Blue Ocean Strategy, a chance to think more creatively on your business

On 13th November 2009 I will do a workshop on ‘Blue Ocean Strategy’ for Kansdenkdag. The Blue Ocean Strategy is the international bestseller written by W. Chan Kim and Renee Mauborgne. The core idea in the book is to extend your business while making your competition irrelevant since the focus has to move to non-customers. At the moment this strategy is extensively hyped by marketing advisors and consultancies. They bring it as the method to save your business from extinction. But to me, this is certainly not the idea behind the book. Red and Blue Oceans don’t stand apart, they exist next to each other. Red Oceans are the cash flows you need to keep your cash cow (see Boston Consulting Group-matrix) alive in your product/service portfolio and the Blue Ocean is the healthy cash flow you will need to invest in your stars to come.

What is this strategy about anyway?
Most companies are in the Red Ocean, trying to extend their business while focusing on the competition who aim at the same customers. This mostly leads to price wars and lowers the status of your brand. In order to get out of this conventional way of thinking the authors W. Chan Kim and Renee Mauborgne propose to draw a Strategy Canvas to see the big picture of your market space. This means you draw a X and Y-axis. On the X-axis you name the key success factors from your business and on the Y-axis you rate them. Then you draw a value curve to combine the rating with your success factors. In the same canvas you draw this value curve also for your competitor(s).
To start the creative thinking you need to utilize the Four Actions Framework to emerge the Blue Ocean Strategy from your canvas. This may sound difficult, but it simply means that you need to check which factors you can reduce or eliminate in order to gain insight how to drop your cost structure and which factors in your industry you can raise or create with the goal to lift buyer value and to create new demand. This should result into value innovation and the Blue Ocean of uncontested market space, making the competition irrelevant.

But what is so creative about lowering costs and higher customer value?
Therefore the authors suggested the six paths framework next to the framework mentioned above. This is quite a fun thing to do in a business environment during a brainstorm session. You will look at alternative (1+2+3) industries, across strategic groups within industries and across the chain of buyers you can approach for your business. Next to that you (4) look across complementary product and service offerings, and ask which products/services can I add to higher customer value? What are my customer doing before, during or after they utilize my product/service? Or you can think about strategic alliances, networks, co-creation opportunities which will enrich your business. The last two paths are (5) to look across functional or emotional appeal to buyers and (6) to look across time. With looking across time the authors mean to find insight in trends that are observable today. You need to ask yourself which trends have a high probability of impacting your industry, how will they do that and how can you open up for unprecedented customer utility? And that’s it!!

Red Ocean next to Blue Ocean
Of course in the book the authors explain far more about the above mentioned frameworks, but the essence is what I wrote just now. This will give you a start. The authors do realize there are quite some key organizational hurdles to overcome to execute Blue Ocean Strategy. But I think that you can at least start with a brainstorm and take the six paths framework step by step. To change everything at once is in my view too radical. And not taking the competition into account anymore is also an illusion. The competitive strategy theory of Porter is certainly not dead. I actually think that Blue Ocean is the combination of the differentiation and focus strategy of Porter with a pinch of cost leadership. They just gave another name to it. Smart indeed. The Red Ocean is the stuck in the middle position a business falls in when having no focus on the future cash flows.
Red and Blue Ocean do stand next to each other. The Red Ocean is your current position and the Blue Ocean is what you aim for in the future. For me this strategy is a combination of having passion for your business, to bring in some creative out-of-the-box thinking and to restrict the problems that keep your business from growing.

Sources:
Kim C. and Mauborgne R., Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, HBR Press 2005.
Interview with Chan Kim by Rick Nieman on RTLZ (introduction is in Dutch, interview is in English)

My first move in the world of blogging

Happy to finally have my website/blog settled. At the moment I am socalled ''in between jobs'' and will have some time to write about the stuff I'm interested in: that's marketing!! Currently I am looking for a marketingjob in a challenging and innovative international working enviroment. And I surely am interested in interim projects too.

Actually I started already a blog in november 2006. This blog was on Passionate Thinking. I did this since I was dissapointed by the way my team members at the time negatively reacted on innovative ideas and expanding the business by experimenting and pioneering. It came across to me as if my team members were not looking for new ideas since new ideas meant more work. For them the workplace was just a spot you go to in the morning to do your (hands-on)work and await what the manager tells you to do.

I find it more important to explore and to find out myself how I can improve the business. Of course there must be enough space for innovation in that organization in which an employer can move. If this space is not there many creative thinkers will start their own business, become very disappointed or even will look for another job.

Nowadays the importance of the creative ethos in the society is growing. People do not like to have their creativity switched on and off at predetermined times. A good mixture of work and play is a growing demand. A job like developing new software requires long periods of intense concentration, puntuated by the need to relax, incubate ideas and recharge. So too does designing a new marketing campaign or investment strategy.

Organizations must give space to these creative and passionate thinkers. Those employers obviously derive from the me-oriented generation. I believe I am on the edge of that generation, being 45-year old and young at heart.

In the next blogs I will discuss this issue a little bit further. I was triggered by it by reading the book ''The rise of the Creative Class'' by Richard Florida. A book I can recommend to anyone with a broad mind.