Blue Ocean Strategy®: The key to finding new, uncontested market space
A former client called us recently about one of his divisions. It was “stuck,” he said in great frustration. As in so many cases after the 2008 Great Recession, this division had entered into a very Red Ocean of competition where everyone was using pricing and promotions to try and hold onto market share and keep their factories operating, hopeful that the old world would return.
Having participated in a Blue Ocean Strategy workshop for his other division, he had experienced with us how a management team could discover an entirely new market waiting for them, literally in front of their noses. He was hoping to get this division leadership to do the same. They had to pause, he realized, reflect on what they were doing, and “see, feel and think” in new ways—hopefully which would shift them into a Blue Ocean and preferably before their competition got there.
The type of company isn’t relevant.
While they are a successful manufacturer of high end products, they are stalled. Why was it so hard for their leadership to re-think their business model? It was reaching that critical point for the survival of this company. Maybe it is critical for yours as well.
For this blog, I thought I would talk about how to free your brain from the road blocks that might be keeping you in a Red Ocean of bloody competition and preventing you from doing your own Blue Ocean Strategic thinking.
What’s a Blue Ocean Strategy, anyway?
Briefly let me share with you the essence of Blue Ocean Strategic thinking, for those of you who have not dug into the book “Blue Ocean Strategy” or read my previous Executive Street Blogs.
After researching over 150 companies in 50 industries for over 100 years, W. Chan Kim and Renee Mauborgne, authors of “Blue Ocean Strategy,” created a theoretical framework that compared companies that competed in a market space (Red Ocean style) with companies that created new market space (Blue Oceans). They argued that classic competition-based strategies take for granted an industry’s market structure and frame a business around competing within those market boundaries. Themes like “best practices” were really commoditizing businesses, as each company copied the rest until they were substitutes for each other in a bloody Red Ocean. They focused only on dividing up the market and growth became increasingly limited.
Blue Ocean Strategy, on the other hand, is based on the view that market boundaries and industry structure are not givens—they can be reconstructed by the actions and beliefs of industry players if they recognize that limits are only in their thinking, not in the reality of the market itself.
The Challenge to Shift the Focus
For managers running businesses that have stalled, the challenge is to force them to shift their focus. Everything that says “that’s the way we do it here” has to be challenged. Rather than compete for the same customer in the same way, they now must figure out how to add value with innovative solutions that will actually create new demand. There is extra demand out there, untapped and waiting for new solutions. Growth doesn’t come from doing “more of the same, cheaper.” Instead, it comes from doing something “completely new better.”
How Can Those Managers Tackle Change?
You can imagine why it is so hard for a manager of a division or a president of a firm to realize that limitations to growth are really self-imposed by their own mind-map of the world. Their perceptions limit what they can “see.” Their strengths may have become their own weaknesses. Rather than becoming better competitors, they need to become better creators. Most of all, their brains are fighting them.
Change is literally pain. The brain hates to change. So this is not going to be easy for those GM’s of that stalled division. Finding a Blue Ocean Strategy and delivering on it is not a linear, traditional strategic process. You cannot do a SWOT analysis, evaluate the competition and try to outsmart them, while competing for the same customers in the same way. You are moving into a foreign territory.
To change, you are going to have to get out of your comfortable office and go exploring.
You have to discover those unmet needs of nonusers by watching them, listening to them talk about their business pain points, and seeing how they are trying to solve problems for which they cannot seem to find a good solution. There are a number of different ways to go exploring, but remember not to ever “outsource your eyes” to someone else if you really want to see your business in new ways.
How to overcome the pain of change?
This really requires you to experience the changes you are asking your own organization to engage in. And when you do this, you may have an epiphany that’s nothing less than amazing. As we are learning from the neuroscientists David Rock and Jeffrey Schwartz writing in “Neurosciences and Leadership,” “When people solve a problem themselves, the brain releases a rush of neurotransmitters like adrenaline.” And voilà, along comes a big new idea—Blue Ocean style.
If you want to “see, feel and think” in new ways, or you have to, you will need to fight your brain’s desire to stay static in the realm it knows today. To change, you are going to have to do it yourself. You need to recognize that new ideas come from working out solutions on your own.