Blue Oceans.

Blue oceans cover 71% of the Earth’s surface and hold 96.5% of all the water on the planet. According to the Soil Society of America, when you take out the mountains, swamps and deserts on the planet, only 12.5% of the surface of the earth is habitable for humans to live and grow food. Simple dynamics that provide challenges and opportunities to think, grow, and find innovative ways to expand and drive the progress within our existing physical and mental barriers. What if those large, Blue Oceans are rich with opportunity that goes way beyond our current belief systems and thinking? What treasures lie within reach beyond our shores?

Our global economy is a complex and dynamic network of 8.2 billion people and 196 nations. According to World Atlas there are 4,416 cities with 150,000 or more people on the planet, and 340 of those cities have one million or more people. The Population Reference Bureau data reveals that in 2008 the world achieved a milestone: more humans are now living in urban centers than rural settings. (The farmers have all moved to the cities over the last hundred years.) Satellite images and analysis reveals that the majority of humans are now clustered into small, tight geographies – maybe within only 3% of the surface of the Earth. The takeaway is that we have 80% of the world population living in poverty (living on less than $10 per day) and clustered into only 3% of our available space. That other 97% of physical space on the planet represents enormous potential to explore, expand and develop – and find new ways to drive progress and help lift more men, women and children out of poverty.

According to the World Bank there are more than 125 million businesses and some 46,000 listed-corporations operating on the planet. Our $80 trillion global economy is growing at a rate of 3-4% and driven by vision, energy, innovation and commercialization, productivity improvements, and economic achievement and political stability. (Our potential and growth is only diminished by the conflicts and wars that hold us back from greater success across the globe.) Our economic growth is also driven by the vibrant ideas and skill development of young people studying in more than 23,700 universities across the planet (1/4 of all universities are located in either the U.S. or China). These young, open minds represent one of our greatest treasures and resources, and provide the brain-power and collaboration to create new industries that literally change the world. Stanford University in Palo Alto, California is probably the most brilliant example of this type of “power-center” in modern times, but the Top 200 universities including Harvard, MIT, Caltech, UC-Berkeley, The University of Washington, The University of Michigan, The University of Texas, The University of Colorado, The University of Toronto, McGill, The University of Waterloo, INSEAD, Peking University, Tel Aviv University, and many others are important innovation-engines, also. Strong leadership and teamwork within both small business and large corporations are the "magic sauce" to enable innovation to spark and form new opportunities. This enables all boats to rise in the harbor.

Innovation potential is everywhere – and game-changing growth requires new business models, mentors and sponsors, and an army of inventors, entrepreneurs and intra-entrepreneurs. And strategic investors. Modern innovation is a team sport. Perhaps less than 5% of our human population are truly wired to be effective players in the innovation ecosystem – although most have the potential to be a valuable player in the process. A shift in Growth Mindsets, and a bold new framework in our public school systems can plant the seeds of innovative vision, thinking, and collaboration. We need better leadership across our political, economic, and educational systems. We need a strong belief system that celebrates failing-forward fast, and then repeat until you achieve success. According to Jim Clifton in his best-selling book, The Coming Jobs War (2011), the world is digging in the wrong places for the key to job creation. To find the right place, the world needs to know the psychological traits inherent in inventors and entrepreneurs. We need bigger thinking, and the universities and cities are the centers that are most like to create and drive the change that is needed to be competitive and successful in the next hundred years. San Francisco models greatness. Detroit modeled it a 100-years ago and then failed to adapt to changing conditions.

There are over 1,000 industries in our global economy and some of the largest are retail and food, energy and oil, pharmaceuticals, healthcare, communications, automobiles, construction, shipping, and defense. Industries are dynamic ecosystems that literally create change by the minute. They mimic advanced biological systems that are highly complex and interdependent. For example, in the $303 billion global wine industry there are 8 major companies that control 75% of the revenue, and another 1,600 companies that fight for the remaining 25% of share. In the $7 billion global contact lens industry, there are 4 competitive rivals (Johnson & Johnson Vision Care, Alcon, Cooper Vision, and Bausch + Lomb) controlling 98% of the global contact lens market. In the $9 trillion automobile industry, 14 companies (GM, Tata, Geeley, Toyota, Honda, Ford, BMW Group, etc.) have 55 brands and manufacture 100 million cars per year. The top 10 manufacturers (GM, Ford, Toyota, Chrysler, Honda, etc.) control over 80% global market share in this giant, 100-year old industry. (Henry Ford launched the first Model T in 1908 and changed the world.) All existing industries are fighting fiercely to maintain and grow their market share. The stakes are very high - and they are literally fighting to the death. Effective Visionary Leadership, talent, innovation, and both smart marketing and financial engineering are keys to elbowing your way to success in the tough world of business. Sometimes the proverbial competitive waters are dark red with blood from the fierce competition -and the sharks begin to circle. Sharks are opportunistic and devour. Red Oceans are difficult places to thrive or survive long-term.

In W. Chan Kim and Renee Mauborgne’s defining book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant (2005), they shape the idea that industries are either defined as “Red Oceans” or “Blue Oceans.” A Red Ocean is characterized as an industry with many competitors fighting for market share, and desperately seeking product, people, and process innovations to strengthen value propositions and business models, driving efficiency and productivity. EBITDA, ROA, ROE, Net Promoter Score, and market share are important metrics on a Scorecard. There is constant competitive threats- known and unknown- and downward pressure on revenue and profitability even in the most stable operating environments. Risk and the threat of disruption to your business model is constant, and your 50-year old company can quickly become irrelevant and destroyed almost overnight. (Think Blockbuster, America Online, or Kodak.) One of the strongest business leaders in recent times is John Chambers, now-retired CEO of Cisco. Last year he gave a speech and delivered a dire prediction that 40% of American companies would be dead in 10 years. In addition to his prediction, a study from the John M. Olin School of Business at Washington University estimates that 40% of today's Fortune 500 companies will no longer exist in 10 years. Fortune Magazine did an analysis in 2015 and found that only 12% of Fortune 500 companies in 1955 still exist today. The rest have disappeared due to acquisition or bankruptcy. Failed business models and a serious lack of leadership, vision, and innovation eventually lead an organization to the cliff.

Most global companies are currently operating in the Red Ocean. Most don't even realize it. (Fortune 500 companies as a group have been averaging only 4% sales growth, 9% net margins, and 15% ROE in recent years. Nothing to write home about.) To survive and remain relevant, a natural evolution for the modern corporation is to acquire and merge with a rival to achieve synergy and financial strength. At least in the short-term on paper. According to Bloomberg News, 2015 merger activity in the U.S. was up 42% from 2014 and accounted for almost $5 trillion in transactions. A famous 2015 KPMG study indicates that 83% of merger deals did not boost shareholder returns. According to research and a recent Harvard Business Review report, the failure rate for mergers and acquisitions (M&A) sits between 70 percent and 90 percent. Clearly the evidence suggests that simply merging or acquiring a competitor is not the long-term answer to survival.

Blue Oceans are the opposite of Red Oceans. Think Netflix, Apple, Google, Facebook, Ritz Carlton, Zillow, Cirque Du Soleil, Uber, Disney World, Priceline, Starbucks, and so many others. Blue Oceans are often new, uncontested markets and market spaces (within an existing industry, or a brand-spanking new one) that represent significant opportunities for a company to innovate, deliver a unique value proposition, maximize revenue and profitability. In their book, Kim and Mauborgne examined over 150 Blue Ocean strategic moves in companies across 30 industries. They identified important performance patterns: In a study of 108 companies, they found that 86% of the new product or service launches were line extensions/incremental improvements within their Red Ocean space, and accounted for 62% of total revenue but only 39% of profits. The remaining 14% of launches were aimed at creating Blue Ocean opportunities. They generated 38% of total revenue and 61% of total profits. A Blue Ocean Strategy is much more powerful that a Red Ocean Strategy. Therefore, creating and driving Blue Ocean opportunities is difficult but highly profitable in contrast to spending so much time and effort to improve existing Red Ocean products or platforms. The challenge is that most leaders and organizations are clueless on what to do and how to do it, and are spending 99% of their time exclusively focused on Red Ocean activities. Without doubt, these CEOs are probably limiting future growth opportunities and increasing the inherent risk of rapid change and shifting markets. And brutal market disruption.

A couple of years ago I had the privilege to have a private lunch with a multi-billionaire at a Denver restaurant; a gentleman who had built one of the largest and most successful real estate companies in the world. He came from humble Midwest beginnings with limited education, connections, and resources, yet he created a magnificent Blue Ocean in an established industry- and eventually enabled tens of thousands of his associates to innovate and realize new opportunities and tremendous success. He had a powerful vision and continues to challenge existing business models, and demonstrates the passion and skill to build teams and engage customers around the globe. (In my opinion, Elon Musk, CEO of Tesla is a younger version of this great American man.) A model of success. American energy, optimism, and an obsession with failing and innovation is more precious than all the money in the banks. This is the fuel to launch us into Blue Oceans. How can we all have a Blue Ocean Mindset and work together to discover new opportunities? Imagine how those beautiful Blue Oceans can change the trajectory of human development and lift all boats in the harbor... and provide a better life for all of our children? Let's go. See you in the water.

Let's Create More Sparks: Robert is a curious Irish-Canadian and well-traveled American who naturally enjoys story telling that includes lots of interesting facts and figures. Stats and data points help tell powerful stories. Interesting quotes and good books bring vivid colors and memorable shapes to a story. Good stories inspire the human spirit. Ideally you found an idea or two in this LinkedIn article that you can now use as a fantastic conversation starter with friends or colleagues over a coffee on a leisurely Saturday afternoon.