Blue Ocean Strategy provides an intuitive framework for creating uncontested market space and making the competition irrelevant. Its key building block is value innovation, the simultaneous pursuit of superior customer value and lower cost. This perspective leads you to expand your definition of customers and to focus in on what they ultimately want while letting go what they can do without. If your offering is nothing more than an imitation or incremental improvement over your competition, you’ll only be treading water in a red ocean. But if you can distinguish yourself and deliver superior value while eliminating unnecessary costs, your competition becomes irrelevant. You will be in an uncontested blue ocean of compelling market possibilities.
With markets becoming less and less predictable, where traditional rules no longer apply, the idea of value innovation — or the variant below referred to as “frugal innovation” — takes center stage as the source of sustainable growth.
Via the Harvard Business Review:
Frugal innovation is the ability to innovate cost-effectively and sustainably under severe resource constraints. In our last blog post, we showed how Carlos Ghosn, CEO of Renault-Nissan and inventor of the concept of "frugal engineering", is reinventing his entire company so it can innovate faster, better, and cheaper in a complex and resource-scarce global environment.
Carlos Ghosn isn't the only CEO spearheading the frugal innovation revolution. In our book Jugaad Innovation, we profile leaders at companies such as GE, Procter & Gamble, PepsiCo, and Siemens who are also working on frugal ways to innovate and drive sustainable growth. These visionary CEOs aren't caving in to Wall Street's demands for short-term gains. Rather, they are boldly restructuring every function in their organizations to boost their firms' long-term ability to deliver affordable and sustainable solutions to increasingly cost-conscious and eco-aware consumers.
[Image via 1ms.net.]