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Is your business idea as innovative as a blue ocean strategy?

(Last Updated On: September 2, 2021)

Everyone knows that if you want to be successful in business, you need to beat the competition, right? Is your business idea as innovative as a blue ocean strategy for the optimum outcome? What is a business opportunity where the blue ocean can be implemented? We need to know what is innovation in business.

Well, according to professors W Chan Kim and Renee Mauborgne, authors of the famous book Blue Ocean Strategy, striving to penetrate the competition in a dominant market is a bad business strategy? Many types of research are made on it, blue ocean strategy Harvard business review makes its way, blue ocean strategy tools are in action, and what not! The rise of e-commerce will be a good option to think deeper.

Red ocean

If you try to answer and establish the fast-food market with the hope of beat competition, you’re adopting the red ocean strategy in today’s world. So, there are thousands of similar markets doing business and competing over others. It is the red ocean strategy where most of the businesses are competing over one another.

With the rise of technology and widespread access to information, it’s too easy for businesses to enter an established market and saturated that market. However, is it the right strategy to make a boom? We need a blue ocean shift, by doing research on blue ocean strategy examples.

Blue ocean

The only way to succeed beating for market share, which turns the market waters, blue in red, hence the term red ocean. If it’s you focused on sailing past the red ocean in search of blue waters, untapped market potential, you increase your chances of survival and profit through new businesses across different industries. Things to be invented in the future in small business ideas, theories of innovation, and promising online business ideas for beginners.

Upon further study, the authors discovered that the blue ocean businesses went on to dominate the respective markets for 10 to 15 years after their initial launch.

Case studies

In a research made by the authors, out of 108 companies, ninety-two businesses adopted a red ocean strategy and aimed at outperforming the competition. The remaining sixteen businesses adopted a blue ocean strategy and avoid competition and search for a new category that they could dominate when looking at the collective profits.

Interestingly, among all 108 companies across several years of study, all 92 red ocean businesses only accounted for 39% of the total profits. That means 61% of the profits were generated by 16 blue ocean businesses.

Secret of success

So, how can we use a blue ocean strategy to find an uncontested, ocean of opportunity and dominate the market over a decade to find the answer? Let’s look at how the company used the blue ocean in the book authored by Kim and Renee. It invented a new category of a drink. It would become the best-selling drink in Australian and US markets when creating a successful new product.

They knew that competing with existing in the traditional would be extremely difficult. They would need to establish their brand over the span of several years and hope to win several recognitions along the way to gain the favor of existing drinkers.

Related: 11 Habits to help dominate by 2020 as a leader

Where is the opportunity

So they decided to take a different approach instead of focusing only on wanting drinkers. They focused on consumers in adjacent markets of other beverages who infrequently, drink, or avoided altogether.

The company approached these noncustomers and asked them a few questions. Like, why did they avoid drinking? And what was it that specifically discourage them from drinking? These noncustomers shared many of the same reasons for avoiding one.

Innovation

What they came up with was a different kind of drink that nondrinkers also loved. They were innovative. Also, they kept it to make it cost-effective for the new type of consumers. Their profit was rising with the new kind of customers and an increased amount of sales.

They created the category of fun. Easy drinking had a huge head start on the competition making it extremely hard for competitors to steal their market share. This is the power of the blue ocean strategy!

Examples

And there are several businesses that have used the strategy to dominate. Yeah, another blue ocean. A business example is five-hour energy the Mini energy drink. So, we see this on the counters of almost every convenience store silence.

The energy created the new energy drink market of two bottles. It maintained a 93% market, share of that market category despite competition from major competitors, like Coke and red bull. Because they created a category and went to a huge lead on future competitors, they continue to dominate that category today. This example is applied to all sects of businesses, by generating innovative ideas for IT company, and beyond.

Where lies the blue ocean ideas

If you’re interested in finding blue waters for your next business idea and dominating a market for years to come, start differently. Therefore, the hint is to focus on the frustrations of customers outside of your current market space. These are innovative ideas for the whole process.

Moreover, you should look at existing products or services within the market and decide on something innovative. The invention is the backbone of every business idea, regardless of the list of all business ideas. Whether it is a million-dollar ideas list, most successful small business ideas, or, any new business idea.

Blue ocean strategy shift: A five-step process

As per the source, the five steps are:

1. To choose the appropriate platform to initiate and develop the perfect Blue Ocean team for the idea.

2. To get a clear picture of the existing situation of the operation.

3. To unleash the hidden pain facts that limit the existing size of the industry and discover an ocean of non-clients.

4. To reconstruct market lengths and develop alternative Blue Ocean opportunities in a systematic and confidential way.

5. To select the exact Blue Ocean to move, conduct the fastest market analysis, finalize, and launch the shift as soon as possible.

Blue Ocean Shift Overview

W. Chan Kim and Renee Mauborgne write in their book Blue Ocean Shift:

Every industry today is confronted with growing prices, fierce competition, and fast change. A “red ocean” is a crowded market where businesses must compete to stay afloat. A market with little or no rivalry is known as a “blue ocean.”

You must build a new frontier where you can provide both lower costs and better value to go from red to blue oceans. This necessitates the use of three important ingredients:

• Adopting a blue ocean mindset and profoundly altering your thoughts Stop concentrating on existing market competitors. Instead, broaden your views and consider new ideas to make genuine breakthroughs.

• Providing your employees with the practical tools and techniques outlined in this book so that they can design and implement the strategic change.

• Embracing the concept of “humanness.” Only willing participants can make a strategic transition. Don’t regard strategy development and execution as two different processes, and don’t use structural modifications or carrot-and-stick tactics to compel individuals to adapt. Instead, (i) engage people from the start, and (ii) persuade them to act by providing them with the motivation and confidence to do so.

Concepts for a Blue Ocean Shift

1. Recognize the Process of Market Formation

Existing markets do not have to be disrupted or destroyed in order to create new markets. We go through three main market-generation techniques in detail in our Blue Ocean Shift overview, each with a particular balance of disruptive and non-disruptive innovation.

The idea is to concentrate on value innovation rather than technological or entrepreneurial innovation. Unparalleled buyer value, not new technology, creates a blue ocean.

Starbucks and the Grameen Bank are two instances of new marketplaces that have emerged without the use of new technologies. To start a new market, you don’t have to be an entrepreneur.

To (i) transform innovation into buyer value and (ii) assist individuals to overcome their concerns and lethargy, all you need are the right tools and methods.

2. The Mindset of the Blue Ocean

To break away from a red ocean attitude and open up fresh blue ocean possibilities, follow these four guidelines:

• The limits and circumstances of your current industry aren’t set in stone. You are only limited by your creativity when it comes to shaping and transforming borders.

• Don’t put too much emphasis on defeating your opponents. Attempt to render your competitors obsolete by providing a quantum jump in value.

Consider this: how can we produce such a compelling offering that we would attract a large number of consumers even if we didn’t advertise it? This causes you to reconsider your competitiveness and investment strategies.

• Don’t compete for current consumers. Concentrate on attracting and retaining new consumers, which will let you tap into a much wider unmet demand or market.

• Don’t make a trade-off between cheap cost and distinctiveness. By combining low cost with distinctiveness, you may create greater value.

With our summary and infographic, you’ll be able to absorb these important insights in minutes!

3. Humanness

People want to make a difference yet are frightened of failing. Adopt a humanistic approach: use three components to inspire, empower, and direct people’s creative energy.

• Atomization: Taking a giant leap into the unknown might be intimidating. Instead, break it down into small, concrete steps that individuals can understand and do for immediate gains.

• Firsthand experience: People will oppose change if you tell them to. Instead, provide the conditions for individuals to recognize the need for change on their own. Give them the resources to come to their own conclusions, and send them out into the field to see/experience the buyers’ pain points and options.

• Fair Process: This entails three concepts to foster trust and cooperation: I active participation (including people in the process), (ii) explanation (helping people understand why each step is taken), and (iii) clear expectations (giving clarity on roles, responsibilities and what to expect).

Provide people with particular tools and frameworks to guide their creative competence (using the 5-step approach outlined below).

The Blue Ocean Shift’s 5 Steps

Here’s a short rundown of the five stages of making the change. We’ll go through each of the 5 phases, the tools/frameworks involved, and how to use them in further detail in our Blue Ocean Shift overview.

1. Get Going

The first stage is to choose the region with the most potential for profit and assemble the appropriate team for your blue ocean venture.

To gain a visual picture of your organization’s value innovation chain, plot your Pioneer-Migrator-Settler map and choose the best product.

Then, to drive your blue ocean effort, assemble the proper team and include them from the start. From our entire summary package, learn how to choose the best team members and map the Pioneer-Migrator-Settler.

2. Determine the current state of affairs

The next stage is to clearly define your plan so that everyone is on the same page about the strategic environment and where you stand. The Plan Canvas is a one-page diagram that aids in crystallizing your strategy and bringing everyone on board.

Learn how to create a solid strategic profile and how to create an “as-is” strategy canvas.

Our comprehensive text, graphical, and audio summaries provide further information on each of these processes and resources.

3. Consider the Possibilities

Then, by exposing customer “pain points” (caused by your industry’s hidden restrictions) and (ii) indicating how fresh demand might be unlocked, assist the team in envisioning how to transition from the existing red ocean to a new blue ocean.

Here, you’ll use two different tools: the Buyer Utility Map (to find hidden value) and three different non customer tiers.

4. Figure out how you’re going to get there.

This stage entails rebuilding your market boundaries (using the 6 Paths Framework) and finding elements you may delete, decrease, elevate, and create in order to translate the broad picture into practical blue ocean strategic actions (using the Four Actions Framework and ERRC Grid).

You can find more information on the 6 paths (industry, strategic group, buyer group, scope of offering, nature of appeal, and time) as well as the questions/process to identify what to eliminate, reduce, raise, and create to simultaneously create value and reduce costs in our full Blue Ocean Shift summary (get a complete summary here).

By the conclusion of Step 4, you should have an ERRC Grid, a “to-be” Strategy Canvas, and a short tagline for each proposed product for each of the 6 Paths.

5. Make a Blue Ocean Effort

The next stage is to choose and implement your strategic move, swiftly testing and improving your company model to realize its full potential. Bring your stakeholders together at the Blue Ocean Fair to select which strategic offering to pursue.

After that, swiftly market-test a prototype and codify a feasible business model (define your strategy pricing, profit margin, and target costs) before gradually implementing it.

4 KEY PRINCIPLES FOR FORMULATING BLUE OCEAN STRATEGY

How do you use the instruments listed above to create your Blue Ocean Strategy? Here’s a short rundown of what goes into creating and implementing your BOS:

1) Re-define market boundaries.

Examine how the market is currently functioning and competing, and then devise a plan that sets you apart from the competition. The book outlines six approaches for identifying blue ocean possibilities and redefining your market limits (read more from our complete summary).

2) go beyond what’s currently in demand

You need to look at three types of non-consumers to maximize the size of the blue ocean: “Soon-to-be” non-consumers, “Refusing” non-consumers and “Unexplored” non-consumers.

Focus on the tier with the largest catchment at the time, but also look for and build on overlapping similarities that apply to several non-consumer tiers.

3) Finding the Right Strategic Sequence

To build a solid plan, there are four important stages that must be followed. Before an economically successful blue-ocean strategy can be birthed, each of the conditions listed below must be met in order.

Exceptional Buyer Utility => Affordability => Profitability => Overcome Adoption Barriers

4) Keep an eye on the big picture

Visualize your plan to inspire individuals inside your business, to help them visualize the blue seas, and to effectively convey the approach. Visual Awakening, Visual Exploration, Visual Strategy Fair, and Visual Communication are the four components of this project.

Putting the Blue Ocean Strategy into Action

1) Overcome Critical Organizational Obstacles

The difficulty of implementation is compounded since BOS constitutes a significant departure from the current quo. To overcome the four major barriers to change, the book suggests utilizing the “tipping point leadership” approach:

• Cognitive Hurdle (getting people to see the need for change); • Resource Hurdle (making a strategic transition with limited resources); • Motivational Hurdle (getting key actors to move quickly and tenaciously); and • Political Hurdle (overcoming age and treachery)

Kim and Mauborgne give suggestions for overcoming each of these obstacles.

2. Incorporate execution into your strategy.

The change will always be met with opposition, and BOS is no exception, as it forces individuals out of their comfort zones and challenges long-held beliefs. The book advocates a “fair approach” in developing and implementing strategy, which includes Engagement, Explanation, and Expectation Clarity, to reduce the danger of distrust, non-cooperation, and even sabotage.

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Take away

To create something new and attract infrequent or apps that customers, you can gradually develop a product that defies the status quo. Moreover, it will also create a new product category that you will dominate. So, stop focusing on how you can beat the competition and start focusing on how you can make the competition irrelevant.

You can generate blue ocean business ideas from home to create vibrant business opportunities by concepts of innovation and creative small business ideas! Just, you need innovation and strategic management on your small business list. Most successful small businesses start at home, why not it’s from your one?

Read More: How could you convert your failure to success

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