Blue Ocean Strategy, a Re-design towards a Green Ocean

The Blue Ocean strategy approach is based on the idea to design a new unoccupied market without any direct competition (“Red Ocean”).

The Buyer Utility Map helps managers to focus on the customer perspective and is an important instrument for defining a Blue Ocean. The application of the Buyer Utility Map shall help to identify new market spaces within the business and allow a new positioning of the products in the future. It outlines all the levers companies can pull to deliver a useful product or service to customers as well as the different experiences customers can have of a product or service.

It enables the identification of the full range of utility propositions that a product or service can offer. It describes the process how the customer perceives the company (a product or service is purchased, delivered, used, maintained or disposed or supplements are bought). Cutting across the stages of the buyer’s experience in a matrix, there are the so-called levers of utility:

-      Productivity

-      Risk (reduction)

-      Simplicity

-      Convenience

-      Image

-      Eco-friendliness (W. C. Kim 2000).

Most of the levers are obvious. Simplicity of use, image, and environmental friendliness require little explanation, as well as that a product could reduce a customer’s financial, legal or physical risks. A commonly used lever is customer productivity. An innovation can increase customers’ productivity by helping them do their thing faster or better.[1] The Buyer Utility Map is an essential element to link the positioning of the offering to the customer to the strategy (W. C. Kim 2004).

 TRIZ provides useful methods to develop solutions for unoccupied fields for customer value, e.g.:

1.    Use of contradictions.

2.    Use of the 40 Inventive Principles.

3.    Trends of Engineering System Evolution. See  (Ikovenko 2016). 

Example:

Every step of the customer experience can be enhanced by one or several levers, especially if this is not done by the competitors. It is not the target to use many or even all the levers. It might even be a good idea to select just one, if it is decisive. For example, Tesla Motors first vehicle, the Roadster, was a sportscar. Instead of competing with other sportscar manufacturers with maximum speed, prestige, etc., Tesla chose the way to offer a more environmentally friendly car. So here, the lever “eco-friendliness” during the “use”-step made the difference. This was achieved using electric engines and advanced batteries, which linked the strategic direction with the inventive advances.

This example shows that these levers of utility offer a great source for contradictions. If we stay with the previous example, the main factor of use of a sports car is engine power and its related ability to accelerate and to reach a certain maximum speed. This contributes to image and prestige of the brand and is relevant for the purchase decision.

If, from a strategic point of view, the lever “eco-friendliness” is to be used, the former parameter “engine power” is in a technical contradiction to “eco-friendliness:  

IF we increase engine power THEN acceleration improves BUT fuel consumption is higher.

The reason for the high fuel consumption lies in the prevalent combustion technology of the engine.

In the present example, the use of electric engines with a higher conversion efficiency than fuel engines helped to resolve the contradiction. The Trends of Technology Evolution (see my previous blog contributions) indicate some hints. The S-curve model shows that the conventional combustion engines are in the stagnant phase of their development. Electric engines in vehicles could be (see at the start of tesla) as the new s-curve in mobility. Also, other approaches are possible: use of light weight materials, use of hydrogen or use of biofuels to mention some examples, but the use of the electric drive provides currently the best results, although considerable improvements need to be done on the battery technology.

TRIZ provides many analytical and problem-solving methods. However, they are primarily used in development and engineering activities. The use in business has been proposed by several authors but is hardly practised (Souchkov 2015) (Litvin 2011).

Classical management and strategy consulting are rarely “out-of-the-box” and come often with the same approaches that often provide little or no value, such as reorganizations, mergers & acquisition, cost reduction programs, Process optimizations and IT tool implementations or measures to protect existing business its extension (James E. Ashton 2003). 

The use of the Blue Ocean Strategy in conjunction with TRIZ could provide new horizons and create value for the business of corporations such as

-      Serve unserved markets

-      Create competitive advantage beyond cost leadership

-      Generation of entirely new creative approaches for top management

 A common misunderstanding regarding Blue Ocean is that, spoken from the biological perspective, blue is the colour of a marine desert. Blue water does not contain any nutrients and is not very productive. Green Oceans contain lots of nutrients and nurture plankton, millions of microscopic organisms. This enables a complex food chains and very productive ecosystems.

Here, the author proposes the use of contradictions in order to gather such nutrients for business. A Green Ocean would be a space where additional customer value is created, and enough potential exists to build a sustainable and profitable business. The resolution of initial contradictions will make such nutrients available which were hidden under the old paradigm. 

This kind of approach also supports the customer centricity of the strategy (Monti 2000) and helps to discover unmet needs (Mijeong Song 2019). The use of the utility levers in combination with TRIZ methods like contradictions, trimming or trends can lead to new service, product, process or business model innovations.

Also, there are ways to provide an even more complete approach to the corporate customers: The levers of “simplicity” and “convenience” are not primarily a domain for TRIZ-based creativity. Here a combination with tools that are able to gather the usability can be more helpful. Methods like Design thinking or Sprint could be involved in such a consulting model.

References

Ikovenko, Sergei. Triz Level 3 Certification Training. Material. C&R, Jantschgi; Jantschgi., TRIZ Consulting GROUP. , 2016.

James E. Ashton, Frank X. Cook, Jr.Paul Schmitz. “Uncovering Hidden Value in a Midsize Manufacturing Company.” 06 2003.

Kim, W. C., Mauborgne, R. “ Knowing a Winning Business Idea When You See One. Edited by Harvard Business Review.” Harvard Business Review, 2000.

Kim, W. C.,, Mauborgne, R. “Blue Ocean Strategy.” Harvard Business Review, 2004.

Litvin, S. “Main Parameters of Value: TRIZ-based Tool Connecting Business Challenges to Technical Problems in Product/Process Innovation.” 7th Japan TRIZ Symposium. Yokohama, Japan., 2011.

Mijeong Song, Dongsup Jang, Siho Jang, Chang-Ryong Heo, Dong-Il Son, Chi-Hyun Cho, Bokyung Kim, Jiho Seo. “EVOLUTION MAP BASED ON ADVANCE INVENTION, PROCESS, AND CASE STUDIES.” TRIZ Review: Journal of the International TRIZ Association , 02 2019: 61-73.

Monti, J. A., Yip, G. S. “Taking the High Road When Going International.” Harvard Business Review, 2000.

Souchkov, Valeri. “SYSTEMATIC BUSINESS INNOVATION: A ROADMAP.” Proceedings of TRIZfest 2015. Seoul, 2015. 215-224.