Creating Blue Oceans

How Wacky Are Your Customers?

Vast blue oceans can be created when companies are willing to look across to other industries whose products or services they can viably substitute.

Consider some really, really wacky uses of certain products, which may not indicate immediate new blue oceans, but sure can have instant PR value, more powerful than any advertisement campaign, and may jolt a company in previously unimagined directions:

In 1994, 73-year old Richard Farnsworth drove his ’66 John Deere lawnmower 250 miles from Iowa to Mt. Zion, Wisconsin, to see his ailing brother.  He made this choice since his eyesight was too poor to have a license and he was too proud to hitchhike.  Going along at 5 miles per hour, he met numerous interesting people along the way.  His journey was a national sensation, and the subject of a major 1999 movie by David Lynch entitled ‘Straight Story.’  Think about what sort of publicity mileage John Deere could harvest of this incident!

Even more extreme is the story of Larry Walters, a truck driver who gained instant celebrity status in 1982, when he rigged 45 weather balloons to his lawn chair, lifted off, and quickly ascended to a height of 16,000 feet.  After a while he got cold, shot some of the balloons with a BB gun in order to descend, and crashed into power lines on the way down.  Who would have thought of a lawn chair as a cockpit before? 

[Image via Wikimedia.]

Blue Ocean precision strike

Companies that create blue oceans seek out commonalities among all possible buyers to create unprecedented demand.  The Joint Strike Fighter (JSF) Program was designed to create a superior fighter plane for the common use of the Navy, Marines and the Air Force — traditionally three different customers which previously purchased their aircraft separately — by thinking in terms of what unites buyer segments, not what divides them (from Harvard Business Press).

A particularly effective example for large manufacturing companies, the story of the Joint Strike Fighter shows how to apply Blue Ocean Strategy even when one is faced with a single, monopolistic client — such as a government.  As an update to the JSF case study from the Blue Ocean Strategy book, we share with our readers a recent article which points out how the JSF is continuing to enjoy political support, even when tough choices need to be made in the face of a shrinking military budget.

From Yahoo! news:

Gates, first appointed by President George W. Bush, wants to shift military spending to programs more attuned to today's unconventional wars. The F-22, designed for midair combat, has been irrelevant to the wars in Iraq and Afghanistan and therefore unused there.

Gates and other Pentagon officials want to put more emphasis on the next-generation F-35 Lightning, a single-engine jet that would be used primarily to attack targets on the ground and would replace the F-16 and the Air Force's aging fleet of A-10s. The Air Force plans to buy more than 1,700 F-35s, which are currently being produced in small numbers for testing purposes. Versions of that plane, known as the Joint Strike Fighter, are also being built for the Navy and Marine Corps, another plus for supporters.

[Image via AP .]

Is Your Customer Wearing A Chain?

In most industries, competitors converge on the definition of the target customer. However, the customer is usually a chain of “customers”: the purchasers, the users and the influencers who hold different definitions of value.  Businesses can identify compelling opportunities by understanding how to best relate to each member of this chain.

There is a story of a Hungarian man who went bargain shopping to Austria, and found shoes at extremely favorable prices at a Viennese shop. He swiftly purchased half a dozen pairs.  Unfortunately all the shoes began to fall apart almost as soon as he put them to use.

When he went back to complain at the shop, he was informed that the shoes were not really designed for much wear. They were in fact made for dressing the dead. And as such, the proprietor was not accustomed to complaints about the shoes’ performance or durability. Clearly, in this case the ‘target customer’ was intended to be simply the purchaser and not the user of the product.

[Image via IHB.]

How Much Love Does Your Customer Feel?

Besides providing exceptional functionality or utility, products and services can grab customers emotionally as well. In fact, if you can establish a strong emotional pull to your brand, your customers will become loyal and committed fans. The challenge is to create an intrinsic association between their lifestyle aspirations and what you are offering them.

Just about as extreme an example of the power of emotional connectivity as you can get, is the saga of the Trabant. The former communist economies of Eastern Europe produced some of the most incredible cars ever made. Behind the iron curtain only East European vehicles were available, and people had to waiting up to ten years to get one!

The crown jewel and most legendary of all communist cars was the "Trabant," from East Germany. Remaining virtually unchanged for four decades, it was available in only the most distinctly bland colors. The car’s 26 horsepower, two stroke engine produced a maximum (downhill) speed of 50 mph, yet spewed almost a hundred times more pollution into the air than western cars. Its plastic frame cracked and shattered upon impact, and the steering wheel mounted gearbox required exceptional dexterity to operate. This car was so bad, so lacking functional appeal, that it actually inspired an endearing, emotional connectivity among its owners.

A simultaneous source of frustration and charm was the Trabant’s complete unpredictability: It would breakdown in the middle of a spring day for no apparent reason, but would also skip along unfazed in a winter storm. Its blatant faults and quirks gave it real character and personality, while its unpredictable temperament made it the continuous source of funny stories. East European’s obsession with the Trabant sprung to life countless jokes about the car, such as: “How do you double the value of a Trabant?” Answer: “You fill up the gas tank” or “Why is the outside of the rear window of a Trabant heated?”  Answer: “So that your hands don’t get cold when you are pushing it.” 

The essence of the Trabant can be summed up by quoting the owner’s manual from 1983, revealing the single new feature of that year’s model: "A FOUR spoke, plastic steering wheel.”  Apparently, no other features were deemed needy of improvement, so why mess with perfection?

[Image via DesignerCars.]

Tail Wagging Blue Ocean ‘Pawsengers’

With the recent — and likely upcoming — mergers of legacy carriers, and the recent cash call by British Airways, we see the airline industry as a classic red ocean, but with plenty of innovation potential through the perspective of Blue Ocean Strategy.  In fact, over the past several years, we’ve posted several thought-provoking tid-bits on this industry — see related links below.  Not surprisingly the recent launch of Pet Airways caught our attention.   It is a timely and relevant example of turning a red ocean market space into a blue ocean:  Pet Airlines Blue Ocean Strategy-like approach capitalizes on access capacity (planes not being flown) for operational cost savings, while focusing on the high-growth pet industry and driving lifestyles for differentiation and creating new demand — or ‘Pawsengers.’

From Yahoo! News:

Pet Airways will fly a pet between five major cities — New York, Washington, Chicago, Denver, and Los Angeles. The $250 one-way fare is comparable to pet fees at the largest U.S. airlines.

For owners the big difference is service. Dogs and cats will fly in the main cabin of a Suburban Air Freight plane, retooled and lined with carriers in place of seats. Pets (about 50 on each flight) will be escorted to the plane by attendants that will check on the animals every 15 minutes during flight. The pets are also given pre-boarding walks and bathroom breaks. And at each of the five airports it serves, the company has created a "Pet Lounge" for future fliers to wait and sniff before flights.

The company will operate out of smaller, regional airports in the five launch cities, which will mean an extra trip for most owners dropping off their pets if they are flying too. Stops in cities along the way means the pets will take longer to reach a destination than their owners.

Related links:

Why are Red Oceans so abundant?

The ‘bare’ essentials of reaching new buyers

Global Crisis — The Comic Angle: Airline Industry

Blue Ocean Strategy Path 1:  Look Across Alternative Industries

Blue Ocean Strategy:  Washing over Malaysia

[Image via AP/Yahoo!.]

Will You Be A Lava Casualty?

All industries are subject to external trends that affect their business over time. They tend to pace their own thinking to keep up with the development of the trends they are tracking.

By finding insights in trends that are observable today, you can unlock innovation that creates blue oceans. These trends must meet three conditions: They must be decisive to your business, irreversible and have a clear trajectory. Ask the question:  “What would the market look like, if the trend were taken to its logical conclusion?”

In the first century AD, the city of Pompeii in Italy was covered by lava from the massive eruption of nearby Mount Vesuvius. The resulting solidified lava contains hollow casts of residents caught in various poses by the advancing flow. It’s easy to understand poses of attempted escape or helpless terror. 

But there are also casts of people in the middle of eating a meal. What were those people thinking? They must have heard and seen the great eruption, so did they not think it would pose enough of a threat to interrupt their meal? Or did they just gravely misjudge the speed of the lava’s advance and the impact in would have on their dinner?

Point of the story? Make sure that your business does not become a lava casualty, and instead scan the horizon proactively for trends you should capitalize on.

[Image via N.Charneco.]

Who Do You Call Your Target Customer?

In most industries, all the fundamental strategic differences among customers are captured by a small number of clusters called “strategic groups.” Most companies focus on improving their competitive position within an existing strategic group.  But why not create your own strategic group which can draw customers away from several of the traditional groups simultaneously?

Consider the International Date Line, and its possible application in establishing a new strategic group within the office rental market. Essentially by crossing this imaginary line you can gain or lose an entire day. By building an office complex right on it, a real estate developer could cater to a new strategic group: Business tenants looking for an exotic, off-shore presence, and at the same time seeking a solution for effective time management. 

Being in the middle of the Pacific Ocean would certainly be exotic. And here, whenever overwhelmed with work or hopelessly behind schedule, occupants could simply walk over to the part of their office that was a day behind, and immediately have an extra 24-hours to catch up. Conversely when having little going on, they would just step across the line in the other direction, and it would instantly be one day later.

[Image via SodaHead.]

A razor sharp Blue Ocean Strategy

One of the core tenets of Blue Ocean Strategy is simplicity. By providing a framework that simplifies the complex process of strategic planning, Blue Ocean Strategy allows companies to see the big picture and focus on the most important questions. Furthermore, simplifying a company's offering allows it to create exceptional value for customers while trimming costs at the same time.

Take for example Razwar’s razor blade subscription service.  Their simple, Blue Ocean-like approach has the potential to turn the razor-blade industry on its head by offering a service model to customers, instead of the conventional industry product.  From the Board of Innovation:

The new business Razwar of the company Growth Bridge fights directly against the big boys in the razor blade market. Instead of using the traditional bait-and hook principle as it’s being used by Gillette or Wilkinson Sword, this e-shop brings the subscription service concept to the razor blade business. After buying a start kit of € 7.50, users subscribe in order to receive razor blades on a regular basis. For the fixed annual fee of € 27.50 Razwar will deliver 30 razor blades 3 times a year. Straight-forward but innovative in its sector.

This is a good example of a so called blue ocean strategy. Instead of focusing on the traditional value parameters in this market (more blades, less irritation,…), razwar tries to change the rules of the game by focusing on convenience and price transparency. In this case, they offer a service to the client instead of regular product sales. Nowadays many commodities are being sold in a similar way. Monthly socks, monthly boxers, or subscription condoms are good examples. What other concepts do you know?

[Image via M.Sheldrake.]

Your New Business Mantra: Buy High, Sell Low

One of the key attributes of Blue Ocean Strategy is its universal applicability. Companies of all sizes from start-ups to multinationals, operating in any market or industry can benefit from the alluring logic and simplicity of Blue Ocean Strategy.

In contrast, consider a business philosophy with far less applicability. There was a well-known shepherd who would go to the top of high mountains to buy sheep from the mountain dwellers, then bring his collected flock down to the valley and sell them for a healthy profit at the village market. He would always pontificate that the secret of his success was to “buy high, sell low.”

[Image via Te Ara.]

Sharks in a Blue Ocean Don’t Bite

Attention advertising and media professionals.... How can Blue Ocean Strategy apply to your job as a Marketing Manager or Media Planner?  A recent article in MediaPost asserts that advertising and marketing executives should focus on creating new marketspaces for clients by incorporating Blue Ocean Strategy in “brand visions, strategies and discreet tactical elements.”  After all, as the author writes, “Sharks in a Blue Ocean Don’t Bite.”

From MediaPost:

In a crowded market, where hundreds of companies are fighting over a shrinking profit pool, we have to develop entirely new approaches to marketing. No longer can we be content with developing plans that seek to dominate existing markets. After all, making inroads at the expense of established competitors is an expensive proposition requiring a flood of marketing dollars - always a luxury in a tough economy.

Keeping this in mind, it is imperative that our marketing strategies capitalize on new and hitherto unidentified windows of opportunity. If we are to accomplish this effectively, we cannot continue to function solely as marketers. We have to think like entrepreneurs.

And one approach that has always served me well during my career, both in marketing and as an entrepreneur has been the Blue Ocean Strategy.

[Image via Sydney Morning Herald.]