“Blue ocean strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool.”
”lasting success comes not from battling competitors but from creating “blue oceans” – untapped new market spaces ripe for growth.”
Authors W. Chan Kim and Renee Mauborgne outline this concept in a book titled, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Published by the Harvard Business Review Press, this book is a great read for any business in any industry.
For me, it opened my eyes.
At the beginning of the book, the authors make a compelling point that has continued to stick with me nearly a decade later “Too many companies let competition drive their strategy.” They go on to explain by having competitors at the core of your strategy rather than your customers you end up losing focus of buyer value and instead make decisions purely off what your competition is doing.
The same study performed by the authors found companies who broke away from competition paid little attention to matching or beating rivals. To better explain they give the example of Cirque du Soleil. An organization who was able to obtain a level of revenue in twenty years that took Ringling Bros. and Barnum & Bailey more than a hundred years to achieve. What’s even more interesting about Cirque du Soleil’s success is that it was attained in a declining industry. When Cirque du Soleil originally arrived on the scene, the circus industry was suffering from a steadily decreasing audience which resulted in declining revenues and profits. In short, the circus industry was an unattractive market to get into. However, Cirque du Soleil chose not to focus on the industry standard model their competitors practiced. Instead, they were able to tap into a whole new market by tweaking the elements that ate into profit.
Another example of an organization who found an untapped market within a highly competitive industry is that of an Australian winery, Casella Wines. You may be more familiar with their line, Yellow Tail. In 1995, the consumption of beer, spirits, and ready-to-drink cocktails made up three times more US consumer alcohol sales than wine. The reason being the average consumer found wine to be intimidating and pretentious. By focusing on the demand side of the alternatives to wine, Casella Wines was able to identify the need for wine to be easy to select and easy to drink. The book goes into greater detail of how they achieved this persona, but the point is Casella ignored their competitors and focused on the unmet needs of the market. Today Yellow Tail is available in fifty countries with more than 2.5 million glasses of wine enjoyed each day.
Cirque du Soleil and Casella Wines are just two examples of organizations who successfully broke away from the competition-based strategy and found untapped markets where competition was irrelevant.
I share this with you because whether you are CEO leading a Fortune 500 company, department head, or meeting professional the blue ocean strategy can be applied to your line of work.
For instance, consider your current business model. How clear is your strategy? Are you able to create a compelling tagline that encompasses the focus of your plan? Or is your model too complicated?
A complicated strategy confuses your audience. It makes it difficult for customers, prospects, and employees to understand the value your organization provides.
Look at the roles and responsibilities of your team. How well do they align with your focus? Is it clear how each position or department assists in helping you reach your goals?
More often than not, these questions lead us back to step one and force us to remap our strategy. While intimidating at first, this is the journey that leads you to a “blue ocean.” It opens your eyes to new trends and market shifts either before or as they happen.
So I ask you, do you have a blue ocean strategy?
Until next time!