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If You Want to Win, Stop Thinking About the Competition

Rock ship

When I work with companies looking to grow, gain market share, or increase margins, I am amazed at how much time they spend thinking about and reacting to their competition.

 

What if these companies could find a way to win by not competing?

 

The Blue Ocean Shift is a strategy and mindset profiled in the best-selling book by the same title that builds on the work by W. Chan Kim and Renée Mauborgne [1] and provides a path for how it is possible to win by not directly competing. Their research-driven business Blue Ocean Strategy presents a transformative approach that encourages companies to veer away from the fiercely competitive "Red Oceans" and to explore the unchartered "Blue Oceans" of the market. This strategy is not only about innovation for its own sake but emphasizes delivering high value at a low relative cost, thus creating a new uncontested space with growth potential.


To realize such a shift, W. Chan Kim and Renée Mauborgne illustrate that a strategy has the best opportunity to succeed if it is built on three foundational pillars:

 

  1. Adoption of a Blue Ocean Perspective

  2. Inclusion of Humaneness in the Process

  3. Employment of Blue Ocean Market-Creating Tools and Guidance

 

A Blue Ocean Perspective

 

Adopting a Blue Ocean Perspective is the foundational step toward a successful shift. This perspective is about looking beyond the existing competitive landscape to see the potential for new markets. It challenges leaders to transcend the traditional confines of industry competition and reimagine their market space's boundaries. At its heart, a Blue Ocean Perspective is driven by the goal of delivering unparalleled value to customers at a lower relative cost, thereby unlocking new demand and making the competition irrelevant. It requires a bold rethinking of what a company offers, how it provides it, and whom it targets, focusing on innovation that dramatically increases value while simultaneously reducing cost. The company must embrace the idea of change through a Blue Ocean Strategy-driven approach and accept that it will benefit the company and its customers.

 

Humaneness in the Process

 

The journey toward uncovering a blue ocean is as much about innovation as holistic change management. Humaneness in the Process emphasizes the importance of empathy, understanding, honesty, respect, and inclusion for all individuals involved in or affected by the strategic shift. This component recognizes that change can be unsettling and that the path to innovation is fraught with challenges. By prioritizing humaneness, companies can foster a culture of trust and openness, encouraging a collective commitment to the vision. This approach not only embraces new ideas and ways of thinking but ensures that the process of creating new value is inclusive, accepting of unique perspectives, and becomes part of the fabric of an organization.

 

Market-Creating Tools and Guidance

 

To navigate the vast, unexplored waters of blue oceans, businesses require a compass, charts, and tools that guide the strategy formulation and execution process. Market-creating tools and guidance provide this direction, offering structured methodologies for identifying and acting on new market opportunities. These tools, including the Strategy Canvas, the Four Actions Framework (Eliminate-Reduce-Raise-Create), and the Value Innovation Process, are instrumental in crafting strategies that deliver high value at a low relative cost. They help companies to systematically explore new possibilities, redefine value for the customer, and create a market space where they can lead unchallenged or better-stated “win” by creating new demand and not continually trying to win a larger piece of an ever-shrinking pie.


The Essence of Blue Ocean Shift

 

At the core of a Blue Ocean Shift is the principle of value innovation—the simultaneous pursuit of differentiation and low cost. This principle is critical as it ensures the new market space is unique, economically viable, and difficult for competitors to replicate quickly. By focusing on critical factors that significantly contribute to customer value while eliminating or reducing those that don’t, companies can unlock extraordinary value for themselves and their customers. This approach goes beyond mere cost-cutting; it's about redefining the notion of value in an industry.

 

The Results Speak for Themselves

 

W. Chan Kim and Renée Mauborgne's research, books, and publications highlight many examples of how those brave enough, willing to learn, trust, and apply a Blue Ocean Strategy often reap huge rewards and shift the marketplace in their favor. They demonstrate that this is how winners win.

 

These principles have also revolutionized my work. Looking back on almost every great success I have led or participated in, from new global product and service launches to massive public sector transformations or helping companies become highly sought-after acquisition targets, all have significantly been aligned with this strategy. Let’s take a quick look at two examples from my career.

 

American Express

Reinventing Payment Solutions with a Human Touch

 

American Express was founded in 1850. Through many decades, the consumer banking industry was pretty predictable. This remained true until the past few decades when globalization, deregulation, worldwide personalized connectivity, and back-end technology converged to alter industry boundaries. To maintain its position as an industry leader, American Express needed to provide customers with new ways to transact business in customized ways that work for them. American Express recognized that if they developed a scalable, agile, global integrated payment platform focused on personalized merchant customer needs, grounded in a continuous culture of value innovation, it could revolutionize industry practices and help the company stay one step ahead as a leader in a fast-changing market for years to come. It was challenging with 192 countries, individual rules and regulations, multiple languages and currencies, and business cultures, but they did it!

 

The result of this industry-changing platform wasn't merely about enhancing transaction efficiency; it was about understanding and addressing the deeper needs of merchants and customers alike and creating a company platform that can adapt and thrive as the world changes. By prioritizing fast merchant payments, uniform credit accessibility, ease of use, flexibility, and security, American Express ensured that the new platform offered never-imagined solutions and options that resonated globally on a human level with merchant clients. This allowed American Express to keep existing merchant customers from leaving and convert non-customers to customers with offerings that mattered. The financial results for American Express that followed have been very positive and demonstrate a culture committed to the power of value innovation supported by global organizational buy-in and a strong connection with merchant customers supported by technology, as the engine can win big and keep winning. [2][3]

 

Eggrock Partners

Setting the Stage for Cloud Computing and Subscription Based Enterprise Software

 

Eggrock Partners was a fast riser in the consulting space, looking for a business edge, a Blue Ocean. It transformed sales, implementation, and software delivery from a traditional licensing model where customers had to purchase expensive software to an application service provider (ASP) framework, which allowed customers to host and rent software access. This ultimately morphed into the cloud computing and subscription explosion we see today. This shift was driven by a keen understanding of the evolving needs of customers and a desire to make software more accessible and user-friendly. To convert non-customers to customers by offering something they previously never had access to. Eggrock Partners met immediate customer needs and anticipated future trends by delivering value through convenience, simplicity, access, and a new subscription-based cost structure, laying the groundwork for a significant market shift. Eggrock not only created new software sales revenue it produced an engine for new consulting clients.

 

This value innovation-based offering showcased how bold strategic foresight and a team regarded as partners can create breakthrough innovations that redefine an industry. It wasn’t too bad for Eggrock Partners either, which, after a few short years, at approximately 250 million dollars, became the highest per-consultant professional services acquisition for many years, partly due to its ASP business. [4]

 

 

The highlighted examples illustrate the importance of value innovation in driving strategic change and fostering marketplace innovation. From redefining industry standards to creating new market expectations, the three pillars of a successful Blue Ocean Shift can be instrumental in creating a business strategy that offers a path to sustainable success and differentiation.

 

Find Your Blue Ocean

 

The Blue Ocean Strategy offers a roadmap for companies seeking to break free from the cutthroat competition of red oceans. The strategy's essence—to enable a market shift by delivering high value at a low relative cost where the competition isn’t—can again be realized by doing three core things well.

 

  1. Adoption of a Blue Ocean Perspective

  2. Inclusion of Humaneness in the Process

  3. Employment of Blue Ocean Market-Creating Tools and Guidance

 

As businesses strive to innovate and grow, the principles of a Blue Ocean Strategy provide a beacon, guiding them toward creating their own uncontested market space, converting non-customers to customers, and achieving and reaping the benefits of unparalleled success. 

 

Are you the next great success story? If you commit to finding your own Blue Ocean, you can be!

 

References and Citations

 

  1. Mauborgne, R., & Kim, W. C. (2017). Blue ocean shift: Beyond competing - Proven steps to inspire confidence and seize new growth. Hachette Books. https://www.blueoceanstrategy.com/books/blue-ocean-shift-book/

  2. U.S. Securities and Exchange Commission. (2008). Form 10-K. Retrieved from https://www.sec.gov/Archives/edgar/data/4962/000119312508042043/d10k.htm

  3. American Express. (n.d.). Investor relations. Retrieved from https://ir.americanexpress.com/investor-relations/default.aspx

  4. Girard, K. (2002, January 2). Breakaway makes a deal with Eggrock for $250 million. CNET. https://www.cnet.com/tech/tech-industry/breakaway-makes-a-deal-with-eggrock-for-250-million/

 

Blue Ocean®, Blue Ocean Shift®, and Blue Ocean Strategy® are registered trademarks and intellectual property owned by Kim & Mauborgne.

 

Images and Media

Cover Image, Shutterstock, April 7, 2024

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