Creating Blue Oceans

Can you make your competition disappear?

You can make your competition irrelevant by really understanding what target customers ultimately want.  If your offering is nothing more than an imitation or incremental improvement of your competition, then you are stuck treading water in a red ocean.  But if you can clearly distinguish yourself and deliver superior value, then your competition becomes irrelevant and you will be in an uncontested Blue Ocean.

Consider an example from the world of sports. In the 2000 Sydney Olympic Games a swimmer from Equatorial Guinea qualified for competition not by meeting the minimum time standard, but by winning a wild card entry.  Such cards are randomly allocated to athletes from small, third world countries who otherwise would have no chance to meet the competitive standards.  The intent is to make the Olympics a truly world-encompassing event.

This particular athlete gained instant celebrity status by flailing and splashing his way to an unforgettable last place showing.  Being exposed to a full size swimming pool for the first time, and uninitiated in the ways of a diving start, he somehow managed to finish the 100-meter heat to the spectators’ uproarious reception.  Such a display of courageous dilettantism made him one of the most talked about athletes of the games, winning him worldwide fame, celebrity invitations and attractive promotional opportunities.  Why such raving success for the worst swimmer in Olympic history? Because he unintentionally sidestepped head-on competition with his much more qualified rivals, and instead gave spectators what they really wanted: inspirational entertainment.

[Image via LIFE.]

Who do you call your target customer?

In most industries, all the fundamental strategic differences among customers are captured by a small number of clusters called “strategic groups.” Most companies focus on improving their competitive position within an existing strategic group.  But why not create your own strategic group which can draw customers away from several of the traditional groups simultaneously?

Consider the International Date Line, and its possible application in establishing a new strategic group within the office rental market. Essentially by crossing this imaginary line you can gain or lose an entire day. By building an office complex right on it, a real estate developer could cater to a new strategic group: Business tenants looking for an exotic, off-shore presence, and at the same time seeking a solution for effective time management. 

Being in the middle of the Pacific Ocean would certainly be exotic. And here, whenever overwhelmed with work or hopelessly behind schedule, occupants could simply walk over to the part of their office that was a day behind, and immediately have an extra 24-hours to catch up. Conversely when having little going on, they would just step across the line in the other direction, and it would instantly be one day later.

[Image via lexico.]

Red Ocean turbulence ahead

Despite the potential upswing of the global economy – there is still great uncertainty and tension in the air.  So to inject a much needed layer of levity, our “Global Recovery Comic Angle” series presents satirical articles of different industries during this period.  Today we showcase ‘Awful Airlines,’ an editorial cartoon roundup by Daryl Cagle depicting the trials and tribulations of air travel.

View the entire slideshow here.

[Image via MSNBC.]

Global Recovery Comic Angle: Bank of America sued for 1,784 billion trillion dollars

Despite the potential upswing of the global economy – there is still great uncertainty and tension in the air.  So to inject a much needed layer of levity, our “Global Recovery Comic Angle” series presents satirical articles of different industries during this period.  Today we showcase a story about a man suing Bank of America for a rather large sum of money — which is reflective of the general frustration with the banking industry — especially given its reliance on government bailouts just to keep afloat.

From gothamist:

A disgruntled New Yorker is suing the Bank of America for "1,784 billion, trillion dollars." It gets weirder: The suit, filed by Dalton Chiscolm last month, is being reviewed by the same federal judge who sentenced Bernard Madoff to a 150-year prison sentence. Judge Denny Chin has called the lawsuit "incomprehensible" and demanded that Chiscolm explain his claims, and elaborate on charges that he received "inconsistent information from a 'Spanish womn" reached by phone at the bank.

When he filed the lawsuit, Chilsom also demanded that the money be deposited into his account the next day, plus an additional $200,164,000....

[Image via The Consumerist.]

Struck dead at 4 mph

In one of her pop chart hits Madonna sings “Time goes
by so slowly,” but we’re not too sure that she had Innovation in mind when she set down the words to this song. We recently researched a story about the first woman to be killed by an automobile, which, in a tragic-comic way illustrates the unimaginable pace of progress, due to Innovation.

The excerpt reads:

On August 17, 1896, in London, Bridget Driscoll, age 45, became an early car accident fatality as crossed the grounds of the Crystal Palace (London), an automobile struck her at a speed witnesses described as "a reckless pace, in fact, like a fire engine.”

Ironically, the car which was observed to be speeding out of control was only traveling at 4 Mph, which is no more than a pedestrian’s pace. Yet at that time, this still seemed recklessly fast.  And, the official investigation report proclaimed the hope that no such accidents would ever happen again.

As this story poignantly illustrates, we have come a long way indeed. To get a quick overview of the rapid advance of the auto industry from a blue ocean perspective, visit pages 193-197 of the Blue Ocean Strategy book. Do you have a humorous story which exemplifies the rapid pace of progress owing to Innovation?

[Image via London for Idiots.]

Can your business communicate under water?

A key utensil in the Blue Ocean Strategy toolset is the Six Path Framework, which allows for the exploration of business strategy from six distinct perspectives, leading to the discovery of blue ocean market space. One of the perspectives, ‘Strategic Groups’ tells us that in most industries, all the fundamental strategic differences among customers are captured by a small number of clusters called “strategic groups.” Blue Oceans can be created by challenging these delineations or by establishing new strategic groups.

As a comic illustration, consider the example of scuba diving. Scuba divers make use of hand signals to communicate basic information under water, such as “I am low on air,” “Stay together,” or “Look over there.” But the extent of underwater communication is greatly limited, which may deter more social, talkative adventure seekers from taking the plunge.

Suppose a dive shop wanted to reach out to the previously overlooked strategic group of customers: Chatty divers. They could attempt to accomplish this by significantly expanding the underwater hand signal repertoire with an array of new expressions such as “You look great in those flippers,” or “That grouper reminds me of my mother-in-law,” etc. In the process, this pioneering dive shop would overstep traditional industry definitions of target customers and establish a new strategic group--well on its way towards a Blue Ocean market space.

[Image via diverjon.]

What is your ramp-up potential?

A key utensil in the Blue Ocean Strategy toolset is the Six Path Framework, which allows for the exploration of business strategy from six distinct perspectives, leading to the discovery of blue ocean market space. One of the perspectives, ‘Complementary Offerings,’ considers that few products and services are used in a vacuum. In most cases, other products and services affect their value. You can create blue oceans by zeroing in on the complements that add to your own product or service.

Consider the following illustration of unconventional thinking and complementary offerings.  Picture steep, downward stretches of mountainous roads with an up-ramp by the side. The up-ramp is a long, uphill dirt runoff, its purpose being to provide drivers a means to slow down and regain control of their car in case of brake failure during descent. These up-ramps represent an untapped source of energy and entertainment, and hence complementary offerings. 

A car barreling out of control down a mountain road has built up considerable speed and energy. This energy is completely wasted as the car comes to a gradual stop on the ramp. Why not place a power generator on the ramp that could harness the energy of runaway vehicles? Or why not put in a loop-the-loop roller coaster feature that would spice up the slowing down process? People who just narrowly escaped disaster would certainly welcome such distracting entertainment. They could be charged an entrance fee for the ride.

[Image via Northlight Images.]

The Magic Wand of Business Strategy

Alas, there is no such thing as a magic wand in business. Blue Ocean Strategy does not claim to miraculously eliminate all risk of failure around new business ideas and strategy formation. Rather, it greatly mitigates risk by asking the right questions and providing a vigorous framework for testing ideas. Those that seek a risk-free formula, take note of the following story. 

Many years ago a middle-aged man in France signed a contract with an octogenarian woman to take care of her by paying a fixed monthly sum for the rest of her life in exchange for inheriting her sizable estate upon her death. This seemed like a sound investment with little risk. However, as a result of the arrangement the man died destitute many years later, having completely exhausted his own life savings on supporting her. The woman in turn, went on to outlast him by decades, living to be well past a hundred years old, and in the process setting an all-time national longevity record.

[Image via kitsh.]

How Can French Fries Save The World And Lead Us To Blue Oceans?

What would you say, if you were a leading fast food company, at the prospect of having the combination of powerful sensory branding, a massive environmentally friendly image boost and the ability to turn waste into a complementary offering, all in one? Does this seem too good to be a viable Blue Ocean Strategy? Well, it may not be as far fetched as you may think.

Vegetable oil is a viable (though not yet practical) source of automobile fuel. A man named Joshua Tickell gained visibility for its use in 1997, when he drove his Veggie Van across the U.S. using leftover vegetable oil from Kentucky Fried Chicken and other fast food chains. Vegetable oil can be used in converted diesel engines.

In America alone, there are 18 billion liters (approximately 4.5 billion gallons) of waste vegetable oil generated every year by restaurants. So here is the opportunity: Instead of removing or recycling this waste, why not offer an eco-friendly fuel source via add-on gas stations at fast food outlets? The retail infrastructure is already in place, and this way motorists and cars can both tank up together. And here is the kicker: Exhaust from a car burning vegetable oil gives off a pleasant French fry smell! Thus the Blue Ocean Strategy scenario is complete.

Even the future King of England has caught-on to this Blue Ocean approach by having his Range Rover, Jaguar and Audi converted to run on discarded cooking oil.  And, most recently, Queen Elizabeth II has gone the Blue Ocean way by having her Bentley limos converted to run on bio-fuels.

[Image via University of Maine.]

Are you being taken to the cleaners?

A principal credo of Blue Ocean Strategy is to challenge taken-for-granted industry assumptions. While most businesses are stuck competing within boundaries and rules set by others, questioning such assumptions can lead to unprecedented value propositions for customers, and hence blue oceans.

As an illustration, consider the outrageous prices of dry-cleaning. You buy a $20 shirt then pay $4 to dry-clean it pretty much after each wear. In other words you pay twenty percent of the purchase price of an item just to have it cleaned.

 Using the same ratio you would pay four thousand dollars for every car wash if you own a twenty thousand-dollar car. The expression "being taken to the cleaners" is no joke. Such an out-of-whack cleaning cost to purchase price ratio seems like a strong justification for introducing disposable shirts, suits and dresses even.

[Image via Mazda6.]