the new image (i.e. |
| hand, however, because many organizations achieve | | | | don't destroy your brand by repeatedly changing what |
| excellent results the Red Ocean way by offering a | | | | it represents). |
| product or service that has a higher perceived value | | | | 2. Acting with integrity and in keeping with a set of |
| than other market options, and marketing it creatively. | | | | established core values. |
| Red Ocean Strategy is viewed as a zero-sum game | | | | 3. Developing a long range vision based on customer |
| where one company's gain reflects another | | | | input, internal and macro-environment assessment and |
| company's loss. "Stealing market share" is a key | | | | trend analysis. |
| element of this approach - and in some cases is the | | | | 4. Being brutally honest about your company's |
| right way to approach the problem at hand. | | | | strengths and weaknesses. |
| There are times, however, when it's tough to steal | | | | 5. Actively formulating and exploring options that break |
| share and to realize sufficient gains to achieve double | | | | with industry tradition. (The Blue Ocean part) |
| digit increases. This is especially tough when... | | | | 6. Finding the sweet spot where your company's |
| the market is saturated, | | | | products and/ or services are truly differentiated from |
| consumers are bombarded with too many choices, | | | | those of anyone else doing business in the sector. |
| supply exceeds demand and prices plummet, etc. | | | | (More Blue Ocean) |
| In these circumstances, the only way to leap ahead of | | | | 7. Being willing to take calculated risks and go out on a |
| the pack is to challenge the underlying assumptions in | | | | limb. (Even more Blue Ocean). |
| the industry - and for senior executives to question the | | | | 8. Being open to the tried and true (sound like a |
| way their company competes in their vertical and how | | | | contradiction, but both approaches are needed to |
| it conducts business in general. Unfortunately, this | | | | develop sound strategy). |
| happens all too infrequently. | | | | 9. Getting input from experts outside your company |
| In this kind of tough market situation I advise clients to.... | | | | and industry who have faced similar challenges |
| Look beyond their current market boundaries - to | | | | (different industries tend to solve problems in different |
| see if there are complementary industries that could | | | | ways, and can provide valuable insight). |
| use their products or services (perhaps with a little | | | | 10. Getting input (and buy-in) from all key functional |
| tweaking) | | | | areas of the company as the strategy is developed. |
| To focus on ways their products can solve myriad | | | | 11. Ensuring that the methods/ path chosen to achieve |
| consumer problems (retail or corporate) - not just the | | | | the vision are sustainable over the long term. |
| ones of the current target audience | | | | 12. Modelling the 'best', 'worst' and 'most likely' scenarios |
| Determine if there are easily-incorporated changes | | | | - and making sure that each assumption in the model is |
| to the product that could stimulate demand in the | | | | based on research, not pure gut |
| existing market segments | | | | 13. Testing the bold idea before bringing it to market. |
| Pursue a reasonable cost strategy (it's necessary | | | | 14. Making sure all company personnel are brought up |
| to offer the perceived value - it is not necessary to be | | | | to speed on what is happening (good internal |
| the lowest cost provider). | | | | communications and training are essential here). |
| For many companies this will highlight ways of doing | | | | 15. Promoting the change(s) creatively in ways that |
| business, and identify previously ignored markets. | | | | have impact (impact and marketing vehicle choices). |
| Creating strategies to successfully sell to these | | | | Going back to the original question, I would have to say |
| segments will usually represent a paradigm shift... and | | | | that Blue Ocean strategy is not a new concept, but |
| this is really what the Blue Ocean approach is all about. | | | | the authors of the book labelled what has always |
| Over the past 100 years or so (as I said, the concept | | | | been a sound business practice, making it easier to a) |
| is not new), it was this kind of thinking that led to... | | | | explain the concept and b) get corporate buy-in. |
| Ford introducing the Model T in 1908 | | | | How do you go about finding your Blue Ocean/ Sweet |
| Sunflight Holidays giving Canadians cheap | | | | Spot will be the subject of another article. |
| Caribbean holidays with charted flights in the 1970s | | | | In the meantime, if you would like clarification on |
| Fred Smith founding FedEx in 1971 and brining the | | | | anything, please feel free to contact me: Otherwise, |
| world overnight delivery 2 years later | | | | remember to have fun and be prepared to "go out on |
| CNN bringing us in 1980 with 24/7 news in 1980 | | | | a limb because that is where the fruit is. |