Creating Blue Oceans

Blue Ocean Strategy Path 6: Look across time

 

Continuing in our series which takes a closer look at each of the paths in Blue Ocean Strategy’s Six Paths Framework, our focus advances to the sixth and final path — looking across time.  This path, along with each previously highlighted path, is made accessible through the Blue Ocean Strategy Basics archive.  For our highlight of the sixth path, we turn to pages 75 - 78 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne):

All industries are subject to external trends that affect their businesses over time. Think of the rapid rise of the Internet or the global movement toward protecting the environment. Looking at these trends with the right perspective can show you how to create blue ocean opportunities.

Most companies adapt incrementally and somewhat passively as events unfold. Whether it’s the emergence of new technologies or major regulatory changes, managers tend to focus on projecting the trend itself. That is, they ask in which direction a technology will evolve, how it will be adopted, whether it will become scalable. They pace their own actions to keep up with the development of the trends they’re tracking.

But key insights into blue ocean strategy rarely come from projecting the trend itself. Instead they arise from business insights into how the trend will change value to customers and impact the company’s business model. By looking across time — from the value a market delivers today to the value it might deliver tomorrow — managers can actively shape their future and lay claim to a new blue ocean. Looking across time is perhaps more difficult than the previous approaches we’ve discussed, but it can be made subject to the same disciplined approach. We’re not talking about predicting the future, something that is inherently impossible. Rather, we’re talking about finding insight in trends that are observable today.

Related links:

Buy the Blue Ocean Strategy book.

[Image via topleftpixel.]

Creativity Crisis

What if we could re-ignite our childhood creativity, and de-construct our realm of acquired assumptions in the process?  It would not only be disarmingly fun, but deeply meaningful in guiding our strategic thinking.

In fact, there seems to be a growing recognition that creativity, or resourcefulness, is a vital component for dealing with unexpected, unprecedented and rapidly changing circumstances.

Via Newsweek:

It’s too early to determine conclusively why U.S. creativity scores are declining. One likely culprit is the number of hours kids now spend in front of the TV and playing videogames rather than engaging in creative activities. Another is the lack of creativity development in our schools. In effect, it’s left to the luck of the draw who becomes creative: there’s no concerted effort to nurture the creativity of all children.

Around the world, though, other countries are making creativity development a national priority. In 2008 British secondary-school curricula—from science to foreign language—was revamped to emphasize idea generation, and pilot programs have begun using Torrance’s test to assess their progress. The European Union designated 2009 as the European Year of Creativity and Innovation, holding conferences on the neuroscience of creativity, financing teacher training, and instituting problem-based learning programs—curricula driven by real-world inquiry—for both children and adults. In China there has been widespread education reform to extinguish the drill-and-kill teaching style. Instead, Chinese schools are also adopting a problem-based learning approach.

How can you re-engage your childhood creativity and sense of limitless possibilities in order to overstep perceived limitations?  Discover how at SlingshotLiving.com .

[Image © 2010 Slingshot.]

Dialing-up explosive growth with Blue Ocean Strategy

When we last reported on China Mobile, it was looking to Blue Ocean Strategy for growth and inspiration.  At the time, it had a mere 330 million subscribers.  Today, that number has exploded to more than 550 million as a result of employing a robust Blue Ocean Strategy for growth.  How will this strategy continue into the future?

Via Converge Digest:

For future growth, China Mobile is pursuing a "Blue Ocean" strategy. Growth areas include New Customers in rural, migrant worker and family groups; New Voice usage by refining market segments; New Business and New Services by stimulating existing customers with new applications; New Arenas, such as developing the Internet of Things; and New Business Models in the mobile Internet Era. China Mobile is also targeting Mobile Payment/Mobile Wallet, Mobile Reading, Mobile Video, Mobile Gaming, Music Downloads and Mobile TV services.

[Image via CultofMac.]

Blue Ocean Strategy Path 5: Look across functional or emotional appeal to buyers

This week we advance to the fifth path in the Blue Ocean Strategy Six Paths Framwork, which involves looking across functional or emotional appeal to buyers. As each path is highlighted, it becomes available in our Blue Ocean Strategy Basics archive.   For the fifth path, we turn to pages 69 - 70 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne):

When companies are willing to challenge the functional-emotional orientation of their industry, they often find new market space. We have observed two common patterns. Emotionally oriented industries offer many extras that add price without enhancing functionality. Stripping away those extras may create a fundamentally simpler, lower priced, lower-cost business model that customers would welcome. Conversely, functionally oriented industries can often infuse commodity products with new life by adding a dose of emotion and, in so doing, can stimulate new demand.

Two well-known examples are Swatch, which transformed the functionally driven budget watch industry into an emotionally driven fashion statement, or The Body Shop, which did the reverse, transforming the emotionally driven industry of cosmetics into a functional, no-nonsense cosmetics house.

Related links:

Buy the Blue Ocean Strategy book.

[Image via Mafer178.]

The honeymoon ends for Java and Wi-Fi

Simplifying a company's offering allows it to create exceptional value for customers while trimming costs at the same time.  Take for instance recent steps by some coffee shops in the USA to eliminate Wi-Fi from the menu.

Via the LA Times:

Coffee shops were the retail pioneers of Wi-Fi, flipping the switch to lure customers. But now some owners are pulling the plug. They're finding that Wi-Fi freeloaders who camp out all day nursing a single cup of coffee are a drain on the bottom line. Others want to preserve a friendly vibe and keep their establishments from turning into "Matrix"-like zombie shacks where people type and don't talk.

That shift could gather steam now that free Wi-Fi is less of a perk after coffee giant Starbucks stopped charging for it last month.

[Image via henribergius.]

Social networkers develop a taste for financing

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 winning strategies. This week, to provide some inspiration, we feature an example of  Defying Conventional Wisdom.

For our example, we turn to a recent article detailing the story of two entrepreneurial brothers who are creatively financing a start-up restaurant-bar in Beirut.  Instead of following the tradiational route of lining up potential investors, they defied conventional wisdom and went straight to YouTube and Facebook communities in order to raise nearly 40% of the required capital.

Via The National:

“We started raising money through word of mouth and the use of social media. We wanted Mybar to go viral.”

In two years, Mybar was able to attract about 90 investors and about 40 per cent of the US$1 million (Dh3.6m) they needed through social media. 

“We created several video bites of two minutes each, which we then posted on YouTube. Sir Richard Branson [the billionaire founder of the conglomerate Virgin] picked up on it and we were asked to do a pitch, which was voted to be posted on Virgin Atlantic’s in-flight entertainment system. We also created a Facebook group,” he adds.

[Image via Uberdubster.]

Blue Ocean Strategy Path 4: Look across complementary products and service offerings

 

Continuing in our series which takes a closer look at each of the paths in Blue Ocean Strategy’s Six Paths Framework, our focus shifts to the fourth path — looking across complementary products and service offerings.  During the upcoming weeks we will highlight the remaining two paths, with each becoming accessible in the Blue Ocean Strategy Basics archives.  Today, for the fourth path, we turn to page 65 - 66 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne):

Few products and services are used in a vacuum. In most cases, other products and services affect their value. But in most industries, rivals converge within the bounds of their industry’s product and service offerings. Take movie theaters. The ease and cost of getting a babysitter and parking the car affect the perceived value of going to the movies. Yet these complementary services are beyond the bounds of the movie theater industry as it has been traditionally defined. Few cinema operators worry about how hard or costly it is for people to get babysitters. But they should, because it affects demand for their business. Imagine a movie theater with a babysitting service.

Untapped value is often hidden in complementary products and services. The key is to define the total solution buyers seek when they choose a product or service. A simple way to do so is to think about what happens before, during, and after your product is used. Babysitting and parking the car are needed before people can go to the movies. Operating and application software are used along with computer hardware. In the airline industry, ground transportation is used after the flight but is clearly part of what the customer needs to travel from one place to another.

Related links:

Buy the Blue Ocean Strategy book.

[Image via eweliyi.]

Perfect Calm Series: Turning toilet wastewater into electricity

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: Turning toilet wastewater into electricity .

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 Dexter Browne.]

Creative destruction coming to a brand nearest to you

All companies and industries face difficult or life-threatening challenges at one point or another, and it is their adaptability which allow them to reinvent themselves and seek new Blue Ocean market spaces.  But those companies and industries that fail entirely to innovate risk becoming a Lava Casualty.  

Such is the case with companies like Blockbuster and Kodak as they had their near brushes with extinction. However, what happens when a company being mindful of this possibility begins preparing for its own demise since it’s creation? 

Via the New York Times:

Even when Kodak wanted to change, it couldn’t, said Mr. Lucas, who has studied the company.  “It was so large and had been so successful for so long that it was difficult to bring in people with a digital background.”

Kodak has had to take draconian steps to survive. It closed labs and factories and laid off 60 percent of its staff of 60,000.

Established companies’ historical inability to change is what makes Netflix’s maneuvers so fascinating. It foresaw its possible demise at the moment of its own creation.

The company was formed in 1997 with the idea of sending movie DVDs, then a new technology, through the mail. But Reed Hastings, the founder and chief executive, and early employees, recognized that delivery of movies over the Internet would replace the mail carrier soon. They named the company Netflix, not Mailflix or DVDs by Mail.

“DVDs by Mail would have been an easier concept to understand in 1999,” said Steve Swasey, the company’s chief spokesman.

[Image via Google Images.]

Blue Ocean Strategy Path 3: Look across the chain of buyers

Moving ahead in our Blue Ocean Strategy Six Paths Framework series, our focus advances to the third path — looking across the chain of buyers.  As we continue to highlight the remaining paths, each will become accessible in the Blue Ocean Strategy Basics archives section.  Today, for the third path, we turn to page 61 - 62 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne):

Individual companies in an industry often target different customer segments — for example, large versus small customers. But an industry typically converges on a single buyer group. The pharmaceutical industry, for example, focuses overridingly on influencers: doctors. The office equipment industry focuses heavily on purchasers: corporate purchasing departments. And the clothing industry sells predominantly to users. Sometimes there is a strong economic rationale for this focus. But often it is the result of industry practices that have never been questioned. Challenging an industry’s conventional wisdom about which buyer group to target can lead to the discovery of new blue ocean. 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.

Think of Novo Nordisk, the Danish insulin producer that created a blue ocean in the insulin industry….  [Novo Nordisk] saw that it could break away from the competition and create a blue ocean by shifting the industry’s longstanding focus on doctors to the users — patients themselves. In focusing on patients, Novo Nordisk found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering. Vials left the patient with the complex and unpleasant task of handling syringes, needles, and insulin, and of administering doses according to his or her needs. Needles and syringes also evoked unpleasant feelings of social stigmatism for patients. And patients did not want to fiddle with syringes and needles outside their homes, a frequent occurrence because many patients must inject insulin several times a day. This led Novo Nordisk to the blue ocean opportunity of NovoPen, launched in 1985. NovoPen, the first user-friendly insulin delivery solution, was designed to remove the hassle and embarrassment of administering insulin.

Related links:

Buy the Blue Ocean Strategy book.

[Image via A. Hoyuela.]