Creating Blue Oceans

The Perfect Calm Series: Google.org to track outbreaks of flu

One of the most exciting spheres of application for Blue Ocean Strategy is the realm of Social Capitalism. This explosive market space is at the intersection of successful business and lasting social impact. Traditionally these two spheres were considered separate, but the two can be pursued simultaneously via Blue Ocean Strategy. Periodically, we feature stories which illustrate stimulating ventures, ideas and concepts targeting this very market space.

This week, we select the story:  Google.org to track outbreaks of flu .

Do you know of other companies, organizations or business visionaries sailing along the intersection of good business and social good? Share your ideas with the Creating Blue Oceans Community.

[Image via Softpedia.com]

The cellphone’s hit list: Is your industry next?

As Blue Ocean Strategy shows us, companies must base strategy on making the competition irrelevant, rather than trying to beat it.  A recent Wired article entitled ‘Five Gadgets That Were Killed by the Cellphone,’ and a follow-up story entitled 'Seven (More) Gadgets Killed by the Cellphone,' help visualize this by recapping the tremendous market convergence and industry obsolescence that cell phones are driving.  With traditional industry barriers being shattered, their gadgets and tools are being made obsolete not by their competitors — but by outside players (cell phones).  Could your industry be next?

More from Wired:

Calling a cellphone a mere phone seems a little silly these days. The little pocket wonders now do so much they are really handheld computers. With extras. The process of mashing one or more gadgets together in the same box used to be called convergence, but that approach quietly died as the mobile phone ate up any and every rival device.

So successful has this been that whole product categories have had the life choked out of their twitching bodies by the phone. The following list is an obituary to five of them, plus a look at the cellphone's next victim.

[Image via Madeline68.]

Blue Ocean Strategy Wisdom: Six Paths Framework

What is the Six Paths Framework, and how can it be used to reconstruct market boundaries in order to break from competition and create Blue Oceans?  As part of our ongoing series, Blue Ocean Strategy Wisdom, we turn to pages 47 – 48 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne), for the origin of the Six Paths Framework:

We found clear patterns for creating blue oceans. Specifically, we found six basic approaches to remaking market boundaries. We call this the six paths framework. These paths have general applicability across industry sectors, and they lead companies into the corridor of commercially viable blue ocean ideas. None of these paths requires special vision or foresight about the future. All are based on looking at familiar data from a new perspective.

These paths challenge the six fundamental assumptions underlying many companies’ strategies. These six assumptions, on which most companies hypnotically build their strategies, keep companies trapped competing in red oceans. Specifically, companies tend to do the following:

• Define their industry similarly and focus on being the best within it

• Look at their industries through the lens of generally accepted strategic groups (such as luxury automobiles, economy cars, and family vehicles), and strive to stand out in the strategic group they play in

• Focus on the same buyer group, be it the purchaser (as in the office equipment industry), the user (as in the clothing industry), or the influencer (as in the pharmaceutical industry)

• Define the scope of the products and services offered by their industry similarly

• Accept their industry’s functional or emotional orientation

• Focus on the same point in time—and often on current competitive threats—in formulating strategy  

Related links:

Buy the Blue Ocean Strategy book

“Create Blue Oceans in Education” -- Malaysia Deputy Prime Minister

Last week, in a continued show of support, Malaysia Deputy Prime Minister Najib spoke about the need for creating Blue Oceans in the education system at a conference hosted by the Malaysian Productivity Corporation (MPC).  The MPC was established in 1962 as a joint project between the United Nations Special Fund and the Malaysia Federal Government.

As reported by the Malaysia Star: 

Speaking at the opening of a one-day seminar on "Creating A Blue Ocean in Education and Training Sectors" here today, Najib also called for "a paradigm shift" in the country's education system, starting from primary school.

Najib noted that the "blue ocean strategy" -- a business concept advocated in a book with the same title -- could also be adapted into the country's public and private universities in their quest for competitiveness in education and training.

The book "Blue Ocean Startegy", co-authored by Prof W. Chan Kim, promotes a systematic approach to creating uncontested market spaces that will make competition irrelevant.

And in 2007, Deputy Prime Minister Najib issued a similar call -- to entrepreneurs -- to make the shift from a culture of know-who to know-how in creating wealth and finding a niche for their businesses.  The approach he recommended:  Blue Ocean Strategy.

“Entrepreneurs should adopt the 'blue ocean' strategy by creating a new market space for themselves, making themselves different from everyone else and producing something that others did not have in order to stay put in the fast changing world,” he added. 

[Image via OllieD.]

From chipware to healthcare: Intel sets sail towards Blue Oceans

Last week, we published two well-received articles aimed at the current state of the global economy:  The overarching theme of our first article, ‘Blue Ocean Strategy:  Innovate out of the economic downturn,’ was that Blue Ocean Strategy is especially important and relevant during difficult times because it pursues increased customer value and cost savings simultaneously.  While the topic of the second article, ‘Will you be a lava casualty?’  was that all industries are subject to external trends, which companies  need to consider in their strategic thinking.

Inspired by these stories, readers asked for more examples of Blue Ocean Strategy-like thinking.  So today, we share the story of how one company, most well-known for its chipware, has tapped into Blue Ocean Strategy-like thinking in order to create an entirely new marketspace far from the one which it currently occupies -- this time in healthcare.

From the San Francisco Business Times: 

Semiconductor giant Intel Corp. took a bold step into health care Monday when it started selling a medical monitor for patients with chronic problems.

The product, named Health Guide, is a medical monitor with a web interface allowing doctors to manage a patient’s care from afar. The Food and Drug Administration approved the device in July.

Santa Clara-based Intel heralded the device as a welcome innovation in a society with a growing population of elderly people. It can be set to ring at particular times to remind patients to answer questions or hook themselves up to blood pressure cuffs or other sensors.

Companies like Advanced Warning Systems Inc. will start using the Intel device to watch heart patients for signs of trouble. In all, four businesses will run pilot programs using the product.

Intel has sought a license to put information from the Mayo Clinic into the system.
   
American Medical Alert Corp. will be the first company to use the devices.

[Image via Mr. Pixel.]

Aquariums get caught in Red Ocean

For many aquariums there’s a new battle brewing over who has the biggest fish -- or the biggest pond even -- as featured in a New York Times article which highlights the mounting competition between aquariums.  It seems that, ironically, even aquariums are getting caught in a bloody, Red Oceans.    

However, as Blue Ocean Strategy shows us, it is not about being best in every -- or even in any one particular criteria -- but rather having the best mix of criteria which leads to unoccupied market space and high growth.  For example, instead of placing all its focus on building the next biggest, greatest ride, Disney created its own Blue Ocean marketspace with the FastPass reservation system, which allowed park visitors to bypass long lines and wait times by enabling them to customize their itinerary in advance.

So aquariums take note:  Get out of the red, and into the blue ocean!

More from the New York Times article:

ATLANTA — Apparently eight million gallons of water and 80,000 animals were not enough for the Georgia Aquarium, which already claims to be the world’s largest. It did not have dolphins.

On Tuesday, aquarium officials announced plans for a $110 million expansion, increasing itself by 1.5 million gallons, most of which will be used for dolphin windows, dolphin shows and something called “dolphin encounters.”

But the expansion of the popular tourist attraction, which has been open for about two and a half years, will also allow Atlanta to cement its claim to the “world’s largest aquarium” moniker, a valuable bit of marketing braggadocio the Georgia Aquarium snatched from the John G. Shedd Aquarium in Chicago when it opened in November 2005.

[Image via The New York Times.]

Blue Ocean Strategy: Innovate out of the economic downturn

In light of the dire state of global economics, we have received a number of  inquiries asking how Blue Ocean Strategy can help.  While during the short-term the situation may seem gloomy, Blue Ocean Strategy is especially important and relevant during such times -- because it looks for sources of innovation and cost savings simultaneously. 

In fact, a recent BusinessWeek article along this same theme describes why companies and governments should “Innovate Out of the Economic Downturn”:

The Austrian economist Josef Schumpeter once declared that economic downturns are "a good cold shower for the economic system." Economic downturns can have positive effects; they force companies to increase their efficiency, cut waste, and strive to do things in smarter ways.

All companies have to cut costs, and deciding what should stay and what should go is the first challenge that faces them. One of the early victims of downsizing is often spending on innovation activities such as R&D, training, or education budgets. Long-term projects are shelved, hiring is frozen, and workers are made redundant. Worse, risk capital evaporates. Unfortunately, this is akin to patients deciding to reduce expenditure by not spending money on medication (as, indeed, has been reported recently).

During economic downturns, innovation is the single most important condition for transforming the crisis into an opportunity. And while many businesses simply won't be able to afford further investment in innovation, governments should recognize that innovation systems, with all their academic, industrial, and public components, are strategic national assets that need to be protected, just like the financial and housing sectors. Times such as these call for government intervention to prevent the contraction of the knowledge bases upon which economies are now more than ever dependent.

Continue to the full article here.

[Image via Quandarie.]

Nintendo’s Blue Ocean pay day – defying the global crisis

One of the most well-known examples of successful Blue Ocean Strategy application is gaming industry leader Nintendo.   And over the past  years as we’ve been monitoring their triumph,  we’ve brought our readers several updates -- from it’s gaming Revolution to the introduction of Wii and WiiFit.

Not surprisingly, according to recently-published financial results, Nintendo’s Blue Ocean Strategy is more than paying off as it eyes a record profit this fiscal year -- in spite of a strong yen and precarious state of global economics.   Now that’s defying conventional wisdom!

From the International Herald Tribune:

TOKYO: Japanese gamemaker Nintendo said Friday it was on course for record profits in the current fiscal year, bucking the deepening global financial crisis on surging demand for its blockbuster Wii home console.

Nintendo eyes a record net profit of 345 billion yen ($3.6 billion) in the year ending March 2009. The latest forecast was lowered 16 percent due to a stronger yen, but the new projection is still up 34 percent from the previous fiscal year.

Nintendo President Satoru Iwata said worldwide sales of the Wii and the DS portable machine remained brisk in the face of a global downturn, and U.S. and European retailers complained they could hardly keep up with demand.

"As far as the overseas market is concerned, I have not seen any signs of slowing demand for the Wii and the DS due to the financial crisis," Iwata told a news conference a day after the company released earnings results. "We can surely meet the sales target of the Wii."

"We keep hearing from European and American retailers saying, 'Don't you have more the Wii, the Wii Fit and the DS.' It's a welcoming headache for us," the president said.

[Image via ceoworld.biz .]