From Blue Ocean Strategy
by W. Chan Kim and Renée Maubourgne (256 pp)
When considering bringing a new business model to market, many leaders strive to anticipate how it will impact the competition. It’s a fundamental business perspective. Yet there’s another way to look at this scenario: from the customer’s eyes. And with that exercise, the process would entail gauging what needs and desires does this initiative fill that are not already filled for the customer. If the answer comes out that it represents a entirely new field of offering, delivering real value, untapped by the competition, then you are in a ‘Blue Ocean’ opportunity.
The challenge then is to translate that opportunity into tangible success. And because the road there has not been mapped by other competition, a form of dynamic trailblazing is required. There are, however, core strategies to aid in this effort. The authors of widely popular Blue Ocean Strategy studied successful business ventures that navigated the wide open expanse of this blue ocean, and they have shared a series of case studies on who they were, and how they did it.
From there, they boiled down essential guidelines that all organizations should align with if their journey is to be a successful one. They are:
by W. Chan Kim and Renée Maubourgne (256 pp)
When considering bringing a new business model to market, many leaders strive to anticipate how it will impact the competition. It’s a fundamental business perspective. Yet there’s another way to look at this scenario: from the customer’s eyes. And with that exercise, the process would entail gauging what needs and desires does this initiative fill that are not already filled for the customer. If the answer comes out that it represents a entirely new field of offering, delivering real value, untapped by the competition, then you are in a ‘Blue Ocean’ opportunity.
The challenge then is to translate that opportunity into tangible success. And because the road there has not been mapped by other competition, a form of dynamic trailblazing is required. There are, however, core strategies to aid in this effort. The authors of widely popular Blue Ocean Strategy studied successful business ventures that navigated the wide open expanse of this blue ocean, and they have shared a series of case studies on who they were, and how they did it.
From there, they boiled down essential guidelines that all organizations should align with if their journey is to be a successful one. They are:
- Reconstruct Market Boundaries – The assumptions of your industry and business model should be open to rigorous challenge. It begins with an examination of the key competitive drivers such as customer preferences, product quality and price to develop a ‘strategy canvas.’ Explore what industry and market standards are subject to drastic change and what to omit, minimize, elevate or rebuild. Red ocean strategies are defined by finite markets. Study the competition for their limitations and with that identify your own strengths and opportunities.
- Focus on the Big Picture, Not the Numbers – Keep an eye on the customer preferences, what’s valuable to them and the quality of products or solutions you can provide in the long-term. Short-term concerns of cost and immediate ROI can inhibit or stifle the development of a blue ocean venture with conventional perspectives preoccupied by the traditional bottom line. Also keep an eye on the competition for moves that signal their own strategic moves, and why they are doing them.
- Reach Beyond Existing Demand – Focus on potential future customers is at the heart of this concept. Shaping new offerings and sizing them with the right pricing, and getting the simple message out that resonates the value statement are part of successful launching of a blue oceans initiative. Yellow Tail wines chose to brand their wine as fun, breaking all the existing marketing perspectives for selling wine. They rejected the elitist appeal of selling a complex taste, and instead made their wine fruiter and sweeter, and appealed to a younger demographic. They created a new market space with this approach.
- Get the Strategic Sequence Right – ‘Value innovation’ should be at the heart of the new offering. Just because it might represent a technology innovation does not guarantee it has value, especially if customers have no use for it. Maintaining a perspective on the factors that affect a customer’s purchase are critical, and they are centered around the ‘exceptional utility’, the fair price for a large audience and the ability to produce the offering at a manageable cost to earn a profit. In addition, study of any impediments that might discourage the market from accepting the product must be included in an offering’s development.
- Overcome Key Organizational Hurdles – A successful launch of a blue ocean initiative requires all groups within an organization to recognize the benefit of the action, and to support it. Resistance or lack of commitment from any group within an organization can hobble the progress, in effect being the weak link in a chain. Timing is another consideration that needs to be recognized. There are certain initiatives that when activated at the right time have a disproportionate influence on a positive outcome. As they say, ‘timing is everything.’
- Build Execution into Strategy – Engagement, explanation and expectation are core process elements of a successful blue ocean strategy. This involves creating trust and commitment among all participants in the initiative. This is critical to assure all teams are galvanized to face the uncertainty and risk that can accompany this kind of action, and help assure cohesive cooperation through the challenges of the initiative.
“The strategic profile
with high blue ocean potential
has three complementary qualities:
focus, divergence
and a compelling tagline.”
with high blue ocean potential
has three complementary qualities:
focus, divergence
and a compelling tagline.”