Getting clear about the current state of play 3. Value innovation is necessarily the alignment of innovation with utility, price and cost positions. Kim and Mauborgne have broken that concept and said that you can have high value and low cost and developed the tools to do it. Once a company creates a blue ocean and its powerful performance consequences are known, sooner or later imitators appear on the horizon. The authors and fans of the book seem to want to play both sides of the argument. We will look at two of these briefly along with some practical use tips. On a graph, the horizontal axis depicts a range of factors that a company competes on while the vertical axis shows the offering level received by the buyers.
Many managers and entrepreneurs already believe their product to be unique and above the other there may be or alternates meeting the same need. In fact, to assess properly the prospects of a blue ocean strategy, surely we would need to fill in the data in all four quadrants of a two-by-two matrix that depicts red and blue water strategies on one axis, and success and failure on the other axis. We have always shared an intellectual curiosity in understanding what it takes to stand apart and create strong profitable growth. Its designer name, the elegance of its stores, and the luxury of its materials capture what most customers value in haute couture. Overcome key organizational hurdles — Successful execution demands that your organization must resolve internal departmental differences.
Limescale would never again be found swimming in British home-brewed tea. The Red Ocean is where every industry is today. Value innovation challenges 's idea that successful businesses are either low-cost providers or niche-players. When Rackspace pivoted to the cloud, it had to evolve the thinking prevalent in every one of its thousands of employees from hosting servers to providing a platform. What is Blue Ocean Strategy? The future is something that only the heavens can answer. It transformed the market for French fry makers. The circus has conducted shows in over 271 countries on all continents except Antarctica through the 1990s and 2000s.
Children cried out for video games rather than a visit to the travelling circus. To be able to provide customers with value innovations both differentiation and low cost , a company needs to approach process innovation in a new way. The idea of this strategy is to build new businesses where none existed before. Yet the book also shows that the kind of leadership and management needed to implement a Blue Ocean strategy initiative is very different from the typical big bureaucracy, where strategy is decided at the top, and where big leaders appoint little leaders, who in turn appoint even smaller leaders, who report upwards on their progress of implementing the top management game plan. Unless the Blue Ocean initiative is conducted by people with the distinctive opportunity-based thinking that is at the foundation of Blue Ocean strategy, it will risk having no impact. That for sure created them new reaches beyond traditional smartphone markets.
Tassimo had a better product than Keurig when both entered the new single-pod coffee market. The blue ocean is taken as a metaphor to represent these industries that may offer greater opportunity or higher profit potential. Today, NetJets is a multibillion-dollar business with the largest private jet fleet in the world — over seven hundred aircraft, flying over one hundred seventy countries NetJets observed that business travelers, the most lucrative mass of customers in the airline industry, had two principal choices: They could fly business class or first class on a commercial airline or the company could purchase its own aircraft to serve its corporate travel needs. Uncontested or untapped market sooner or later becomes Red Ocean, as blue ocean strategy is more attractive and hence creates competition and the organizations lose first mover benefit. I consult with organizations around the world on leadership, innovation, management and business narrative. Entering a market where there is no competition may be seen as very attractive, the writer assesses the advantages and disadvantages of a blue ocean strategy using real companies to illustrate the points raised.
The employees must be encouraged to always think creatively and given the empowerment to bring improvements where needed. In the case of all costs being allocated to a single project or. The blue ocean idea index provides executives with tools to assess whether their idea to do good also aligns with what it takes to do well. Should all examples of value innovations be considered as blue ocean strategies? In search of this answer, we looked back more than 100 years and across more than 30 industries. The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. Is all innovation a blue ocean initiative? Cirque du Soleil, for example, marketed itself as something new. This created a blue ocean as families bought the devices, not hardcore gamers and lead to big margins for Nintendo as the Wii machines we cheaper to make than more advanced machines.
These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed. You can think of the color red being used in the term red ocean because of the bloodbath that a highly competitive marketplace can sometimes feel like. Blue Ocean Strategy Examples: iTunes With the launch of iTunes, Apple unlocked a blue ocean of new market space in digital music that it has now dominated for more than a decade. Though sound advice in practice this may put managers at risk for ignoring relevant competition. The authors have identified a handful of successful companies and made a series of unfounded recommendations. From this process perspective, there are six important steps to using the Blue Ocean Strategy.
Apple observed the flood of illegal music file sharing that began in the late 1990s, enabled by file sharing programs such as Napster, Kazaa, and LimeWire. Well before the internet offered such services, traders could use Bloomberg online services to buy items such as flowers, clothing, and jewelry; make travel arrangements; get information about wines; or search through real estate listings. The authors use Hewlett-Packard and the digital camera ind. For this to happen, companies need to go beyond competing with each other to take hold of new profit and growth opportunities that can be used to create blue oceans for their business. The current strategy paradigm failed to explain how to create and capture this lucrative and growing part of the market universe.