I’m back, and thanks for asking …. patenting and business plan things went very nicely. Still some work to do with those but now those things are at least starting to look fine. That patenting thing could be seen as being a part of startup’s strategy,… which reminds me of a Blue Ocean Strategy book that I’m now going through… when time permits.
Blue Ocean Strategy is a quite well known and easy to understand concept. It become famous in 2005 through the business strategy book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. I (too) love the simplicity of that (differentiation) strategy, the basic idea is that
- In all well established markets the head-to-head competition is fierce and the profit margins are low, this is the Red Ocean
- However if a company can create its own market and dominate it, the profit margins will be higher and this is the Blue Ocean
Yes, the Blue Ocean looks like a better choice, but first a company must create its own “blue ocean”. The most important aspect behind a successful Blue Ocean Strategy is making a Value Innovation. And that is supposed to be a result of discovering something that gives surprisingly high amount of value to both customers and to company. Once that “value innovation” has been discovered the company needs to make it real business.
The creation of Blue Ocean is usually achieved through execution of a carefully thought strategic choice. Unfortunately, even those most clever strategic plans don’t just become real autonomously – typically those need to be enforced. According to Blue Ocean Strategy book, it usually takes a strong willed CEO or a major financial crisis to change the company’s overall strategy. And even then there will be friction; a term coined by Carl von Clausewitz a Prussian military theorist. Yet, the authors point out that the Blue Ocean strategy is mainly a risk avoiding strategy – not a strategy for risk taking. And most importantly the authors kindly provide a set of tools for creating blue oceans.
Tomorrow’s post will have some examples of discovering Value Innovations and creating Blue Oceans…