Have you ever wondered about the best way to strategically position your business? While I was reading Blue Ocean Strategy by W. Chan Kim & Renee Mauborone, they talked about how to completely eliminate competition by creating your own market (a blue ocean). They talk about how successful it can be (with lots of examples), how to find a blue ocean, and the best way to position your business.
- Create a new opening
- Don’t focus on benchmarking
- Price it based on potential customers
Create a new opening
The main focus of this book is discussing the concept of a blue ocean, which is contrasted by typical businesses in a “red ocean” that has a lot of competition. A blue ocean is a place without competition because it’s a totally new concept, as it’s empty of other businesses. You’re not trying to fit in where there are already so many others doing the same thing.
One of the examples frequently discussed throughout the book is Cirque du Soleil. They created something totally new, it wasn’t a circus, a play, or any other live entertainment that was currently available. It is typically seen as a spin off of the circus, but they were able to reduce the overhead costs by removing the animals (which also reduced concerns about animal rights) and make it more expensive by comparing it to a play or high-end live entertainment. They were able to create something totally new, which allowed them to be so successful and well-known.
To find a blue ocean, look for what people need, but address it differently than currently being done. For example, when Ford developed the Model T, he wasn’t looking at the current automobiles of the time, but rather comparing against the horse and buggy. He wanted to market it to the masses, and make their transportation faster and more reliable. He was addressing their needs, not the needs of the elite with their highly customizable cars.
Finding a blue ocean requires a very different kind of market research. It also requires you to look at the world with an inquisitive mind to find a new way of addressing people’s problems. You need to start looking past what’s currently done to find what could be the solution.
The beauty of creating something entirely new is that there’s no one else doing the same thing. Obviously, this can be a good thing by having no competition, but it can also be more difficult to ensure the right people, those who would benefit from it, can actually find your product/service.
Don’t focus on benchmarking
Tying into the point above about your market research being different, that also means you won’t be doing the typical benchmarking exercise. Generally, companies do benchmarking to see what their peers are doing, where they are being successful, and how you’ll compare to them. If you’re creating a blue ocean, you won’t have any peers.
Without any peers, you’ll have to define a lot of things for yourself, such as what’s considered successful. By creating a blue ocean, you’re able to carve out your own space and do things how you want to.
You’ll also have to be creative when determining how to gauge your price-point and how to fit into the market. You’re doing something new, so you’re not trying to be better or cheaper, you just need to be different. To find a price-point, you’ll need to look at other markets and figure out how much value you can provide them.
Price it based on potential customers
Once again, tying in nicely with the points above, you need price your product/service based on your potential customers, not what’s currently available. You should base it on those you can give value to and how you may take away from other markets. For Cirque du Soleil, it’s priced as a very nice night out, comparable to a Broadway play, even though it’s completely different.
You’re looking at how to solve people’s problems and at what cost will the product/service be worthwhile to them. For Ford’s Model T, he priced it against the horse and buggy, not the fancy customizable cars of the time. He wanted to make it close enough to the cost of a horse and buggy, so that the majority of people could start considering and even justifying the switch to a car. Another example was the school lunch caterers, who simply considered how much would parents be willing to pay so they don’t have to pack their children’s lunches everyday.
The goal is to look around and find new problems to solve. Then determine how much your potential market would value the product/service. How much time, effort, and money does your product save them. It’s not the typical business planning, but it can be hugely beneficial if you do it correctly.
The book was quite interesting. I enjoyed learning about how others have created a blue ocean, such as Cirque du Soleil. The book provided so much more context for these landmark inventions, most of which isn’t typically common knowledge. I feel like I learned both about business and history, which is always an insightful combination.
Overall, I feel like the idea is very simple and straightforward. Of course if you create a new market you initially have less competition. But the problem is finding a way to create that blue ocean. It’s an easy concept to grasp, but incredibly difficult to implement successfully.
But I do think the book provides a lot of food for thought on the power of being different and finding a new way to solve people’s problems. Especially in this day and age where there is always someone cheaper or faster. Now you really do need to be different or more creative to start a successful business. With the increased connectivity of the world, there’s just so much competition, it’s even more important to find a blue ocean.
- Here’s where you can find out more about blue ocean strategy: https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/
- You can buy the book here.