Creating Blue Oceans

Defying Conventional Wisdom: The common thread of greatness

Companies today, facing an environment of great uncertainty, need to embrace the idea of challenging traditional industry assumptions.  This perspective of defying conventional wisdom goes hand-in-hand with the process of Blue Ocean Strategy, which is a systematic approach to turning unconventional ideas into successful strategies.  

The importance of embracing the perspective of defying conventional wisdom was noted recently in an interview given by Steve Forbes, editor of Forbes magazine, to the Tampa Times.  The inspiration for Forbes’ insight came a few years ago when he was browsing in a Florida bookstore and picked up a copy of Hannibal Crosses the Alps by Eckerd College classics professor John Prevas. From the Times interview:

As he reviewed the book for his magazine, Forbes was struck by two things: that the elements of successful leadership have not changed in 2,000 years and that anyone who accomplishes something great or unique, whether in business or politics, often does so by defying conventional wisdom.

Are you continuously searching for a different angle and fresh perspective?  For inspiration, you can see more of our ideas on Defying Conventional Wisdom.

[Image via Dai Oni.]

South Korean government announces exploration of serious ‘blue ocean’ games

“The overriding focus of strategic thinking has been on competition-based red ocean strategies …. To focus on the red ocean is therefore to accept the key constraining factors … and to deny the distinctive strength of the business world:  the capacity to create new marketspace that is uncontested” (From pages 6 - 7 of Blue Ocean Strategy, co-authored by Professor W. Chan Kim and Professor Renée Mauborgne).

Recently the South Korean Ministry of Culture, Sports and Tourism revealed plans to inject  USD 64 million into the serious games market, which Minister Yu In-Chon refers to as an “emerging blue ocean.”  In fact, the blue ocean is so vast that according to the Korea IT Times the ministry's goal is to grow this marketspace to a value of USD 400 million by 2012.

From gameindustry.biz:

The functional game market is at an early stage, but the market is an emerging blue ocean.  The government is going to give support to prompt private investment in that field,” said minister Yu In-Chon.

As you might have guessed, “serious” games are those which are developed for a primary purpose other than pure entertainment.  While the Korean government has yet to make a specific announcement about gaming applications, they are likely to include medical simulations, educational titles and military simulations.

[Image via getCHU.]

A Blue Ocean revolution in finance

Challenging an industry’s conventional wisdom about which buyer group to target can lead to the discovery of new blue oceans. By looking across buyer groups, companies can gain new insights into how to redesign their value curves to focus on a previously overlooked set of buyers (Blue Ocean Strategy, page 61).

We recently received an article contribution entitled "Islamic Finance in the Blue Ocean," which describes the need not only for change and reform in finance, but to address the banking needs of a previously overlooked set of buyers.  That set of buyers is, in fact, a rather large one — potentially consisting of the entire global Islamic population. 

As Ng Boon Ka writes:

Blue Ocean Strategy advocates a better strategy by exploring “blue oceans,” or untapped and untargeted markets that hold tremendous growth potential — rather than going against rivals for a share of existing markets.

The development of BOS revolves around preference for risk minimization by reconstructing market boundaries; focusing on the big picture, not numbers; reaching beyond existing demand; getting the right strategic sequences, overcoming organizational hurdles and embedding execution into strategy.

The present economic crisis sparks “creative destruction” whereby “out of destruction a new spirit of creativity arises” for Islamic finance to be the agent of change.

In fact, the revolution is likely to happen sooner than anticipated, with the recent announcement by Shaikh Saleh Kamel, chairman of Al Baraka Banking Group, of the imminent launch of a new mega Islamic Bank.

Download the entire article Islamic Finance in the Blue Ocean, by Ng Boon Ka, Oxford law graduate and PhD candidate at Centre for Education on Islamic Finance, INCEIF, here.

[Image via Reuters.]

Global Crisis – The Comic Angle: Remain afloat till hard times pass

No matter where one turns these days, it seems nearly impossible to escape the news of the latest company or industry to unravel.  So to challenge the status quo of doom and gloom, and to inject a layer of much needed levity, our 'Global Crisis — The Comic Angle' series presents satirical articles of different industries during the crisis.  Today we showcase an article poking fun at the strategy of demanding bailouts to combat the current crisis, which encapsulates typical Red Ocean thinking in this quote: “Our hope is to remain afloat as an industry until these hard times pass.”

From Recoil Magazine:

Washington, D.C. – Citing the nation’s poor economy and a major downturn in the Grand Openings sector, CEOs of the giant ceremonial scissors industry went before Congress Tuesday, asking the U.S. government for bailout funds to keep their businesses alive during the current slowdown.

CEOs from the four largest giant ceremonial scissors makers laid out a plan that would call for $13 billion to fund job-creating activities like grand re-openings for more than 4,000 grocery stores across the nation, a redeemable voucher program to encourage consumers to buy American-made ceremonial shears, and a government buyback program that would guarantee higher aftermarket values for giant ceremonial scissors purchased within the next year.

“Our hope is to remain afloat as an industry until these hard times pass,” said Frank Melman, CEO of Festive Cuts, a giant ceremonial scissors manufacturer that produced its first pair of massive scissors in 1922. “We’ve tried everything we can to curb the effects of this recession, but in order to keep our employees working and to keep America opening stores and breaking ground in our time-honored grand fashion, we need an investment from our fellow citizens and leaders.”

[Image via The Pitch.]

The Small College from Kentucky that outshines Harvard

According to a survey by the US Department of Education in 2006, nearly two of every three undergraduate students in the USA are going into debt to go to college, owing an average of more than US$19,000.  And this figure speaks only about the segment of students who qualify for financial aide.  What about those who aren’t quite as lucky, don’t they deserve a chance at higher education as well?

Enter Berea College, which is defying conventional wisdom in the education sector.  The school’s secret?  Free tuition.  The college’s unique approach opens up education to a larger pool of quality students, decreases the overall cost per student (by having them work), and gives them a high quality education — all Blue Ocean Strategy themes.

From Time:

At Berea, which was founded in 1855 as the first integrated college in the South, all 1,530 students work at least 10 hours a week in a campus or service job, earning US$ 3.80 an hour and four years of free tuition. Eighty percent of the school's operating costs are funded by its endowment and the rest comes from donations, a tough combination these days: the school announced on Friday that it would lay off 30 employees, or 5% of the staff. Berea did not, however, back off from its commitment to offering a free education, and this year, not surprisingly, as applications cratered at some expensive schools, Berea notched a 15% increase. And more of the students applying were of a higher academic caliber. The number who received the school's top "four-star" academic rating jumped 10%, raising the average GPA of admitted students to 3.48. All of which might be expected after an October survey from MeritAid.com found that 57% of high school seniors were considering a less prestigious school for financial reasons. Berea is used to getting high-quality students who say affordability is a major factor, says Joe Bagnoli, associate provost for enrollment. "This year, there were just more of them."

What the school didn't expect, however, was to hang on to so many of those top students....

[Image via Rosa Say.]

Blue Ocean Strategy: Go where they’re not

We recently came across a thought-provoking article by business author Scott Eblin, in which he discusses how ‘underdogs’ have been winning at a much higher rate over the past 100 years.  Why?   Because they better understood their weaknesses and adopted strategies against their much larger and better equipped opponents.  Creating a ‘blue ocean’ is a prime example of this approach.  As such, we second Eblin’s suggestion that as we move through the downturn and into recovery, perhaps business and government leaders need to adopt the mindset that we are all ‘underdogs.’ 

From Business Management Daily:

Go Where They’re Not:  In their book, Blue Ocean Strategy, Chan Kim and Renee Mauborgne offer an underdog’s handbook for succeeding by going where the competition isn’t.  Rather than competing in the red ocean (think of sharks fighting for the same food), they talk about creating blue ocean opportunities.  Take online music as an example.  It wasn’t long ago that the Recording Industry Association of America was filing law suits against 15 year olds for downloading music from free file sharing sites.  Enter Steve Jobs and Apple who said, “How about if we create a service where you can download all the songs you want for 99 cents each?”  Five billion downloaded songs later, Apple’s changed an industry and created two “must have” devices (iPod and iPhone) that have fed off the iTunes model.

[Image © CreatingBlueOceans.com ]

Blue Ocean Strategy: Key to preparing for an abnormal recovery

In light of the lingering global economic downturn, we continue to receive inquiries from around the world 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, yet another recent article along this same theme discusses “3 Ways To Prepare For An Abnormal Recovery,” and advocates that companies “Use the ‘Blue Ocean Strategy’ to achieve value innovation and more favorable economics in new and existing markets.

From MediaPost:

The value that is vaporizing in one business can be created anew in another. Capitalize on the new paradigms of a digital interactive age by embracing socialization, personalization, monetization and other means to a profitable end. Wean off of traditional, legacy structure and assets and embrace virtual, interactive solutions. Use the "Blue Ocean Strategy" to achieve value innovation and more favorable economics in new and existing markets. It is mandatory to take some measured risk with what you know and can control.

Deep cost cuts that sacrifice talent and intelligence have become a damaging, counterproductive reflex to a situation that is as much about transformation as recession. These times call for shifting -- not eliminating -- spending, and forging new game plans to capitalize on tech advances. Consumers' digital adoption continues full steam ahead, even in economic tough times. Translate everything you can be and do to smaller screens, mobile devices and interactive exchanges with key constituents. Reinvent yourself. It beats sitting on your hands.

[Image © CreatingBlueOceans.com ]

Global Crisis – The Comic Angle: Pushpin Industry

No matter where one turns these days, it seems nearly impossible to escape the news of the latest company or industry to unravel.  So to challenge the status quo of doom and gloom, and to inject a layer of much needed levity, our 'Global Crisis — The Comic Angle' series presents satirical articles of different industries during the crisis. 

“Pushpin Industry Thriving In Recession,” from The Onion: 

Analysts agree that the industry is experiencing a growth not seen since 1983, as consumers who once thought nothing of spending $30 or $40 on an impulse item, such as DVDs or an MP3 player, have found themselves with less disposable income. With an average price point of 62 cents for a card of 60, pushpins—or "thumbtacks," as they are sometimes known—provide an attractive alternative to the average consumer.

"This is a great time to be in pushpins," economist Brad DeLong said. "In a soft economy, people turn to family for support, and they want pictures of their loved ones in a place where they can see them, only they can't afford to have those photos professionally framed. That makes the pushpin a very hot commodity."

[Image via The Onion.]

The Perfect Calm Series: China Set to Corner Electric Car Market

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:  China Set to Corner Electric Car Market .

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 WorldChanging .]