How can ‘Blue Ocean Strategy’ help you with your revenue & profitability targets?
Are you struggling to think out a way for your company to break out of vicious price competition that is killing your margins and revenues – no doubt there will be blood in the water (hopefully not yours) as the competition gets tougher. You are probably looking around for a way to break out of your situation and perhaps you’ve come across the soaraway business best seller “Blue Ocean Strategy” by Prof. Chan Kim (Professor of Strategy and International Management at INSEAD, France).
What’s so great about Blue Ocean Strategy?
Blue Ocean Strategy sets out some of the world’s most powerful tools for diagnosing whether your business has or can create a competitively advantaged customer proposition and supporting business model. In the absence of superior customer proposition and/ or business model, unless you are a monopoly supplier then you are going to suffer poor profitability or worse.
Hands up who would like to be rich?
‘Blue Ocean strategy’ on the face of it appears to be a very attractive proposition – as it offers to make your competition irrelevant and create high profit growth? I’d like to be offered the lead in the next James Bond movie too
Hands up who would have liked to have come up with Google or ‘Cirque du Soleil’ – you would be sipping champagne by the pool in your own Caribbean island by now no doubt! But how many of these unique truely ground breaking innovations come up in life – maybe 1 or 2 per decade across the globe. I’m sure I would have a better chance of winning the lottery.
A Fax Machine that is also a Toaster – Where can I buy one?
Now I could come up with an innovation that no-one else has though of – a fax machine that is also a toaster & coffee maker. (Actually I would think of buying such a great device if it had wireless Internet routing capabilities built in too – I’m surprised I haven’t seen any on sale).
No doubt Prof. Chan Kim would say this is a ridiculous offer – as not many customers want this particular set of attributes. What they want is an offer that is the best on a limited number of highly relevant attributes (to that group of customers) that offers fantastic value for money.
I guess if this is true – then we have arrived at the thinking of Prof. Patrick Barwise & Sean Meehan of London Business School set out in their book “Simply Better”.
Forget “Differentiate or Die” – You just really want something Better
To quote Simply Better” – “At the heart of the “simply better” approach is a new and controversial view of why customers buy what they do. Barwise and Meehan argue that customers rarely choose a product or service because it offers something unique. Instead, customers usually choose the brand which they think will most reliably deliver the basics – the generic category benefits which all the reputable brands provide but which some provide better or more reliably than others.”
If you are in the UK, think Tesco and “every little helps” – Tesco set out to be that bit better than their main competitors (Sainsbury, WalMart Asda).
How do you come up with an (Even Better) Proposition?
Now I do think Prof. Chan Kim has come up with a great model and set of tools for coming up with your better proposition. His ‘strategy canvas’ method of describing propositions is brilliant – and doesn’t take too much time. [I have worked with clients who reworked their propositions to come up with 2 great new offers in less than an hour – though it did take them a good deal longer to get them to arket].
Chan Kim’s “Value Innovation method” then has a great way of helping you rsehape the proposition – taking cost & complexity over part of your offer – to reinverst in making you a winner elsewhere. I’d suggest at this point – you either go over to www.hbr.org and download one of his HBR articles for about $6 – or purchase his “Blue Ocean Strategy” book from Amazon.
[You can even download a presentation describing it from http://blueoceanstrategy.org/wbos.html
What should I do next?
My suggestion for 3 steps to creating our own fantastic proposition:
i) Better beats Different
I would suggest you get a hold of “Simply Better” first, read it through to get your ead around the idea that customers just want better products and services (at a great price). [I know anyone outside of a leading global business school will think this idea to be galringly obvious].
ii) Get your head around the Strategy Canvas toolset
Get a hold of any of Prof. Chan Kim’s books or HBR articles and teach yourself the technique for creating your own compelling “Value Curves” in under an hour
iii) Create Your Own Better Proposition
Use Prof. Chan Kim’s method (the “Strategy Canvas”) for describing your propsition – then start to use his 4 approaches for making your value curve more compelling Try the idea out with a few key customers – and see if they find it much more compelling and attractive than your current proposition.
Good luck – and see you in the Caribbean on your new yacht soon