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  • In Search of Blue Oceans of Profitability and Growth

  • In Search of Blue Oceans of Profitability and Growth

    At a recent conference, Frank O’Dea the co-founder of Second Cup and PROSHRED, described the tremendous growth and profitability that both companies underwent when they stumbled onto blue ocean strategy concepts that were later portrayed in the million copies sold business book “Blue Ocean Strategy- How to Create Uncontested Market Space and Make the Competition Irrelevant.” W. Chan Kim and Renee Mauborgne Professors at INSEAD University wrote this seminal and extensively researched bestseller business strategy book.

    Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, authors W. Chan Kim and Renee Mauborgne argue that lasting success comes from creating ‘blue oceans’: untapped new market spaces ripe for growth. And the business world has caught on – companies around the world are skipping the bloody red oceans of rivals and creating their very own blue oceans. This is a very well thought through and researched piece of work. It is a must-read for any executive or business owner who wants his or her company to operate in a space different from the beaten track. The book puts together a pack of simple yet powerful tools to conceptualize the new space, define it in detail, craft a profit strategy, and actualize its implementation.

    Traditionally competition has been at the heart of business strategy-country versus country and company versus company. The fundamental roots of strategy can be traced to military strategy. The rule of strategy has been that to gain share in a given market place you must take something from your competitor. In other words you win and they lose. This is known as a zero-sum game.

    Strategy thus becomes a question of outpacing rivals to gain a greater share of a limited economic pie. Mauborgne and Kim argue that we not only admire business leaders who are winners but more so we admire people who create new paradigms, businesses and market space. These innovations are what expand the pie of intellectual and creative wealth. In other words creating a non-zero sum game.

    According to Kim and Mauborgne markets are made up of red and blue oceans. The red ocean represents the known market space where all the industries currently exist. In this space all boundaries are defined and accepted with companies trying to outperform each other. However, as the market space becomes congested, the potential for profits and growth decreases.

    In contrast, blue oceans are untapped market space characterized by demand creation and opportunities for highly profitable growth. Blue Ocean strategy actually opens up a larger pie by reconstructing market boundaries.

    The book gives practical examples and puts forward conceptual tools. It argues that the key to creating new market space is the simultaneous pursuit of differentiation and low cost. That is what allows a company to create a new curve. For example, Cirque du Soleil eliminated animals and star performers from the show, which dropped its cost structure and created an all-new element of artistic dance and music to achieve differentiation.

    Blue Ocean Strategy provides a fresh approach to making the competition irrelevant. They deliver example after example of Blue Ocean Thinking – including success stories like Cirque du Soleil, Dell Computers, Southwest Airlines, NetJets, CNN, Callaway Golf, Casella Wines (Yellow Tail), AMC Theatres, and many more. These companies created a market place in which, at least for a time, they had no competition. What makes many of them survivors to this day is that they have continued to challenge themselves with ongoing Blue Ocean Thinking, realizing that the competition is always on the move, and that ultimate success demands that they keep moving forward as well.

    Blue Ocean Strategy is a philosophy that Mastermind Solutions Inc. firmly believes in. It is a guiding light for us, not only from an overall perspective, but also from the perspective of our independent practice areas and expertise.

    Blue Ocean Thinking is part of our strategic mindset; because we always endeavour to help our clients pursue the Blue Ocean of market leadership. It is the place where winners reside, whether they are there currently or whether they are in pursuit of that goal.

    Blue Ocean Thinking will change the way you see your market and will help you to revise your goals.

    Click here to see how Mastermind can help you find your Blue Ocean Strategy