Blue Ocean

blue-ocean-coverA few weeks ago when we were discussing destructive alpha male strategies, Dung recommended a business bestseller to me, entitled “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant”

I have only read the reviews so far, but her tip is interesting enough to recommend the book here.

The blue ocean is a metaphor for an uncontested market. Red oceans, by contrast, are most of the markets we have today, where companies try to outperform their rivals by grabbing a greater share of the existing demand. No matter how skillfully you compete in existing markets, with tools such as differentiation, market focus, benchmarking and downsizing, there are bound to be losers. The bloody battle turns the ocean red. The alternative propagated by this book is to open up unknown and untapped markets, and it provides a framework and analytical tools to pursue and capture them.

One of the cases the book presents is Cirque du Soleil. Created in 1984 by a group of street performers, it has become Canada’s biggest cultural export and is far more successful than the traditional circuses. How did they do it? They reinvented the circus completely by eliminating or reducing certain aspects, and raising or creating others:

  • They eliminated star performers, animal shows, aisle concessions and multiple arenas.
  • They reduced fun, humor, thrill and danger
  • They raised the factor of unique locations and venues
  • and they created themes, a refined environment, a theatrical story and artistic music and dance.

This allowed them to create what the authors call “value innovation” which occurs when companies align innovation with utility, price and cost. A company must produce something of value to the customer at low cost to be successful, and finding that sweet spot of differentiation is what value innovation is about. The tools of elimination and reduction are the key to dropping costs, while raising and creating are the tools to reach new buyers.  This breaks the traditional cost-value trade-off of the old economy, in which higher value results in higher cost and makes you less competitive.

The six principles of carrying out the Blue Ocean Strategy are:

  • to reconstruct market boundaries
  • to focus on the big picture, not the numbers
  • to reach beyond existing demand
  • to get the strategic sequence right
  • to overcome key organizational hurdles in your company
  • and to reduce management risk by building the execution into your overall strategy.

The authors, W. Chan Kim and Renée Mauborgne, are professors of strategy and international management at INSEAD in Fontainebleau, France.

Now if I could only figure out how to apply all of that to my own little business, I, too, could sail out into the big blue ocean.

Learning the ropes – Vokabeln

uncontested – unbestritten
competition – Mitbewerber auf dem Markt
downsizing – Entlassungen
bound to be – lässt sich nicht vermeiden
untapped – noch nicht angezapft
aisle concessions – Verkauf auf den Gängen
venue – Veranstaltungsort

Here’s a clip from a Cirque du Soleil show.

Learning English tip of the week

Write four sentences to complete these beginnings:

  • I/We could reduce…
  • I/We could eliminate…
  • I/We could raise…
  • I/We could create…

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Anne

Teaching English for business communication skills, writing online for learners, translating, sailing whenever I can, from Washington, D.C.

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