As the world continues to evolve and change, businesses must adapt and reinvent themselves in order to thrive. The Blue Ocean Strategy is a concept that outlines the best way to eliminate competition is to not have any competition at all.
Developed by R. Mauborgne and W. Chan Kim, the strategy suggests that most companies operate in a “Red Ocean” marked by high competition and limited untapped customers, leading to limited growth potential.
Successful organizations that have used the Blue Ocean Strategy to innovate their products and services include Cirque du Soleil, NetJets, Swatch, Nintendo, Novo Nordisk, and Mexican company CEMEX.
So how can you find your own blue ocean? The authors have outlined six basic principles to help create a new value chain and reduce the risks associated with these types of businesses:
- Redefine market boundaries – Analyze new industries, technologies, target populations, methods, and trends to identify potential blue oceans. For example, the growth of organic products and local trade could suggest a blue ocean opportunity.
- Leverage creative potential – Identify ways to capitalize on the new market and present it in a novel way.
- Explore existing demand – For instance, in the organic products example, if there are already many specialized stores selling these products, you must add value to your offerings to stand out.
- Create a new value chain – Analyze the cost-benefit from the customer's perspective.
- Anticipate potential problems – Determine how to address issues that may arise with your new product or service, especially related to acceptance and public response.
- Define and study your target audience – Conduct market research to understand the needs, interests, possibilities, and methods of contact of your target customers.
It is important to keep in mind that finding a blue ocean is not just about guessing what customers want or predicting market trends, but rather it's about focusing the entire organization on a long-term customer-centric vision. This way, you're not just analyzing what customers want now, but also anticipating what they may want in the future.
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New business ideas that could fit into the Blue Ocean Strategy:
- A zero-waste grocery store that offers only package-free products, reducing waste and providing more sustainable options.
- A virtual interior design service that uses augmented reality technology to help customers visualize their space before making any purchases.
- A subscription-based service that delivers locally sourced produce and other goods to customers' homes, promoting healthy eating and supporting local farmers.
Companies like WP Engine and Hello Sells can be seen as successful examples of businesses that have found their blue ocean by offering innovative solutions in the web hosting and website design industries, respectively.