“Winning without competition: a new strategic approach.”
This definition refers to a popular strategy called the Blue Ocean. Here’s what you need to know about it and how it can help your business:
What is the Blue Ocean Strategy?
The authors of the idea, W. Chan Kim and Rene Mobornho, claim that fierce competition leads to a “bloody red ocean” of rivals. This is bad because when competitors are fighting for a source of profit that is on the verge of depletion.
W. Chan Kim is a professor of strategic and international management at INSEAD University in France, while Mobornho is a professor of strategy and management.
Kim and Mobornho are exploring 150 strategic moves spanning more than a hundred years and thirty industries. What did the authors of the study find? According to them, the long-term success is not due to fierce competition, but to the creation of “blue oceans” or untapped market spaces. In other words, businesses need to pursue undeveloped niches called “value innovation” that can drive sales leaps and make competition meaningless.
Red and blue oceans
Let’s look at the two concepts that Kim and Moborno discuss:
• Red Oceans – these are all existing industries. In the Red Oceans, industries have generally accepted and defined boundaries. The rules of the game are clear. How do things work in the red oceans? Companies are trying to surpass their competition. Growth is difficult to achieve because the niche is overcrowded.
• Blue Oceans – these are all industries that do not yet exist. In other words, the term refers to new and unused niches. There is no competition. There are no players and rules defined yet. Therefore, the potential for growth is considered greater.
What does this mean in practice?
Let’s look at some examples of the company’s strategic moves that present the theory of practice:
The Danish company Novo Nordisk is engaged in the production of insulin. Kim and Moborno review their work and conclude that the company is in line with Blue Ocean theory.
How does this work? Insulin is used by people with diabetes to regulate their blood sugar levels. Traditionally, companies in the sector focus on the main influencers in the field: doctors. The idea is that it is doctors who influence decisions to buy such products.
However, Novo Nordisk notes that it can create so-called blue ocean by shifting the focus from doctors to insulin users. Thus, they understand that the insulin delivered to patients in vials is not convenient for injection in public places. This prompted the company to provide a solution: NovoPen is the first insulin delivery to be user-friendly and eliminate the inconvenience of insulin injection. Patients can carry the product everywhere and use it without the need for syringes and needles.
And so Novo Nordisk paves the way for a new unused business niche. The company continues to innovate in the field, presenting even more innovative products with the same goals as NovoLet.
What is the conclusion?
Sail out of the red ocean and dive into the blue.
Think: how can you unlock a new business niche? Can the products or services you offer be targeted to a different user in the chain or solve a specific problem? Success will not be late.
Share your successes and difficulties in the comments! 🙂