Creating Blue Oceans

Coca-Cola: Creating value through design

Companies which understand they are not in the business of selling certain products or services, but rather in the business of delivering lifestyle enrichment to customers, are the ones that prosper.  Blue Ocean Strategy helps to instill this perspective, and once it takes root, a company can continue to stay highly relevant to customers, drive lifestyle changes, and continuously create blue oceans.

But what do you do when you are a company like Coca-Cola — which sells the fizzy beverage at the rate of 18,000 servings per hour — yet your product doesn’t change?  Enter David Butler, Coca-Cola’s VP of Global Design, whose aim is to create value for the business through design.  Following some Blue Ocean Strategy-like insights of his own, Mr. Butler now is helping to show that Coke’s core business is not just as a 123 year old manufacturer and distributor of beverages, rather, it’s core business is actually design.  

From Fast Company:

The idea was to show his colleagues that even though they didn't recognize it as such, Coca-Cola is one of the world's largest design companies. And to point out that a more deliberate focus on design could sell more stuff. "The word 'design' is not so important to the top echelons of the company, but winning at the point of sale is fundamental," Butler says. "I wanted to show how you could create value for the business through design. I had no organization, no influence, nothing to point to, but now we had that statement out there -- a flag in the ground."

[Image via Flickr.]

Struck dead at 4 mph

In one of her pop chart hits Madonna sings “Time goes
by so slowly,” but we’re not too sure that she had Innovation in mind when she set down the words to this song. We recently researched a story about the first woman to be killed by an automobile, which, in a tragic-comic way illustrates the unimaginable pace of progress, due to Innovation.

The excerpt reads:

On August 17, 1896, in London, Bridget Driscoll, age 45, became an early car accident fatality as crossed the grounds of the Crystal Palace (London), an automobile struck her at a speed witnesses described as "a reckless pace, in fact, like a fire engine.”

Ironically, the car which was observed to be speeding out of control was only traveling at 4 Mph, which is no more than a pedestrian’s pace. Yet at that time, this still seemed recklessly fast.  And, the official investigation report proclaimed the hope that no such accidents would ever happen again.

As this story poignantly illustrates, we have come a long way indeed. To get a quick overview of the rapid advance of the auto industry from a blue ocean perspective, visit pages 193-197 of the Blue Ocean Strategy book. Do you have a humorous story which exemplifies the rapid pace of progress owing to Innovation?

[Image via London for Idiots.]

Can your business communicate under water?

A key utensil in the Blue Ocean Strategy toolset is the Six Path Framework, which allows for the exploration of business strategy from six distinct perspectives, leading to the discovery of blue ocean market space. One of the perspectives, ‘Strategic Groups’ tells us that in most industries, all the fundamental strategic differences among customers are captured by a small number of clusters called “strategic groups.” Blue Oceans can be created by challenging these delineations or by establishing new strategic groups.

As a comic illustration, consider the example of scuba diving. Scuba divers make use of hand signals to communicate basic information under water, such as “I am low on air,” “Stay together,” or “Look over there.” But the extent of underwater communication is greatly limited, which may deter more social, talkative adventure seekers from taking the plunge.

Suppose a dive shop wanted to reach out to the previously overlooked strategic group of customers: Chatty divers. They could attempt to accomplish this by significantly expanding the underwater hand signal repertoire with an array of new expressions such as “You look great in those flippers,” or “That grouper reminds me of my mother-in-law,” etc. In the process, this pioneering dive shop would overstep traditional industry definitions of target customers and establish a new strategic group--well on its way towards a Blue Ocean market space.

[Image via diverjon.]

Gabor leads Blue Ocean Strategy event for NAPEO at the ‘Bleau’

The event theme this year for the annual conference of the National Association of Professional Employer Organizations was “Blue Ocean Strategy: Plotting Paths to Profit.”  Each year, NAPEO members gather from around the country to immerse themselves in the latest business trends and strategies, and to collaborate with colleagues in renowned inspiration labs. This year’s event, quite fittingly held at the Fontainebleau in Miami, was especially meaningful as it was also in celebration of NAPEO’s 25th anniversary.

As a leading expert on Blue Ocean Strategy and Defying Conventional Wisdom, Gabor delivered the Keynote  presentation — on the very stage that Frank Sinatra and the Rat Pack used to croon.  Afterwards, Gabor hosted a Q&A session arranged for NAPEO’s VIP members.

A copy of the event agenda at the ‘Bleau’ is available here.  Meanwhile, if you feel the topic of Blue Ocean Strategy and Defying Conventional Wisdom is a strong match for your upcoming event, you can get in touch at the email link in the upper left-hand corner of this page.

About Napeo: NAPEO, the National Association of Professional Employer Organizations, is the largest trade association for professional employer organizations nationwide. NAPEO has nearly 400 PEO members operating in all 50 states, representing approximately 91 percent of the revenues of the $68 billion industry. NAPEO's members range in size from start-up PEOs to large, publicly held companies with years of success in the industry.

[Image via NAPEO.]

A sea of new online customers

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.  From page 61 of Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne).

As a natural follow-up to our story on the Blue Ocean revolution in finance, today we feature a related story on the launch of the world’s first Halal search engine.  As with the creation of the new mega-Islamic bank, the Halal search engine addresses the needs of an overlooked set of buyers — which also happens to be a rather sizeable one — potentially consisting of the entire global Islamic population.

From The Huffington Post:

Religious Muslims across the world can now access the internet without searching through content that is considered haram — forbidden according to Islamic Law — through a new search engine, Dutch media company AZS Media Company announced today.

The search engine, ImHalal.com, will only get results that are considered safe or halal for the user.

ImHalal.com has been created to give religious Muslims, who previously avoided the internet for some of its explicit content, an avenue to search the web and continue their online activities responsibly.

[Image via ImHalal.com ]

What is your ramp-up potential?

A key utensil in the Blue Ocean Strategy toolset is the Six Path Framework, which allows for the exploration of business strategy from six distinct perspectives, leading to the discovery of blue ocean market space. One of the perspectives, ‘Complementary Offerings,’ considers that few products and services are used in a vacuum. In most cases, other products and services affect their value. You can create blue oceans by zeroing in on the complements that add to your own product or service.

Consider the following illustration of unconventional thinking and complementary offerings.  Picture steep, downward stretches of mountainous roads with an up-ramp by the side. The up-ramp is a long, uphill dirt runoff, its purpose being to provide drivers a means to slow down and regain control of their car in case of brake failure during descent. These up-ramps represent an untapped source of energy and entertainment, and hence complementary offerings. 

A car barreling out of control down a mountain road has built up considerable speed and energy. This energy is completely wasted as the car comes to a gradual stop on the ramp. Why not place a power generator on the ramp that could harness the energy of runaway vehicles? Or why not put in a loop-the-loop roller coaster feature that would spice up the slowing down process? People who just narrowly escaped disaster would certainly welcome such distracting entertainment. They could be charged an entrance fee for the ride.

[Image via Northlight Images.]

Limitless blue skies

Over the past few months, there’s been quite a wave of Blue Ocean Strategy-like stories emanating from the airline industry.  First there was the story of Pet Airways, then came the story of Allegiant Air — the most profitable airline in the USA.   The latest story comes from the airline with quite a fitting name: jetBlue.  jetBlue’s Blue Ocean Strategy-like approach — with its now sold-out monthly flight pass initiative — allows it to create new demand, and to generate revenue, distinction and publicity simultaneously.  In fact, jetBlue’s initiative has been so popular that even Wired magazine has climbed aboard by sponsoring a travel pass for a future air traffic controller, who will be doing more than just writing for Wired about his travels every day on jetBlue during the next month.

More from Marketplace Money:

A few weeks ago JetBlue announced something as rare for an airline as gourmet food. For 599 bucks you could buy an "all you can Jet."

....They have these seats that are going to be flying around and basically an airline seat that takes off without somebody sitting in it is spoilage. The same as bread that a supermarket has to throw out at the end of the day because it didn't sell any.

So Jet Blue would like to turn that bread into dough in the least busy month of the year. And the airline, unlike its competitors, does not overbook flights. So don't expect long lines at the airport. All-you-can-jet flights have to be booked three days in advance.

Kaplan says the genius of all-you-can-jet is that JetBlue might actually make money from it.

[Image via Living El Paso.]

The Magic Wand of Business Strategy

Alas, there is no such thing as a magic wand in business. Blue Ocean Strategy does not claim to miraculously eliminate all risk of failure around new business ideas and strategy formation. Rather, it greatly mitigates risk by asking the right questions and providing a vigorous framework for testing ideas. Those that seek a risk-free formula, take note of the following story. 

Many years ago a middle-aged man in France signed a contract with an octogenarian woman to take care of her by paying a fixed monthly sum for the rest of her life in exchange for inheriting her sizable estate upon her death. This seemed like a sound investment with little risk. However, as a result of the arrangement the man died destitute many years later, having completely exhausted his own life savings on supporting her. The woman in turn, went on to outlast him by decades, living to be well past a hundred years old, and in the process setting an all-time national longevity record.

[Image via kitsh.]

Another Blue Ocean in the sky

There are those airlines in the industry which continue to swim in the red (like American and British Aiways), and then there are those that are taking a more Blue Ocean Strategy-like approach.  Most recently we touched on this with the opening of Pet Airways, and now with an intriguing article on Allegiant Air — the most profitable airline in the USA.  Under their unique business model, they act more like a full-fledged travel agent as opposed to just an airline.  They strip away any extra costs down to the base ticket price, and then let the customer customize the extras — such as seating assigments and checked bags — for themselves, allowing them to create the perception of low cost and more customer control.  Perhaps most impressively, they target otherwise non-served third tier cities, so that only 6 of their 134 routes have any competition — talking about making the competition irrelevant! 

From Fast Company:

You’ve probably never heard of the most successful airline in America. That's because Allegiant Air is not for you. It eschews business travelers, daily flights, even service between major cities. Allegiant is the anti-airline, or as CEO Maurice Gallagher calls it, the "accidental airline."

But it's no accident that Allegiant's planes are full, profits soared 200% in the first quarter to $28.2 million, and the number of passengers is up 18% through May during the worst recession in recent memory. While competitors furiously cut back, Allegiant has boosted capacity 30%. The more intriguing question, though, is whether its rock-bottom fares, bootstrap approach, and focus on the places abandoned by the hubs and spokes are the new blueprint for building an airline in tough times.

[Image via rrstar.]

How Can French Fries Save The World And Lead Us To Blue Oceans?

What would you say, if you were a leading fast food company, at the prospect of having the combination of powerful sensory branding, a massive environmentally friendly image boost and the ability to turn waste into a complementary offering, all in one? Does this seem too good to be a viable Blue Ocean Strategy? Well, it may not be as far fetched as you may think.

Vegetable oil is a viable (though not yet practical) source of automobile fuel. A man named Joshua Tickell gained visibility for its use in 1997, when he drove his Veggie Van across the U.S. using leftover vegetable oil from Kentucky Fried Chicken and other fast food chains. Vegetable oil can be used in converted diesel engines.

In America alone, there are 18 billion liters (approximately 4.5 billion gallons) of waste vegetable oil generated every year by restaurants. So here is the opportunity: Instead of removing or recycling this waste, why not offer an eco-friendly fuel source via add-on gas stations at fast food outlets? The retail infrastructure is already in place, and this way motorists and cars can both tank up together. And here is the kicker: Exhaust from a car burning vegetable oil gives off a pleasant French fry smell! Thus the Blue Ocean Strategy scenario is complete.

Even the future King of England has caught-on to this Blue Ocean approach by having his Range Rover, Jaguar and Audi converted to run on discarded cooking oil.  And, most recently, Queen Elizabeth II has gone the Blue Ocean way by having her Bentley limos converted to run on bio-fuels.

[Image via University of Maine.]