“Go where the profits are and the competition isn’t.”
—W. Chan Kim and Renée Mauborgne
Blue Ocean Strategy
Want to know how to succeed with your next project? Simple: Stop competing
Counterintuitive? Yes! That’s the point. Blue ocean strategy is here to change the way you strategize toward success.
Kim and Mauborgne, business thinkers extraordinaire, studied hundreds of products to suss out the secrets driving good launches. They found that most new companies just can’t cut it. Most fail and fail quickly
Most new companies target marketplaces already crowded with competition. They join the game with limited growth opportunities. They’re destined for narrow profit margins. Kim and Mauborgne call such environments red oceans, because of the blood-in-the-water that comes from cutthroat competition
Why put yourself in that situation? Instead, create an entirely new market—one with no competitors. Already, you’re going to be in a much better position!
Why is this so important? It comes down to how your environment forces you to behave. If you’re in a red ocean, you’ll have to alter your strategy based on what you see. This is reactive—and it automatically puts you a step behind your competition.
In a blue ocean, you have the freedom to be proactive. You set your own course, you define your own priorities, and you force everyone else to react to you.
How freeing (and exciting!) is that? These blue-ocean risks come with rewards: Higher profit margins, for example, and more opportunities for growth.
Blue Ocean Strategy
Wondering how to start a blue ocean project? It’s all about buyer utility, price, cost, and adoption. Here’s what you need to know:
- Think about your product. Will it be exceptionally useful for your dream client?
- Consider your target price. Will it be accessible to your audience?
- Reflect on your profit margins. Will you be able to price your product strategically and still make money?
- Identify obstacles. What stands in the way of a buyer being interested in—or adopting—your product? Are you addressing these issues?
A Different Way of Thinking
This is a different way to think about starting a business! Most entrepreneurs don’t spend much time creating an innovative buyer experience.
Consider this: It might be the method of purchase and delivery, rather than the product, that changes everything. (Want examples? Think Amazon, Uber, or Harry’s Shave Club.)
Most people determine their product’s cost. Then, they set their strategic price at a mark-up to profit. But! What if we looked at cost first from the buyer’s point of view?
If we start with an attractive, buyer-friendly price, then we have a goal. We have a cap on our costs. We’ll know immediately if our product stands out—in a good way. (Think Uber again—great product, but first offered at an unsustainable price.)
Be Proactive – NOT Reactive
Let’s start again. Entrepreneurs tend to think about what their product can do, but then—once their product is live—they find themselves playing defense as obstacles crop up.
Instead, consider obstacles for adoption from the start. If creative strategies for overcoming these issues are baked into the product’s development, you’ll always be ahead.
Right now, the world is in a chaotic state. We’re living through a pandemic, an economic downturn, and ongoing social strife. It may feel safer to start a company in a known market, with clear buyers, and defined rules.
Or—we can take this opportunity to leave safety behind so we can SHINE.
It’s Your Blue Ocean
Do the research and analysis. Make something entirely new. Bring unexpected value to the market. Make your own rules.
It’s time to dive in.