Creating Blue Oceans

Blue Ocean Strategy: When to value innovate again

As we conclude our Blue Ocean Basics series, today our focus turns to when to value innovate again. Each entry from this series is accessible through the Blue Ocean Strategy Basics section.  Now, let’s turn to pages 188 — 189 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne).

Eventually, however, almost every blue ocean strategy will be imitated. As imitators try to grab a share of your blue ocean, you typically launch offenses to defend your hard-earned customer base. But imitators often persist. Obsessed with hanging on to market share, you may fall into the trap of competing, racing to beat the new competition. Over time, the competition, and not the buyer, may come to occupy the center of your strategic thought and actions. If you stay on this course, the basic shape of your value curve will begin to converge with those of the competition.

To avoid the trap of competing, you need to monitor value curves on the strategy canvas. Monitoring value curves signals when to value-innovate and when not to. It alerts you to reach out for another blue ocean when your value curve begins to converge with those of the competition.

It also keeps you from pursuing another blue ocean when there is still a huge profit stream to be collected from your current offering. When the company’s value curve still has focus, divergence, and a compelling tagline, you should resist the temptation to value innovate again and instead should focus on lengthening, widening, and deepening your rent stream through operational improvements and geographical expansion to achieve maximum economies of scale and market coverage. You should swim as far as possible in the blue ocean, making yourself a moving target, distancing yourself from your early imitators, and discouraging them in the process. The aim here is to dominate the blue ocean over your imitators for as long as possible.

As rivalry intensifies and total supply exceeds demand, bloody competition commences and the ocean will turn red. As competitors’ value curves converge toward yours, you should begin reaching out for another value innovation to create a new blue ocean. Hence, by charting your value curve on the strategy canvas and intermittently replotting your competitors’ value curves versus your own, you will be able to visually see the degree of imitation, and hence of value curve convergence and the extent to which your blue ocean is turning red.

Tune in tomorrow for a practical example of when to value innovate again from one of the world’s leaders in entertainment. 

Related links:

Buy the Blue Ocean Strategy book

[Image via Google Images.]

 

Re-Imagining the search for the tomb of Genghis Khan

TUNE IN today as we feature Gabor’s recent radio discussion with Dr. Albert Yu-Min Lin, National Geographic’s 2010 Readers Choice Adventurer of the Year,  who leads a major international effort known as the Valley of the Khans Project, a non-invasive technology based search for the tomb of Genghis Khan, and find out the answer to the question: 

How is Dr. Lin leading the way to re-imagine the fields of archeology and exploration?

What if you could re-imagine your business, and your life? SLINGSHOT is the first book-based journey addressing this very topic and to unfold on all media channels closest to you. With Gabor as your host, SLINGSHOT appears through national radio and online TV shows, downloadable text, live events, printed article series, accompanying illustrations and music. 

Watch, listen, play, join fascinating personalities that are re-imagining our world today.  Learn the Slingshot concepts yourself, see how they prime you for Blue Ocean Strategy application and for shaping the world through meaningful creativity and innovation. 

Re-Imagine your busines, re-imagine your life. Click on over to Slingshot Living for inspiration.  

Blue Ocean Strategy book: A perennial bestseller

Since its initial publication in 2005, Blue Ocean Strategy remains a global, perennial bestseller, having been published in a record-breaking 42 languages. Most recently, Blue Ocean Strategy appears on 800-CEO-READ’s January 2011 list of best-selling business books by corporate customers. 800-CEO-READ is a leading direct supplier of book-based resources. 

From the Kansas City Star:  

5. "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant" by W. Chan Kim and Renee Mauborgne; Harvard Business Press, 256 pages ($29.95).

[Image via Google Images.]

Renewed through Blue Ocean Strategy, Naked Angels hosts 25th anniversary celebrity gala

As a special thanks for Gabor’s Blue Ocean Strategy advisory to the board members of Naked Angels, Gabor was an honorary guest at the 25th anniversary celebration of one of NYC’s most prestigious theatre groups.  The event took place this past Valentine’s Day at the Roseland Ballroom in Manhattan. Attending the highly-charged event, a host of well-known celebrities, including Marisa Tomei,  Gina Gershon, Liev Schrieber, Evan Handler and upcoming Slingshot Featured Visionary Rob Morrow. 

More on Gabor’s work with Naked Angels here, and more information on Naked Angels here and the 25th anniversary gala here.

[Image via Makány Márta.]

 

Blue Ocean Strategy sustainability and renewal

In this segment of our Blue Ocean Strategy Basics series we address the  sustainability and renewal of Blue Ocean Strategy.   Once featured, each piece in this series is made accessible through the Blue Ocean Strategy Basics archive. For today, we turn to pages 185 — 186 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne).

A blue ocean strategy brings with it considerable barriers to imitation. Some of these are operational, and others are cognitive. More often than not, a blue ocean strategy will go without credible challenges for ten to fifteen years, as was the case with Cirque du Soleil, Southwest Airlines, Federal Express, The Home Depot, Bloomberg, and CNN, for starters. This sustainability can be traced to the following imitation barriers rooted in blue ocean strategy:

• Value innovation does not make sense to a company’s conventional logic.

• Blue ocean strategy may conflict with other companies’ brand image.

• Natural monopoly:  The market often cannot support a second player.

• Patents or legal permits block imitation.

• High volume leads to rapid cost advantage for the value innovator, discouraging followers from entering the market.

• Network externalities discourage imitation.

• Imitation often requires significant political, operational, and cultural changes.

• Companies that value-innovate earn brand buzz and a loyal customer following that tends to shun imitators.

Related links:

Buy the Blue Ocean Strategy book.

[Image via Google Images.]

 

Blue Ocean Strategy by the glass

Companies who can maintain a high level of relevance cease to think of themselves as product suppliers or service providers, and instead think of themselves as being in the business of furnishing lifestyle enrichment.  

The wine industry is ripe with examples of Blue Ocean Strategy. Like Yellow Tail, which, instead of offering wine as wine, created a social drink accessible to everyone.  The latest example of Blue Ocean Strategy-like thinking in the industry comes from a place known for its long love affair with wine. 

From Knowledge @ Wharton: 

With the launch of its three-in-one concept, WINE by ONE has successfully created a "blue ocean" in the wine industry, with little competition in the market. Parisians can now access global wines, tourists can sample French appellations, and all clients have the opportunity to discover their personal preferences anonymously without revealing a lack of wine knowledge (a major faux pas in France and other sophisticated milieus). WINE by ONE has also captured a younger clientele as well as a greater proportion of women compared to traditional wine bars or stores. Many opportunities exist for WINE by ONE, including geographic expansion, the creation of official corporate wine clubs, and monetizing card member/loyalty programs.

[Image via Google Images.]

Blue Ocean Strategy Creepy Crawler Invasion

Blue Ocean Strategy is a systematic framework for transforming unconventional ideas into successful strategies. Its core premise is the simultaneous pursuit of differentiation and lower cost in such a way that new demand is created. 

Creepy crawlers. Most people do all they can to avoid them. But the Korean government is taking an unconventional approach to them, with an announcement to turn its budding insect market into a highly-profitable Blue Ocean marketspace. Get ready for the blue ocean strategy creepy crawler invasion! 

From Arirang Korea: 

"We plan to turn the insect industry into the new growth engine of the 21st century, and to promote its growth as the new blue ocean strategy."

The value of the Korean insect market is predicted to reach US$269 million by 2015, and approach the US$1 billion by 2020. The Korean insects will continue to awe the world with their great potentials.

[Image via Google Images.]

Blue Ocean Strategy: The third ‘E’ of Fair Process

Via the Blue Ocean Strategy Basics series, we highlight building execution into strategy and the three E Principles of Fair Process.  Each principle is made accessible through the Blue Ocean Strategy Basics section of this site once featured.  For an introduction to the third ‘E’ Principle of Fair Process, we turn to page 175 - 176 of the book Blue Ocean Strategy (co-authored by Professor W. Chan Kim and Professor Renée Mauborgne).

Expectation clarity requires that after a strategy is set, managers state clearly the new rules of the game. Although the expectations may be demanding, employees should know up front what standards they will be judged by and the penalties for failure. What are the goals of the new strategy? What are the new targets and milestones? Who is responsible for what? To achieve fair process, it matters less what the new goals, expectations, and responsibilities are and more that they are clearly understood. When people clearly understand what is expected of them, political jockeying and favoritism are minimized, and people can focus on executing the strategy rapidly.

Related links:

Buy the Blue Ocean Strategy book.

[Image via Google Images.]

 

Defying conventional wisdom: Five new paradigms for fostering blue ocean strategy-like thinking in the workplace

To foster Blue Ocean Strategy-like thinking in the workplace, management and employees must 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.  

Check out this article from Mashable on creating workplace cultures that enhance blue ocean strategy-like thinking: 

The age of social media is not just changing our personal lives, but is increasingly affecting how business is conducted. No longer satisfied with strictly top-down models that view employees as cogs in a system, businesses are quickly adapting to a new paradigm that emphasizes connection, collaboration and innovation.

When people in companies and teams feel engaged, the benefits are significant….

[Image via Google Images.]

Blue Ocean Strategy helps manufacturers re-define their industry

“There’s no such thing as a permanently great company or a permanently great industry. All industries rise and fall as do companies.  However, there are permanently smart strategic moves” —W. Chan Kim & Renée Mauborgne, from Chief Executive magazine article “Flouting Conventional Wisdom” (May 2003).

A key quality industries and companies should strive for is adaptability, always scanning and acting upon broad market opportunities. All industries and companies face difficult or life-threatening challenges at one point or another, and it is their adaptability and ability to make smart strategic moves which allow them to prosper even in the face of adversity.

See how, with the help of Blue Ocean Strategy, some on-the-ball manufacturers are looking beyond the traditional paradigm of cost reduction and re-evaluating their value to customers and the products they produce.

From Industry Week:

For Thogus Products, that meant Hlavin had to come to terms with the fact that the company, which his grandfather had built more than 60 years ago, was operating under a corroding business model.

"We had no debt, but we were still in trouble," says Hlavin. "We were still thinking linearly and following the traditional manufacturing path. We had to change our model if we wanted to shape the landscape of our business."

That meant shifting from being a mass producer of plastic parts to one that emphasized engineering and product development. Just as important, Hlavin wanted to stop fighting for smaller and smaller slices of densely competitive industries and identify "blue ocean space," a reference to the best-selling 2005 book Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne. Blue oceans are a metaphor to describe the wider, deeper potential of market space that is not yet explored.

[Image via Google Images.]