Friday, March 10, 2006

Blue Ocean Strategy and making competition irrelevant

I haven't heard Blue Ocean Strategy before, but while I was reading the following notes from Rajesh Jain's Blog, I recalled a conversation that I had years ago with Bernard Aleva who was the CEO and President of Ei at the time (now he is Publishing Director for Life Sciences at Elsevier) and telling him that I would never base my product development strategy on my competitor because if I start copying them I will be making the same mistakes and there won't be any differentiation between my product and the competitor's product, and at the end the customer will buy the least expensive one.

Customers do not want me-too products.

"Blue ocean strategy is about creating uncontested market space. Too many companies are swimming in the red ocean of bloody competition where there is limited room for real growth. The image of the vast blue ocean conveys the infinite possibilities for profitable growth that exist with this strategy.

Value innovation is a strategic move that allows a company to create a blue ocean. Typically, companies in the red ocean pursue incremental improvements for customers through either low cost or differentiation. Value innovation helps companies make giant leaps in the value provided to customers through the simultaneous pursuit of differentiation and low cost.

It shouldn’t be a trade off between the two; exceptional value and innovation should be inseparable. Offer buyers a huge leap in value, and that will give rise to new markets. That’s how you make the competition irrelevant.

We begin by giving companies three pointers on how to break out of the red and into the blue ocean. Number one: stop benchmarking the competition. The more you benchmark your competitors, the more you tend to look like them. That makes you a me-too organization, which is the opposite of what you want to achieve.

Second: stop being content to swim in the red ocean. Many companies are caught up in competing and don’t even look to the horizon of the blue ocean. And third: don’t count on your customers for growth. Look to non-customers; they provide the most insights into how you can create new, uncontested opportunities— new demand for your products or services." via Emergic [bolding is mine]

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