Creating Blue Oceans

Contributed Article: Leadership and Innovation Lessons

Inspired by the recent TED Talks, this week we feature the article “Leadership and Innovation Lessons” contributed by Cheenu Srinivasan.  In the article, Mr. Srinivasan presents the story of “El Sistema” and its Blue Ocean Strategy-like approach which has positively affected the lives of over 350,000 children around the world by making “music by the masses for the masses.” 

From “Leadership and Innovation Lessons” by Cheenu Srinivasan:

Challenging the entrenched supply-side thinking of those days in the mid 1970s, economist and amateur musician Jose Antonio Abreu struck upon the idea of combining social work with classical music orchestras as a way of offering an alternatively lifestlye to that of a life of crime on the streets for the poor. 

Rather than cramped class rooms for vocational training, he assembled children in open spaces to learn and practice classical music as a group. While classical music was hitherto the exclusive reserve of the wealthy and connected, that which he called classical music by the few for the few, he opened up entire new vistas of opportunity with his vision of music by the masses for the masses.

Continue reading “From Leadership and Innovation Lessons” by Cheenu Srinivasan in PDF here.   Read previous contributions by Mr. Srinivasan here and here.

Watch the TED talk which inspired the article by clicking on the video image above.

Will the waves of praise ever subside for Nintendo?

Here at CreatingBlueOceans.com we have monitored closely the success of Nintendo and the Blue Ocean marketspace it has created with its mold-breaking Wii console.   With all the accolades it has received, writing about the Wii is almost getting, dare we say, monotonous? But we are compelled to tell the whole story, and just last week, the Nintendo Wii again scored big with yet another distinctive title: “fastest selling” game console in North American history.  As competitors continue to duke it out in bloody red oceans, Nintendo’s position is an enviable one, and serves a keen reminder of the heightened relevance Blue Ocean Strategy especially during difficult economic times. 

From Gaming Industry online:

The US video games market may well be starting to struggle in the face of the global recession, but Nintendo is undoubtedly fairing best in the face of economic instability as Wii sails past yet another significant sales milestone.

Since its release a mere 31 months ago the Wii has now sold over 20m units in North America, making it the fastest selling console in the territory’s history.

Let’s not forget either the extent to which the DS outstripped its console opposition in May, with the DSi shifting 390,000 machines and the DS Lite 244,000 units. The combined sales of 633,000 placed it far ahead of any other platform.

“The continued enthusiastic consumer response to our products shows that Nintendo has something for everyone,” Nintendo of America’s executive vice president of sales and marketing Cammie Dunaway stated.

[Image via xispo.]

Wii don’t focus on the competition

Last week we brought you the story of Nintendo’s continuing blue ocean with the recent launch of Wii MotionPlus — a new, gyroscopic sensor which precisely mimics hand movements for better on-screen accuracy.  As a follow-up, this week we bring you an interview with Satoru Iwata, CEO of Nintendo.  The interview is especially timely, given the announcements by Sony and Microsoft of new motion-control devices meant to infringe upon the Wii’s blue ocean.  In the interview, Iwata discusses Nintendo’s Blue Ocean Strategy, the iPhone, the recession, and free games.

From Venture Beat:

When we talked about it two years ago, a lot of people thought the Wii Balance Board was crazy. They thought Nintendo would start selling a bathroom scale. But Wii Fit became a success because we saw a “blue ocean strategy.” But now a lot of companies are fighting in the red ocean of follow-up exercise games. [Note: As discussed in the Blue Ocean Strategy book, too many sharks in one area make a red ocean; but innovators who swim in the blue ocean have no rivals]. When we introduced the Wii controller, we were in the blue ocean and this year is still the blue ocean. But the year 2010 may become the red ocean for motion-sensing controls, based on what Microsoft and Sony say. The advantage for Nintendo is that we always try to do things that other companies don’t try to do. That is something that the general public appreciates. That’s why we have to introduce this Wii Vitality Sensor. A lot of people must be wondering what the hell this is about. But that’s exactly the way people felt two years ago with the Wii Balance Board. Looking at the history of video games, and game controllers in particular, you have always controlled it consciously. That’s what the name implies. Starting from the movements of your fingers to the shifting of the body mass, you always control it consciously.

[Image via Venture Beat.]

Nintendo goes gyroscopic, enhances Blue Ocean marketspace

One of the most well-known examples of successful Blue Ocean Strategy application is gaming industry leader Nintendo.  And over the past years as we’ve been monitoring their triumph, we’ve brought our readers several updates — from its gaming Revolution to the introduction of Wii and WiiFit.

Now, with the introduction of the Wii MotionPlus, a new sensor which is able to precisely mimic hand movements for better on-screen accuracy with activities such as golfing and sword fighting, Nintendo appears poised to enlarge its blue ocean marketspace.  All of this in spite of the fact that the gadget itself isn’t all that “charming.”

From Yahoo! News:

"The great thing about this particular new technology -- which isn't always true for other new technologies -- is that we immediately saw the benefits of it," said Jason Shenkman, senior producer of Tiger Woods PGA Tour 10

....If the blockbuster sales of the Wii Balance Board with Wii Fit are any indication, gamers want the new device even if it isn't compatible with old titles.

Michael Pachter, a game analyst for Wedbush Morgan, thinks the price of the Wii MotionPlus ($19.99 for one, $49.99 if bundled with Wii Sports Resort) is right for cash-strapped consumers. He foresees sales exceeding 30 million in the first year.

"Some people will find Wii MotionPlus really appealing," he said, "and some people won't understand it and will wait until they're told by their friends they need it."

[Image via Nintendo.]

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.]

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 ]

Tesla: Blue Ocean model of inspiration

We’ve watched with great interest the evolution and introduction of Tesla Motors Model S Electric Sedan.  Firstly, it flies in the face of conventional wisdom which  dictates electric cars being small, slow, unable to travel long distances and expensive to fuel.  The four door Model S can reach maximum speeds of 200 km/h, can travel a range of 250 - 480 kilometers (depending upon the size of the battery) per charge, and only costs USD 4 to fully charge. 

As Seth H. Weintraub of Computerworld notes, “The car is a model of inspiration to a dying domestic car industry.”

Secondly, and equally exciting is the possibility to immediately sell complementary offerings.   As the Fourth Path of Blue Ocean Strategy demonstrates, by looking across complementary offerings companies can create blue oceans by zeroing-in on new types of offerings that add new dimensions of value to their current product or service — even new offerings that are well outside their traditional industry boundaries.

And while one may not typically associate Google with the auto industry, Weintraub points out that the Tesla Model S could potentially become the next “Google Car,” complete with:

• Google Maps for directions
• Google Android as the operating system for running the car
• Google voice for voice-guided commands
• Google AdSense with location based advertising results for finding local shopping and restaurants
• Google Reader and news feeds for a bit of entertainment

“That's just the beginning,” writes Weintraub, “Google has their hands on what could be the most revolutionary vehicle of the millennium, if they put those big brains to work on what automobile consumers want, they'll likely come up with things that make other cars seem ... so last century.”

Related articles:

Automaker says ‘Ta-ta’ to competition, eyes Blue Ocean

Breaking the speed record Blue Ocean Strategy style

SUVs go the way of Pompeii

[Image Chicagoist.]