Is There a Blue Ocean Way to Position Yourself?
A college friend recommended “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant” by W. Chan Kim and Renée Mauborgne. She’s in real estate and the book helped her promote her business differently.
With traditional marketing strategy, companies strive to build a better solution at a better price. The idea is to outsmart and outdo the competition. It’s an exercise in one-up-man-ship that frequently leads to each competitor releasing marginally better solutions over their competitors. The authors describe that approach as a red ocean strategy. Firms behave like sharks bloodily feeding off each other in order to capture more market share and revenue. It’s very military like with the victor winning the spoils over the other guy. The flaw is that you’re fighting for a bigger chunk of a limited and possibly saturated market.
The book recommends a blue ocean strategy which involves creating a new market with absolutely no competition combined with cost reductions that lead to greater profits. Because you’ve eliminated the competition, the focus is on delivering and maintaining a cost structure that continuously increases your profits.
I wasn’t completely following this blue ocean idea until they gave an overview of Circus de Solae. This Canadian company started with a circus concept and made something new and unique.
Consider the traditional circus. A circus typically targets families and their children. There are a lot of circus groups out there so the market is saturated. They deal with expensive animal acts and currently have to deal with the negative image drawn up by animal rights activists. Their three ringed venues require a lot of performers meaning a larger payroll.
Circus de Solae made sure to keep the tent typically expected by a circus, but even there they made some changes. Their tents are elegant and upscale. The seating went from the simple circus venue to a more theater like experience. Instead of three rings, they created multiple sequential acts around a common unified theme. They priced their tickets comparable to what would be expected for a theater outing. And by eliminating expensive animal acts and the many performers required for three ring acts, they drastically reduced their costs.
To this day, not only is Circus de Solae a bit hit with permanent venues in places like Las Vegas and Disney World Orlando, but it faces minimal competition and booming profits.
The book discusses other examples of companies that have created blue oceans. It discusses many companies like Southwest Airlines and Federal Express that moved to create their own blue oceans. These are companies that have since been copied and are now experiencing what happens when blue oceans themselves start turning red. I guess that’s a sign of success.
What’s really interesting is that the book doesn’t just discuss the companies. It outlines a very specific process for developing blue oceans. It shows a step by step approach for reviewing an existing market and for analyzing customers sets who aren’t current customers in that market. They are not proposing a theoretical solution, but a proven approach for identifying new markets and business models. It’s a process for reinventing something brand new and profitable.
The book is a good one for entrepreneurs and corporate types. It gives help for taking a new look at a business for ideas on how to move ahead aggressively.
I also recommend it for reviewing your own career. We’re frequently too involved or close up to our own careers to look at them objectively. You can use it to analyze your own direction and see if your career is headed in a direction that makes your profitable.
Hope this helps.