Beyond competing-creating your own blue ocean

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Beyond competing-creating your own blue ocean
Posted February 8, 2018

It is the highly anticipated follow up to Blue Ocean Strategy (2004), the global bestseller by world-renowned Insead professors Chan Kim and Renée Mauborgne. They invite businesses to shape the market boundaries and industry conditions that they face rather than merely accept these as a given. Their blue ocean strategy is a business theory that suggests companies are better off searching for ways to gain "uncontested market space" than just competing with similar companies.

Blue Ocean Shift contains practical tools that guide your move from overcrowded, highly competitive red oceans to blue oceans devoid of competition in a way that brings your people along.

According to Kim and Mauborgne’s research, there are three aspects which revolutionise a business:

Firstly, it is necessary that businesses adopt a blue ocean perspective which shifts their understanding of where new opportunity lies. Thus, you need to think about different things instead of limiting your thinking to competing in your specific industry (the red oceans) and being wedded to industry best practices. Do not expect to create a blue ocean if you continue to think like a red ocean strategist. For example, applying their blue ocean tools give you a clear view of the ways your industry causes “pain points” for customers. This leads you to understanding precisely who your noncustomers are and why they tend to stay away from your industry. It is after all, according to Kim and Mauborgne, your noncustomers, that provide the greatest insight into the ways that your industry limits demand and at the same time provide insights to new opportunities.

Secondly, you need to ask the right questions at the right time and mine these insights productively to create a blue ocean shift. Their books provide practical and insightful tools which act as a map to guide you in the right direction allowing you to confidently challenge industry logic and structures, and design successful strategies by mining the insights provided by noncustomers.

For example, managers have traditionally been urged to “create competitive advantage” to beat the competition rather than to differentiate themselves from the competition. The authors recommend the tool, called the Four Actions Framework which has  four key questions:

  • Raise: Which aspects of your business should be raised above your industry's standard? 
  • Reduce: Which aspects should be reduced since they were the result of competing against other industries rather than shaping industry trends?
  • Eliminate: Which factors (that your industry has long competed on), should be eliminated altogether?
  • Create: Which factors should be created (that your industry has yet to offer)? 

The Four Actions Framework forces you to examine every factor of competition, and so discover the limiting assumptions you unconsciously make while competing (rather than creating). Their four actions framework further allows the team to construct six potentially viable blue ocean strategic moves, which is elaborated upon in Blue Ocean Shift.

Mauborgne also recommends using the strategy canvas, a one-page analytic tool, to discover your blue ocean. By focusing on your industry and its key competing factors, the tool forces you to take a hard look at your own business and discover how your markets truly view you. Ultimately, the strategy canvas becomes a catalyst as it creates a strong impetus for change. 

Finally, the pivotal and perhaps most unusual aspect of their research, is that blue ocean businesses must have a humanistic process, something they call “humanness” to be successful. “Humanness, in short, builds our confidence to act by eliciting our emotional engagement, which is critical for reshaping and reimagining industry boundaries.” It is the ingredient which inspires and builds people’s confidence to own and drive the transformative change process and by doing so, successfully execute new, blue ocean strategies and shifts.

I have been a customer of Amazon for over a decade and have seen how their business model has caused a great deal of disruption across various industries. Amazon employed an initial blue ocean strategy by refusing to take existing industry conditions as givens: by being an online book retailer. Other ways of differentiation were: good pricing, a virtually unlimited book offering and reader reviews and suggestions. It has since continued to disrupt the online retail space by adding many other retail products to its online stable, thereby shaping rather than merely accepting existing conditions and by so doing, attracting previous noncustomers.

So what else differentiates Amazon? Amazon states that it wants to “build the most customer-centric company on Earth”, and when personally engaging with their customer-facing staff, I have found their levels of confidence and engagement a factor that makes competition irrelevant. These employees (the face of Amazon’s brand) pay careful attention to their customers’ comments and complaints and the manner in which they act to solve these pain-points that, in my experience, ultimately determines a large part of Amazon’s brand integrity.

 The five steps (and the tools) that you need to take to find your own blue ocean are:

  • Getting started by selecting the right initiative /product or service (pioneer-migrator-settler map)
  • Get a clear picture of where you are now (the strategy canvas)
  • Imagine where you want to be (the buyer utility map)
  • Find out how to make the steps to get you there (the six paths framework and the Four actions framework) and finally,
  • Finalize and launch your blue ocean move (the blue ocean fair).

Blue Ocean Shift is valuable as it delves deeply into the operational details of how to put the right team together, start the process, use the tools correctly and avoid hurdles that might trip you up in the process of discovering your next blue ocean.

 

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