Change The Game Change The Rules

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book-blue-ocean-strategy.jpgThe difference between number one and number two is typically rather significant. The leaders, those who Break from the Pack of Commodity do so by challenging the typical norm, with courage, absent fear.

The metaphor of red and blue oceans describes the market universe. Red oceans are all the industries in existence today--the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the red ocean bloody.

Blue oceans, in contrast, 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. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.

The corner-stone of Blue Ocean Strategy is 'Value Innovation'. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.

Companies who successfully develop a distinctive brand and product are able to redefine the product they sell. Apple does not sell computers. Harley Davidson does not sell motorcycles.  VW does not sell cars.  What do they have in common?  They sell the lifestyle and the products that provide that lifestyle.  They reaffirm for their customer that they understand them and that they offer what it is that makes them unique and special.

Building something truly remarkable also requires courage, which shouldn't be underestimated. Even the simplest items require you to step out from the norm, be looked at as different, take a leap of faith, because your idea may fail, may cost money, yours or someone else's, may not be popular, may offend someone, may offend a lot of folks, but maybe, if you can drive back the fear long enough to be creative, to be remarkable, your idea may Break from the Pack of Commodity. But, listen to the pundits too long and even the best of ideas become diluted mush.

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This page contains a single entry by Eric Brown published on November 17, 2008 4:43 PM.

Personalization is for Big Companies, Right? was the previous entry in this blog.

Exasperating Our Customer is the next entry in this blog.

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