You are running a restaurant business. But there are so many restaurants in your town. And, every restaurant owner is fighting for the same group of customers. You see, all they do is either reducing the price or giving discounts. Their end goal is to drive the rivals out of the market. The huge competition makes it harder to earn a decent profit since the industry demand is stagnant. Sometimes you wish there would be no competition.
What if a company doesn’t have to compete with each other? How amazing it would be if you created an environment that makes the competition irrelevant!
Okay, the strategy that skips competition exists. It’s called Blue Ocean Strategy. Renowned business theorists and authors W. Chan Kim and Renée Mauborgne coined this phrase in their book called Blue Ocean Strategy in 2004.
At the beginning of the book, they talked about two types of strategies. One is a traditional strategy where all the typical companies in the industry compete against each other for the market cap. They named the strategy ‘red ocean’. Basically, in this bloody competitive environment, companies try to do something that makes them one step ahead of their competitors. The cutthroat experiences make the environment bloody.
On the other hand, the ‘blue ocean’ doesn’t want to pursue the idea of competition. Rather in this strategy, a company tries to create new market space. It redefines the process and boundaries. Thus, it generates new market demand. Blue oceans’ idea is breaking the habit of performing under the defined competitive rules.
Then the book talks about one of the most fascinating features of the blue ocean strategy that all the conventionalized businesses don’t take into account. Value innovation is something when your innovative ideas consider the cost and price. Sometimes we are so focused on the idea of innovation, we forget whether it is affordable to our customers or not. The authors explained why we need both of them to create the new market space.
The book discussed several analytical tools, grids, and frameworks. One of the most interesting frameworks the authors talked about is the Four Actions Framework. The framework asks you four essential questions. These questions point out what issues you need to identify to provide greater value to your customers. Thus, it helps you to alienate yourself from the competition.
The authors discussed numerous strategic moves. The idea that they are talking about is not only in theory. It exists in the practical world. Whenever you read the frameworks or any other tools in the book, you find exact relevant practical case studies for that context. What amazes me is they brought years old strategic moves from different industries so that we find the blue ocean strategy relevant and practical.
In the book, the authors brought the revolutionary business case of Novo Nordisk’s NovoPen, an insulin delivery solution.
There is no question how vital insulin is to diabetes patients. Previously, people used the traditional vial-and-syringe method. It required the supervision of medical professionals. And, the traditional syringe approach is inconvenient and time-consuming. So, Novo Nordisk challenged the idea of the traditional approach and brought the pen-based insulin delivery solution. Novo Nordisk’s NovoPen is a lot user-friendly than conventional syringe delivery solutions.
I think you can discuss the four-action framework with this case study. Novo Nordisk eliminated the traditional vial-and-syringe approach that may be valued no longer among many diabetes patients. NovoPen raised the bar of user-friendliness to customers.
Insulin service providers focused on low cost where Novo Nordisk didn’t fall for that traditional benchmarking. They explored new customer groups. They targeted the patients where other insulin delivery solutions targeted the health care professionals.
The writers emphasize redefining the market boundaries. Since all the companies blinded by the same conventional competitive rules try to attract a limited number of customers, finding profit from there would be harder. The book will help us with some insights to redefine the market boundaries.
I don’t know, it may sound ridiculous. I think the book is a business version of how to mind your own business. Yeah, minding your own business brings joy. The book with a significant number of cases proves that it works on a business level too.
The blue ocean strategy is a continuous process. When you find a new space, you attain new customer demands. There are no defined competitive rules. But at some point in time, the companies will start to gather and make the same pattern they made previously. So you always have to be in the process of making value innovation so that you can create new customer demands.
The book is an inspiration to small growing businesses since the toxic competitive strategic moves discourage the small business owners to run a business. Sometimes high competition produces highly standardized low-grade products. When you seek new markets, want to create new demands, you end up producing quality goods that serve your customers adequately.