Refreshing Your Customer: An Ocean of an Idea
Posted on April 20, 2007 by Vinnie Lacey.
Blue Ocean Strategy, as its title suggests, is a book of big ideas. In the business arena, the image of the blue ocean conveys a sense of endless possibility and profitability. And just like a real ocean, that same body of water becomes much more manageable in the larger context of the universe. In the business arena, this is the “strategy” part: the definable set of boundaries that makes creating an ocean an attainable goal.
Inherent to Blue Ocean Strategy is dissatisfaction with the status quo of business behavior in the marketplace. This is not the book of a comfortable middle manager; entrepreneurs, however, will feel right at home. The thesis is essentially this: In an increasingly competitive and homogenous-looking marketplace, companies wishing to hit a home run must abandon the traditional rat race. Instead, they should seek to “create uncontested market space and make the competition irrelevant.”
Authors W. Chan Kim and Renee Mauborgne root the blue ocean strategy in the concept of “value innovation”: that a company only truly creates a blue ocean when it pursues differentiation and low cost simultaneously. A company cannot embrace innovation for the sake of innovation, lest it find itself in a“bloody” red ocean with the competition—a zero-sum game of one-upmanship.
To back up their findings, Kim and Mauborgne took the strategic move as their unit of measurement, studying companies and their relevant business players in multiple industries from 1880 to 2000. The stories behind these real-life examples give legs to their findings and subsequent theories.
Three principles of the blue ocean strategy
The creation and implementation of the blue ocean strategy may at first appear a daunting task. It certainly requires turning a critical eye inward, challenging practices that an organization has always done and takes for granted.
For your convenience, I enumerated three principles of the blue ocean strategy—along with real-life examples—that I found the most fascinating. Hopefully they inspire you to create your own blue ocean of uncontested market space.
1. Simplify, simplify, simplify. As part of the strategy for creating a blue ocean, a company must not only look at what it can add to an industry, but also what it can subtract. In creating its approach a company must ask, “What factors can be reduced or eliminated from what the industry takes for granted?”
Case in point: Cirque du Soleil. This innovative entertainment hybrid not only offered a theatrical twist to the usual circus visit, it also cut down on the most draining and unattractive features of a typical circus. By eliminating animals (too expensive to maintain), star performers (too unfamiliar compared to movie stars) and expensive aisle concessions (too poorly perceived), Cirque du Soleil created a wholly different and efficient entertainment option that attracted customers in droves.
2. Find Non-customers. When a company looks to maximize the size of its blue ocean, it must venture outside of existing demand. This challenges the status quo of focusing on existing customers and driving for further segmentation among target audiences.
This is exactly what took place with Casella Wines’ [yellow tail] brand of wine. Casella examined why people chose not to drink wine (perception of pretension, complicated choices, price) and formulated a streamlined offering of two simple wines with a basic, hip branding and design. The focus wasn’t on capturing existing wine drinkers, but rather converting beer and liquor drinkers into Yellow Tail aficionados.
3. Get a Leader. “Tipping point” leadership—that is, the internal person or persons who can inspire fundamental changes on a mass level—drives a successful blue ocean strategy.
Take the case of New York City police commissioner Bill Bratton, who faced seemingly insurmountable odds against rising crime rates when he was appointed in the early 1990s. Bratton was able to recognize certain areas of “disproportionate influence” that were contributing to the bulk of the city’s problems.
Despite being trapped in a cash-strapped public sector, Bratton executed fundamental changes in these key areas. This required doing things very differently, calling into question some long-standing practices, and working under tight time constraints. But it’s hard to argue with success: New York became the safest large city in the US under his leadership. More importantly, he set into motion policies that continue to be used (and copied) in policing districts today.
Blue Ocean or puddle in disguise?
Ironically, what I found most attractive about Blue Ocean Strategy was also what I found most frustrating. While the book supposedly outlines a “new” approach to strategic thinking, I would hesitate to say it breaks new ground in that arena.
The book does offer a systematic way to think about the process of creating new, uncontested market space—but great companies have also been innovating around the underlying principles for years. And it is, of course, impossible for me to test how creating my own blue ocean from scratch would actually play out. The authors do not offer examples of blue ocean strategies sinking.
That may not, however, be the relevant lesson. As I said from the beginning, this is a book of big ideas. Big ideas are not always easily categorized. Nor are they inhibited by silly little things like budget numbers or consumer trends—or long explanations in books. The value of Blue Ocean may simply be the realization that one can look at an industry, and in turn its own company, in a very different light. Only you can determine what the spark of an idea is really worth. Cue the dramatic violins.
Perhaps the cleverest thing about Blue Ocean Strategy is that I walked away from the book inspired by the success stories. Pet concepts like “value innovation,” “visual strategy fair,” and “six paths framework” remained on the tip of my tongue. Suddenly I remembered that despite the hype, Starbucks still sells coffee, Borders sells books, and iTunes, music. Blue Ocean Strategy has sold over a million copies worldwide; yet hundreds, if not thousands, of newly published business books sit idle each year, never to see the light of a best seller list. And that’s the genius of creating the blue ocean of blue ocean strategies.
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April 20, 2007 in award winning newsletter, Award winning publications, Blogs, Brand enhancement, build credibility, Building B2B Relationships, Building Customer Community, Building Customer Intuition, business credibility, Business editorial, Business publications, Business relationships, E-Marketing, Email Marketing, Interactive Marketing, Marketing Communication, marketing solutions, mass email, money magazine, Newsletter ROI | Permalink
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