Entrance of the red ocean
If you are a pioneer and successful in what you do, copycats will arise and take advantage of your idea and the lessons learnt from the mistakes you have made. Maybe in this Internet episode more people try and see the opportunity, nevertheless the process is not new in itself. What to do when you were in a blue ocean and it is now turning into a red ocean?
Where would you like to be?
W. Chan Kim and Renée Mauborgne introduced the red ocean and blue oceans a few years ago with their book ‘Blue Ocean Strategy’. They claimed that competition can be rendered irrelevant, because the rules of the game are waiting to be set. The image below explains in short summary the difference between the red and blue ocean.
Source: Blue Ocean Strategy Australia
How to survive in a red ocean?
In red oceans, companies and entrepreneurs are in a conception-cage of competitive strategy business thinking. They rivaling head to head with their competition over the same consumer segments doing exactly the same things, only better and cheaper in order to offer customers a better cost/value tradeoff in order to convince them to stick with them. As the space gets more and more crowded, prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns the water bloody. Many companies encounter difficulties as they try to break from the competition.
How to stay blue?
To beat the competition by working harder, will not work. You will have to move, to leave the competition behind. It always reminds me of the conversation of Alice with the red queen of the chess board, in the movie and in the book of Lewis Caroll ‘Alice through the looking glass’. Suddenly they start running, but no matter how hard Alice runs, they stay in the same place. The queen explains that in this country you have to run at least twice as fast to get somewhere else. A great metaphor for what happens in the oceans.
Denote all the industries not in existence today, the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. There are two ways to create blue oceans. In a few cases, companies can give rise to completely new industries, as eBay did with the online auction industry. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. How to stay blue or become blue again? A few tips and tricks:
- Offer benefits which are considered irrelevant or over-unique by your competitors. Think for example of shape; a unique style not typical for the product category; or a unique purpose, for instance a contribution to the environment and implement this purpose throughout your whole organization, be authentic.
- Make a combination of benefits for your customer of different product categories or lines of business. The key is to define the total solution buyers seek when they choose a product or service. A simple way to do so is to think about what happens before, during, and after your product is used.
- Search for other buyer groups or other segments for your product.
- Find a new appeal.
- The process of discovering and creating blue oceans is very structured and entrepreneurs are engaged in a process of reordering market realities in a fundamentally new way. It is not about predicting or preempting industry trends. You can approach your business from a different perspective in time.
- Focus on powerful commonalities in what buyers value instead of focusing on customer differences.
Love to hear your suggestions and tricks to swim in a blue ocean.