Blue Ocean Strategy argues that focusing on red oceans is tantamount to accepting the limiting factor of the business war, which is to win on a limited amount of land, while denying the possibility of opening up new markets in the business world. Using Blue Ocean Strategy, the vision will move beyond competitors to buyer needs, crossing the existing competitive boundaries, sifting and reordering the buyer value elements of different markets, and shifting from positioning choices under a given structure to changing the market structure itself.
Six Principles of Blue Ocean Strategy
Blue Ocean Strategy*** puts forward six principles, four principles of strategy development: rebuilding market boundaries, focusing on the big picture rather than numbers, going beyond the existing demand, and following a rational strategic sequence, and two principles of strategy execution: overcoming key organizational barriers, and building strategy execution as part of the strategy.
One of the Blue Ocean Strategy Principles: Rebuild Market Boundaries
From competing hard and fast to creating blue oceans, use six paths to rebuild market boundaries.
1, industry: across his choice of industry to see the market
Red Sea thinking: people cloud for the industry boundaries, and bent on becoming the best of them.
Blue Ocean Perspective: A company not only competes with its own industry rivals, but also with other alternative (Alternatives) products or services industry rivals.
Example: NTT DoCoMo, a Japanese telecom operator, launched one-click Internet access on its i-mode cell phones in 1999, turning customers who used only voice services into those who used both voice and data services (music, pictures, information).
2. Strategic Grouping: Looking at the market across different strategic groups within an industry
Red Sea Thinking: Subjecting oneself to the widely accepted concept of strategic grouping (e.g., luxury, economy, family) and trying to outperform the others in the group.
Blue Ocean Perspective: Break out of the narrow vision and figure out what determines customer choice, e.g., upscale versus downscale consumer products.
Example: Curvy Fitness, a health club for women, cuts out the luxury amenities and miniaturizes its community locations, where members use a set of machines in sequence, three times a week, for half an hour each time, for just $30 a month.
3, buyer groups: redefine the industry's buyer groups
Red Sea thinking: only focus on a single buyer, do not pay attention to the end user.
Blue Ocean Perspective: A buyer is a chain of buyers consisting of purchasers, users and influencers*** together.
Example: Novo Nordisk, an insulin manufacturer, integrated insulin and injection pens to create the NovoLet injection device, which is easy for patients to use on-the-go.
4. Scope of product or service: looking at the market across complementary products and services
Red Ocean Thinking: a thundering way to define the scope of a product's services.
Blue Ocean Perspective: Complementary products or services contain unexplored needs, the simple way is to analyze what customers need before, during and after the use of the product.
Example: North Bus found that the city was not concerned about the price of the buses themselves, but rather the cost of maintaining them, and created a win-win situation with the city by using a fiberglass body that raised the price of the buses but lowered the cost of maintenance.
5. Functional Emotional Orientation: Crossing the functional and emotional orientation of the industry for the seller
Red Sea Thinking: Accepting the functional emotional orientation of the existing industrial solidification.
Blue ocean view: market research feedback is often the result of industrial education, companies challenge the existing functional and emotional orientation can be found in a new space, if the emotional layer of competition, can be removed which elements to make it functional? And vice versa.
Example: Aimed at men, Fast Hair Salon eliminated emotional elements such as massages and beverages, replaced "water washing" with "air washing," and focused on haircutting, reducing the time for a haircut to 10 minutes and the cost of a haircut from 3,000 yen to 1,000 yen.
6, time: across time to participate in shaping the external trend
Red sea thinking: the development of strategy to focus only on the current stage of the competitive threat.
Blue ocean perspective: gaining insights from a business perspective on how technology and policy trends are changing the value customers get and how they affect business models.
Example: Apple's offering of licensed music downloads through iPod and iTunes improves massive music libraries, high sound quality, single-song downloads, and low fees ($0.99/track).
Blue Ocean Strategy Principle No. 2: Focus on the Big Picture, Not the Numbers
A company should never outsource its eyes to others; great strategic insight is the result of getting down to the grassroots and pushing the boundaries of the competition. Blue Ocean Strategy suggests drawing a strategic layout map to visually represent a company's existing strategic position in the marketplace, opening up the creativity of all types of people in the organization to direct their eyes to the blue ocean.
Blue Ocean Strategy Principle #3: Go Beyond Existing Demand
Often, efforts to retain and expand existing customers in order to increase one's market share lead to more nuanced market segmentation, but in order to maximize the size of the blue ocean, companies need to go the other way around, focusing not just on customers, but on non-customers as well. Instead of focusing on meeting customer differences through personalization and segmentation, they should look for buyer ****similarities, putting non-customers before customers, ****similarities before differences, and merging segments before multilevel segments.
Non-customers can be categorized into three levels.
The first level is the "quasi-non-customer" who hovers at the boundaries of a company's market and is ready to change ships at a moment's notice.
These "quasi-non-customers", before finding a better choice, only the minimum use of existing products and services, once there is a better choice will change ship and go. For example, in response to the inability of office workers to do anything for lunch, the British Prêt A Manger fast food restaurant focuses on the same needs of office workers' lunches***: fast, fresh and healthy, offering fresh and tasty finished sandwiches, eliminating the need for a place to eat, shortening the act of purchasing to 90 seconds, and selling 25 million sandwiches a year in the United Kingdom.
The second level: the "refusal non-customer" who deliberately avoids the market.
Non-customers who do not use products or services available in the market because they are unacceptable or beyond their financial means.
In 1964, JCDecaux created the concept of "Street Furniture", which was based on the idea that outdoor advertising, which was previously highway billboards and transportation ads, would be short-lived, but JCDecaux realized that there was a lack of city-centre, stationary ads. JCDecaux realized that the lack of fixed advertising locations in city centers was the reason for the industry's unpopularity, and in response, JCDecaux made a profit margin of up to 40% on the sale of advertising space by providing street furniture and its maintenance to municipalities free of charge.
The third level: the "unexplored non-customer" who is far from the market.
Companies in the industry often never target these "unsuspecting non-customers," whose needs are often taken for granted as belonging to other markets, and would be shocked to learn how many of these customers they are discarding. Teeth whitening, for example, was never thought of as a dentist's business, and when oral care makers recently focused on that need, the market exploded.
Blue Ocean Strategy Principle No. 4: Follow a sound strategic sequence
Following a sound strategic sequence to build a strong business model and ensure that the blue ocean idea is turned into a strategy to execute it for blue ocean profits, the sound strategic sequence can be categorized into four steps: buyer utility, price, cost, and acceptance.
Blue Ocean Strategy Principle No. 5: Overcoming Key Organizational Obstacles
Corporate managers proved that the challenge of executing a blue ocean strategy is formidable, and that they are faced with a four-fold obstacle: a cognitive obstacle, an organization that is obsessed with the status quo; a limited resource base, where executing the strategy requires a large amount of resources; a motivational obstacle, a lack of motivated employees; and an organizational-political obstacle, the opposition of powerful vested interests from "the company". opposition, "being pilloried down before they can stand up in the company."
The Blue Ocean Strategy, based on the 1990s changes in the New York Police Department led by William Bratton, proposes the Tipping Point Leadership methodology, the theory being that in any organization, when a critical mass of people in numbers of a critical size infects the entire organization with confidence and energy to act on an idea, fundamental change occurs. Unlike organizational change theory, which has a base point of transforming the masses, the Trigger Point Leadership Approach believes that transforming the masses involves focusing on the extremes, the people, behaviors, and activities that have a transcendent impact on the performance of the organization.
Blue Ocean Strategy Principle #6: Make Strategy Execution Part of the Strategy
In executing a Blue Ocean Strategy, companies ultimately need to turn to the most fundamental basis for action, the attitudes and behaviors of the people at the grassroots level of the organization, and they must create a culture of trust and loyalty to inspire people to buy into the strategy. When people are asked to step out of the realm of habit and change the way they work, panic grows and they speculate about what the real reasoning behind the change is.
The further away employees are from the top, the less likely they are to be involved in creating the strategy and the more anxious they become, and shoving a new strategy down their throats without taking into account the thoughts and feelings of the grassroots can cause resentment. To build trust and loyalty at the grassroots level, and to inspire resources to work together, companies need to make strategy execution part of the strategy, and they need to use a "fair process" to develop and execute the strategy.
The term "fair process" comes from the psychological research of social scientists, who have recognized that people care not only about the outcome itself, but also about the fairness of the process that produces the outcome, and that when procedural fairness is practiced, satisfaction and support for the outcome rise.
There are three factors that define a fair process, and these are the three E's: Engagement, Explanation, and Clarity of Expectation, which invites participation, allows for comments and rebuttals, and expresses management's respect; Explanation, which lets all involved understand why a strategic decision was made; and Clarity of Expectation, which lets all involved understand why a strategic decision was made; and Clarity of Expectation, which lets all involved understand why a strategic decision was made. Clarity of Expectation is a clear statement of the new rules of the game, how performance will be evaluated, and how poor performance will be penalized.
The key to achieving a fair process is not the new goals, expectations, and responsibilities, but whether they are clearly understood. By organizing the development of a Blue Ocean strategy around the principles of a fair process, and by building strategy execution into the creation of the strategy from the beginning, political lobbying and favoritism can be minimized and people can focus on executing the strategy.