With a Blue Ocean Strategy, it’s clear sailing ahead

“If I had asked people what they wanted, they would have said faster horses.” – Henry Ford

By bringing mass production to the manufacture of automobiles, Ford created a new market. I’m certain that if you think about it for a few moments, you can come up with other companies that have essentially created new markets when they introduced their products or services.

One label these fall under today is “Blue Ocean Strategy.” It’s a term created by W. Chan Kim and Renee Mauborgne in their book of the same title. They contrast it to a red ocean strategy, where you jump into a crowded marketplace, attempt to compete, and get eaten by the sharks.

It’s clear sailing in a blue ocean, at least theoretically…and for a while. In a fresh new market, competition is irrelevant.

We’ve discussed the importance of differentiation a lot on these pages. Kim and Mauborgne’s blue ocean strategy adds to that a bit. It focuses on differentiation plus low price. I think the innovations Henry Ford introduced illustrate the power of differentiation plus low price, but let’s look at a more contemporary example.

I was tempted to mention Uber here, but by using such a major “disruptor” as an example, it makes the blue ocean strategy seem out of reach, so let me stay in transportation but give you an example that is more “reachable” for the average entrepreneur.

Do you have Super Shuttles in your area? They are a fairly inexpensive way to get to the airport. You schedule a pickup, the van arrives at your location, and off you go.

The first step in carving out a new market, according to the Blue Ocean Strategy, is to find dissatisfied users of a current product or service. Before Super Shuttle was launched think about the ways people would get to the airport:

  • Drive their own cars, but many resent the parking fees.
  • Take a cab, but many think it’s too expensive.
  • Take a bus, but many don’t like having to lug their stuff to the pickup location.
  • Lean on a friend or relative for a ride, I don’t think I need to comment on this one!

When Super Shuttle started up, the service could easily pick up some of the disgruntled users of the other means of airport transportation.

Another important aspect of the Blue Ocean Strategy is that your company must be systematically focused on providing the differentiation and low cost. In other words, what makes your vision special can’t be merely some creative marketing. It has to be real and be experienced by your customers.

For example, if Super Shuttle pushed customers through an inconvenient scheduling system it would undermine the company’s purpose.

Pursuing differentiation and low cost at the same time is not an easy task and Mauborgne and Kim’s system is extremely focused on data analysis. In fact, they have established their own business – Blue Ocean Strategy –­ to help companies create new market spaces using their tools, methodologies, and frameworks.

And if you want to delve more deeply into the topic, be sure to check out their book. Grab a copy on Amazon or find it at your local library.