What’s your strategy for your organization? So many leaders we work spend so much time on performance that they don’t have a minute to think about strategy. Blue Ocean Strategy turns 15 this year – and it’s still shaping organizations thinking. The challenge is to think about new markets /blue oceans v. spending time on old markets. You don’t have to venture into distant waters to find blue ocean – new markets are right next door!
A little bit of history: in a study of businesses launched by 108 companies, 86% of new ventures were line extensions or incremental improvements to existing industry offerings. That’s staying in the red ocean (where there fierce competition already exists). A mere 14% of ventures were aimed at creating new markets or industries – blue oceans! But here’s the headline: red oceans only gave the companies 39% of the profits, but new markets or blue oceans yielded 61% of the profits.
Spend more time in blue oceans. They are more profitable.
Is the theory still relevant? There are some amazing Blue Ocean tools to use but for us it raises the following questions:
- What are examples of red and blue oceans today?
- How are your leaders using it to drive performance?
- How is technology innovation impacting your decisions to explore blue oceans?
- What are the cognitive barriers to imitation with your competitors?
- How does this impact your business?
A great place to start, the four actions framework is used to add new values to the strategic canvas value curve. The four actions taken here are:
- Create – Here, the idea is to create new industry factors that can generate value and anew market and were not offered before.
- Reduce – Here, the idea is to reduce any of those factors which were nothing more than a consequence of the competition between industry players to differentiate themselves.
- Eliminate – In this step, the idea is to identify those factors which have been the basis of industry competition for a long time.
- Raise – Finally, the idea is to identify those factors that need to be raised above where they are in the industry at present.