What Can Firms Do To Find Blue Ocean Strategies

What Can Firms Do to Find Blue Ocean Strategies?

Finding a blue ocean strategy—creating uncontested market space and making the competition irrelevant—is the holy grail for many businesses. It's about moving beyond cutthroat competition in existing markets ("red oceans") and creating entirely new demand ("blue oceans"). But how do firms actually achieve this seemingly elusive goal? It requires a strategic shift in thinking and a systematic approach. This article delves into the practical steps firms can take to discover and implement their own blue ocean strategies.

Understanding the Blue Ocean Strategy Framework

Before diving into the practical steps, it's crucial to grasp the core concepts of blue ocean strategy. It's not about technological innovation alone, but a holistic approach involving:

1. Value Innovation:

This is the heart of a blue ocean strategy. It involves simultaneously pursuing differentiation and low cost. This isn't about compromising on either; it's about creating a leap in value that makes the competition obsolete. Think of how Southwest Airlines offered low fares and a convenient, no-frills experience, creating a new segment rather than competing directly with established airlines.

2. Strategic Moves:

This involves analyzing six principles:

• Eliminate: Which factors that the industry takes for granted should be eliminated? Often, these are factors that add cost without adding much value to the customer.
• Reduce: Which factors should be reduced well below the industry's standard? Finding areas where less is more can significantly reduce costs.
• Raise: Which factors should be raised well above the industry's standard? Identifying key differentiators that resonate strongly with the target market is crucial.
• Create: Which factors should be created that the industry has never offered? This is where true innovation and uncontested market space comes into play.

Practical Steps to Finding Blue Ocean Strategies

Finding a blue ocean strategy requires a dedicated and systematic process. It's not a matter of chance; it's a matter of strategic thinking and action. Here are some key steps:

1. Reframing the Market:

The first step isn't about analyzing the current competition but about questioning the basic assumptions of the industry. Traditional competitive analysis often traps firms in the red ocean. Instead:

• Challenge Industry Boundaries: Look beyond your direct competitors. Consider alternative industries, customer segments, and functional or emotional benefits offered. Ask yourself: "What other industries offer similar solutions, even if indirectly?"
• Focus on the Customer: Forget about the competition; focus on the unmet needs and underserved customers. What pain points are not being addressed? What latent demands are waiting to be tapped?
• Explore the Buyer Experience: Map the entire buyer journey, from initial awareness to post-purchase experience. Where are the friction points, and how can these be eliminated or transformed into value-added moments?

2. Utilizing the Strategy Canvas:

The strategy canvas is a powerful tool for visualizing the competitive landscape and identifying opportunities for blue ocean creation. It plots the factors that industries compete on against the level at which they offer those factors.

• Visualizing the Existing Market: The strategy canvas allows firms to see clearly how competitors are positioning themselves and the factors that are driving competition.
• Identifying Potential Blue Oceans: By analyzing the strategy canvas, firms can identify areas where they can eliminate, reduce, raise, and create factors to achieve differentiation and low cost.
• Benchmarking and Inspiration: Examining the strategy canvas can reveal strategies of companies in other industries that could be adapted.

3. Employing the Six Paths Framework:

The six paths framework provides a structured approach to finding blue ocean opportunities:

• Look Across Alternative Industries: Examine industries offering similar functional or emotional benefits to identify opportunities for adaptation and innovation.
• Look Across Strategic Groups Within Industries: Explore different customer segments and their unique needs to tailor solutions that address specific requirements.
• Look Across the Chain of Buyers: Identify opportunities by examining the buyer experience from end-to-end and tailoring solutions to enhance value at each stage.
• Look Across Complementary Product and Service Offerings: Consider how to integrate complementary products or services to create greater value for customers.
• Look Across Functional or Emotional Appeal to Buyers: Determine how to appeal to customer needs through either functionality or emotional engagement.
• Look Across Time: Analyze the history of the industry to understand the evolution of value and to identify opportunities for innovation.

4. The Buyer Utility Map:

This tool helps understand the full customer experience, identifying pain points and opportunities for value enhancement. Mapping each stage of the buyer experience—Purchase, Delivery, Use, Supplements—helps to pinpoint areas where superior value can be created.

• Customer Pain Points: Clearly identifying what customers dislike about existing solutions is crucial to designing a value proposition that addresses those issues.
• Untapped Value Opportunities: The buyer utility map highlights opportunities to create value by exceeding expectations at different stages of the customer journey.
• Focusing on the Whole: The map ensures that the entire customer experience is considered, avoiding a narrow focus on a single aspect.

5. Testing and Validation:

Before full-scale implementation, it's crucial to test and validate the blue ocean strategy.

• Pilot Programs: Launch small-scale pilot programs to test assumptions and gauge customer response. This allows for early adjustments and reduces the risk of costly mistakes.
• Customer Feedback: Continuous feedback from customers is vital to ensure the strategy aligns with their needs and expectations.
• Iterative Development: The process of creating a blue ocean strategy should be iterative, with continuous refinement based on feedback and market insights.

6. Overcoming Internal Resistance:

Even with a well-defined strategy, internal resistance can hinder implementation. Companies need to actively address this:

• Communication and Education: Clearly communicate the vision and benefits of the blue ocean strategy to all stakeholders.
• Building a Cohesive Team: Assemble a cross-functional team dedicated to implementing the strategy.
• Leadership Commitment: Senior leadership must demonstrate unwavering commitment to the strategy to inspire and motivate the organization.

Examples of Successful Blue Ocean Strategies

Several companies have successfully implemented blue ocean strategies, demonstrating their potential for dramatic market disruption.

• Netflix: By transitioning from DVD rentals to streaming, Netflix created a new market and largely disrupted the traditional video rental industry.
• IKEA: IKEA revolutionized the furniture industry by offering affordable, self-assembly furniture, creating a whole new segment.
• Southwest Airlines: By offering low-cost, no-frills air travel, Southwest Airlines carved out a unique market space and changed the landscape of the airline industry.

Conclusion: Navigating the Blue Ocean

Creating a blue ocean strategy is not a simple task. It requires a fundamental shift in mindset, moving from competitive analysis to value innovation. By systematically utilizing the tools and frameworks outlined above, firms can significantly increase their chances of discovering and successfully implementing their own blue ocean strategy, achieving sustainable growth, and making the competition irrelevant. Remember, it's not about copying successful examples, but about applying the principles and methodologies to your own unique market context and identifying your own unique value proposition. The journey demands creativity, rigorous analysis, and a deep understanding of customer needs. However, the potential rewards—uncontested market space and sustainable competitive advantage—make the effort well worthwhile.