Business StrategyBlue Ocean Strategy
Title: Tapping into Uncharted Markets: Blue Ocean Strategy Framework
Author: Brayden Martin
Year: 2020
Category: Blue Ocean Strategy
Summary
I. Introduction to Blue Ocean Strategy
Brayden Martin’s “Tapping into Uncharted Markets: Blue Ocean Strategy Framework” provides a comprehensive guide on how businesses can break away from the highly competitive “red oceans” and instead explore new market spaces, or “blue oceans”, where competition is irrelevant. The book emphasizes creating new demand rather than fighting over existing demand, leading to rapid growth and profit increase.
Action: Evaluate your current market position. Identify if you are in a “red ocean” filled with cut-throat competition. Start brainstorming ideas for new markets or under-served segments you can approach differently.
II. The Four Actions Framework
This section introduces the Four Actions Framework: Eliminate, Reduce, Raise, and Create. These actions help reconfigure a company’s value curve to unlock a blue ocean.
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Eliminate: Identify which factors that the industry takes for granted should be eliminated.
- Example: In the airline industry, Southwest Airlines eliminated in-flight meals and hub-and-spoke routes.
- Action: List down aspects of your business offering that could be unnecessary to customers and examine if eliminating them can reduce costs without affecting value.
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Reduce: Determine which factors should be reduced well below the industry standard.
- Example: Southwest reduced the sophisticated seating class system and lounge services, focusing on point-to-point travel.
- Action: Conduct a cost-benefit analysis of your current service features. Aim to reduce those that add little value relative to the cost.
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Raise: Identify which factors should be raised well above the industry standard.
- Example: Southwest raised the convenience of flight schedules and customer service focusing on speed and efficiency.
- Action: Collect customer feedback to find out what aspects of your product/service they value most and explore ways to enhance these features.
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Create: Discover which factors should be created that the industry has never offered.
- Example: Southwest created a unique culture of fun and friendly service, which differentiated it from other serious, corporate airlines.
- Action: Conduct competitor analysis to identify gaps in the market and invent new value propositions that set your business apart.
III. Analytical Tools and Frameworks
Martin introduces key analytical tools that help in exploring blue oceans:
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Strategy Canvas: A diagnostic and action framework capturing the current state of play in the known market space.
- Example: For the wine industry, Casella Wines used a strategy canvas to identify that most competitors focused on prestige and tradition, whereas they focused on taste and price.
- Action: Draw a strategy canvas for your market. Plot the key factors of competition and see how you can differentiate yourself by changing variables significantly.
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The Six Paths Framework: This helps break out of accepted boundaries to systematically identify blue ocean opportunities.
- Example: [Paths include looking across alternative industries, strategic groups within industries, etc.]
- Action: Use the Six Paths Framework to challenge assumptions about your industry boundaries and identify unexplored areas.
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Buyer Utility Map: This maps out the utility levers across buyers’ experiences across different stages.
- Example: Apple’s iPod focused on ease of use and instantaneous access across various utility factors.
- Action: Create a buyer utility map for your product/service to see where you can enhance utility for your customers at different stages.
IV. Case Studies and Success Stories
Martin includes several real-world examples of companies that successfully implemented Blue Ocean Strategy:
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Cirque du Soleil: The company redefined the circus experience by eliminating animal acts, reducing star performer costs, raising the level of production and theatrical elements, and creating a unique blend of circus and theater.
- Action: Analyze your industry to see which conventional elements can be rethought or combined innovatively.
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NetJets: This company created a new market by offering fractional jet ownership.
- Action: Look into industries with high perceived barriers to entry and think about innovative models (like fractional ownership) that you can use to lower those barriers.
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Nintendo Wii: Instead of competing directly with other gaming consoles on graphics and processing power, Nintendo targeted non-gamers with innovative motion-sensing controls.
- Action: Consider whether your product is overly focused on advancing in one dimension (e.g., technology) and explore ways to innovate in user experience or accessibility.
V. The Role of Leadership and Organizational Politics
The importance of leadership in fostering a culture that embraces blue ocean thinking is crucial. Leaders must be willing to challenge conventions and mobilize the organizational support required for disruptive innovations.
Example: Ford’s Model T revolutionized the automobile market by making cars affordable to the masses rather than competing in the luxury segment.
Action: Develop leadership programs that encourage creative thinking and risk-taking. Foster open communication channels where all employees feel safe to propose radical ideas.
VI. Execution and Alignment
Successfully implementing a blue ocean strategy requires alignment between value, profit, and people propositions. This section underscores the importance of company-wide alignment for executing a strategic shift.
Example: The Body Shop aligned its ethical values with its product offerings and company culture, appealing to socially conscious consumers.
Action: Ensure that all departments (marketing, production, sales) are on the same page with the new strategy. Regularly communicate the vision and how each team contributes to its realization.
VII. Overcoming Hurdles
Martin discusses the potential organizational and market hurdles businesses may face in moving to a blue ocean and how to overcome them:
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Cognitive hurdles: Organizational denial or unawareness of needed changes.
- Example: Senior management workshops and immersion in market surveys can help overcome these hurdles.
- Action: Organize sessions where employees experience market feedback first-hand to ground them in the realities faced by the business.
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Resource hurdles: Limited resources for implementing new strategies.
- Example: Focus on key influencers within the company to build momentum without needing vast resources from the outset.
- Action: Identify key individuals who can influence change broadly and leverage their sway to rally the rest of the organization.
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Motivational hurdles: Lack of enthusiasm or resistance within the organization.
- Example: Direct employees to understand how changes can benefit them personally, and reward early adopters to set examples.
- Action: Create incentive programs that recognize and reward employees who actively contribute to the blue ocean initiatives.
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Political hurdles: Opposition from dominant factions or influential individuals.
- Example: Strategic stakeholder engagements and transparent communication can diffuse internal politics.
- Action: Map out potential political roadblocks and develop strategies to address concerns of those feeling threatened.
*VIII. Sustaining Blue Ocean
Lastly, the book emphasizes that sustaining a blue ocean requires continuous innovation. Staying vigilant and responsive to trends ensures ongoing differentiation.
Example: Starbucks continuously innovates beyond coffee, such as through the introduction of mobile apps and loyalty programs.
Action: Set up processes for ongoing market trend analysis and adaptable innovation frameworks. Encourage a company culture that embraces perpetual adaptation and improvement.
Conclusion
“Tapping into Uncharted Markets: Blue Ocean Strategy Framework” by Brayden Martin serves as a vital roadmap for businesses seeking to escape competitive saturation and discover untapped market spaces. By understanding and applying key frameworks and tools mentioned in the book, businesses can create unique value propositions, reduce costs, and achieve lasting growth. The practical actions and vivid case studies provided make the principles of blue ocean strategy accessible and actionable.
Overall Action: Continuously review and refine your market strategy using blue ocean principles to not only discover new opportunities but also maintain a competitive edge through ongoing innovation.