Discover the Untapped Market Potential Right Under Your Nose. Learn How Companies Like Netflix, IKEA and Cirque du Soleil Left Rivals Floundering. See How Any Business - No Matter the Size - Can Benefit From This Innovative Approach
- The difference between competing head-to-head in crowded red oceans versus strategically discovering wide open blue oceans ripe for growth.
- How to systematically analyze any business using the proven Eliminate-Reduce-Raise-Create framework to shift strategy away from competitors.
- A step-by-step process any organization can follow to break out of the status quo, attract new demand beyond existing customers, and achieve lasting competitive advantage through continued innovation.
- Bonus Section (at the end)
In today's competitive markets, simply competing head-to-head often leads to diminishing returns. However, companies like IKEA, Cirque du Soleil, and Toyota achieved tremendous success by creating "blue oceans" of uncontested market space.
The authors of Blue Ocean Strategy provide a systematic approach to shift from red to blue oceans. One key tool is the Eliminate-Reduce-Raise-Create Framework.
The Eliminate-Reduce-Raise-Create Framework This framework involves mapping out all factors customers consider when evaluating purchases within an industry. These can include price, features, service, branding and more.
The company then analyzes each factor to determine whether it should be:
Eliminated - Remove irrelevant factors to lower costs. Cirque du Soleil eliminated animal acts.
Reduced - Decrease importance of expected but less valued factors. Netflix reduced late fees.
Raised - Significantly improve appreciated factors. Nordstrom raised exceptional customer service.
Created - Develop new factors customers haven't considered but will value. Prius created eco-friendly image.
By making these coordinated changes to the strategic value curve, a company can shift to a new profile that outmanoeuvres competition. This forms the basis for tapping blue ocean opportunities.
Here are some tips for how businesses ( no matter the size ) can identify factors that can be eliminated, reduced, raised, or created as part of the Blue Ocean Strategy framework:
- Conduct customer interviews/surveys - Ask open-ended questions to understand pain points and unmet needs beyond existing offerings.
- Analyze online reviews/social media - Look for frequent complaints or requests that indicate opportunities to eliminate or reduce unimportant factors.
- Benchmark competitors - Determine which factors are essential across the industry versus place-based assumptions you can challenge.
- Map the buying process - Identify extraneous steps, costs, or complexity that influence customer experience negatively.
- Review lifetime customer value - Consider unnecessary servicing, support or add-on costs that can be reduced over the long run.
- Consider industry norms critically - Tradition may justify keeping irrelevant factors just because "that's how it's always been done."
- Apply outside perspectives - Discuss your industry with those new to it to identify unrealized opportunities.
- Explore new technologies - Digital tools may help eliminate physical constraints and facilitate new factors.
- Get employee feedback too - Frontline staff see pain points that systems/new ideas could resolve.
The goal is spotting overlooked ways to change strategic positions, not just incrementally improve current offerings. With insight and creativity, new factors can emerge.
Here are some common challenges businesses may face when implementing a Blue Ocean Strategy:
- Resistance to change from within the organization. Introducing new strategic directions can disrupt the status quo and meet internal opposition.
- Difficulty reconstructing industry boundaries in creative ways. It's not easy to redefine markets or envision currently non-existent customer demand.
- Struggle applying the Eliminate-Reduce-Raise-Create framework. Analyzing all factors systematically requires strategic thinking outside the box.
- Failure to attract new non-customers beyond existing demand. Finding entirely new types of buyers is challenging without proven concepts.
- Lack of resources for robust prototyping and testing of innovations. Ideas may fizzle without proper exploration and refinement.
- Risk adversity preventing bolder moves away from competitors. Major strategic shifts take courage away from established norms.
- Difficulty building execution plans in sync with strategy from inception. Translating ideas into action cohesively is complex.
- Trouble leading industry change versus incrementally following others. Proactively pioneering transformations requires vision.
- Lack of refinement based on market testing feedback. Continuous learning and adjustment is needed over iteration.
- Competitors effectively imitating successful blue ocean moves. Protection and ongoing innovation is key long-term.
Overcoming these challenges demands perseverance, creativity, organisational alignment and a willingness to learn through experimentation.
