Surviving and Thriving in a Blue Ocean

In a previous blog post, we discussed the difference between blue oceans and red oceans. As a very brief recap, red oceans are the “what is” of the industry; it’s what is being done. Blue oceans, by contrast, are an open frontier. They are the unknown. They are the space where companies create their own new markets.

The benefits of blue oceans are apparent. There’s no competition yet. You invented the market and are in many ways a monopolist. Given the benefits of blue oceans, every business would operate in them if they could; however, it’s not that easy.

In “Red Ocean Traps,” a Harvard Business Review article by W. Chan Kim and Renée Mauborgne, the authors discuss six common pitfalls that cause business leaders to remain trapped in red oceans. The piece is worth reading in its entirety, but here is a quick overview of the six pitfalls:

Seeing Market-Creating Strategies as Customer-Oriented Approaches

Almost by definition, blue market strategies aren’t customer-oriented. You shouldn’t be focusing on your existing customers, but on the customer-that-could-be. Don’t think about the people who are already buying something; think about those who aren’t, and ask why.

Treating Market-Creating Strategies as Niche Strategies

A niche strategy looks to differentiate a product enough to target a segment that is generally already being served but could be served more precisely. This isn’t what blue ocean strategy is all about. A blue ocean strategy looks to develop a new, broad demand, not an existing, narrowly-tailored demand.

Confusing Technology Innovation with Market-Creating Strategies

Just because a new product or service is technologically groundbreaking doesn’t mean there’s a market for it. The key is to focus on value innovation as opposed to technological innovation. How can we create new value in a new space? If it involves new technology, great. But it doesn’t need to.

Equating Creative Destruction with Market Creation

Creative destruction occurs when a new innovation destroys demand for a previous product or service. Think PCs and the typewriter. Creative destruction focuses on existing markets, replacing one offering with another. Blue ocean strategies focus on new markets and innovative offerings.

Equating Market-Creating Strategies with Differentiation

Companies seeking to differentiate think in terms of trade-offs. “We can be quality, or we can be low cost.” But in a blue ocean, you can have the best of both worlds, because there’s no one to differentiate yourself from.

Equating Market-Creating Strategies with Low-Cost Strategies

Setting yourself apart from competitors isn’t the same as creating a new market. It’s simply staking out a position in an existing market. When creating a new market, the possibilities for setting price points are much more abundant and potentially lucrative.

Blue ocean marketing strategies are often the holy grail of business leaders; however, when one has spent years or decades operating in red oceans, it can be difficult to see things through a blue ocean lens.

Recommended Reading:

The Everything Guide to Customer Engagement

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