Source:http://dragano.com.my/images/dragano/goldfish%20escapes.jpg
Justifying the need for developing innovation centric approaches the authors state the fallacies in the existing approach of companies in competing in red oceans. The competition based approach leads to everyone resorting to the same techniques in the market leading to smaller market segments and pressure on existing margins. The current trends of globalization also are counter productive to the Red Ocean approach, as with merging markets it becomes very expensive and sometimes non profitable to keep abreast with the competition.
The
The focus of the
The strategy comprises of different tools and frameworks for strategy. One of the tools for identifying innovation possibilities is the Strategic Canvas.
The strategy canvas is a graph depicting the company’s position vis-à-vis the competition in the market. It helps diagnose the gaps and areas for differentiation.
The x axis lists the factors that companies compete on, and the y axis is an indication of the magnitude of investment of each competitor on that particular factor.
An example of a strategy canvas is depicted below.
Source :http://hbswk.hbs.edu/archive/3020.html#chart
The graph for Southwest Airlines shows how it has differentiated itself from the competition on friendly service, speed and frequent departures.
The Strategy Canvas helps your company in identifying the common points of competition and the differences and the gaps if any in the industry. The graph above has used a very novel approach in making a comparison even with the car segment(road transportation) which is an alternative to the airline industry. It even helps in identifying the congruence of differentiation on different factors for e.g. the graph above for Southwest Airlines show that it has differentiated itself on the factors that are advantages of the car commutation mode and not on the factors of the airline industry.
Some examples of
1.) Nintendo Wii’s addition of accelerometer in the Wii remote, thereby creating a magic wand to control the video game console.
2.) Google’s brilliant algorithmic and data mining approach to identify relevant searches by tracking the user mind.
3.) Toyota Prius a high computing power based vehicle.
Another noteworthy example is the approach used by Cirque de Soleil. The circus used to function by the market norms of a circus by staging typical animal and performer shows. They shifted their focus to more mature entertainment by clubbing the typical circus activities with theatre and which not only created more market value but reduced their costs as well.(Ref: http://blog.hubspot.com/blog/tabid/6307/bid/54/Blue-Ocean-Strategy-A-Small-Business-Case-Study.aspx)
A criticism of
Thirdly
References :
1.) Dr. Dan Herman(n.d.). Every Blue Ocean Will Eventually Turn Red; Create An Unfair Advantage Instead .Retrieved September 07, 2008, from http://www.content4reprint.com/business/management/every-blue-ocean-will-eventually-turn-red%3B-create-an-unfair-advantage-instead.htm
2.)
3.)
4.) Susan Sarfati (n.d.).Swimming Toward a Blue Ocean. Retrieved September 07, 2008, from EBSCOhost Web ,
5.)Ralph G. Trombetta, Founder, Value Innovation Associates and Senior Strategist, The Value Innovation Network(n.d.).Design Your Future: Blue Ocean Strategy.Retrieved September 07, 2008, from EBSCOhost Web, Xavier Institute Of Management
6.)
7.) Use a strategy canvas to identify innovation opportunities(August 03,2006).Retrieved September 07, 2008,from http://www.innovationtools.com/Weblog/innovationblog-detail.asp?ArticleID=946
8.)http://www.blueoceanstrategy.com
3 comments:
Howsoever seductive and charming the "blue ocean strategy" might sound, there is always an element of chance (as you mentioned in the closing para). But again this should not be viewed as real deterrent because even of there is an element of chance, it can't always be unfavorable. The key should be to constantly strive towards innovation and come out with new products. Blue ocean detractors can point out a number of good products from unsuccessful companies which didn't work , but they fail to take note of an equally large number of failed products from successful companies who didn't give up and came up with new products which turned out be huge successes.
your point on the supporters of blue ocean only pointing out successes was very relevent.
Blue ocean approach sounds better in many ways. First it helps in creating a new market segment by capitalizing on niche areas, and better profit margins till it again turns into a red ocean approach. Secondly if successful it opens a new door for many business opportunities thus helping create employment options for many. But both these approaches are equally important for the society as blue ocean approach leads to new opportunities/businesses as part of innovations and red ocean approach helps in brushing off the monopoly (which would otherwise be created if there is no competition to the blue ocean segment) and better quality products for the customers at genuine rate. So I guess both approach should go hand in hand.
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