We have challenged one another in the NBN Club to read two books each month for the year. You may scoff at the simple quest of reading twenty-four books in a year, but to me it is a challenge. What can I say? I am a slow reader.
My first book of the new year is Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant by Renée Mauborgne and W. Chan Kim. Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture their own blue oceans. Cirque du Soleil and Curves are two such companies that have created their own blue ocean businesses. As I read the book, I pictured Julien Smith's Breather as a great example as a company that found a blue ocean.
The following are fifty takeaways from the book. I recommend reading the book in its entirety to fully grasp each point. The takeaways include points and questions you should consider regarding your own business. It definitely made me rethink some aspects of my digital marketing consulting business, Futureforth.
50 Takeaways From Blue Ocean Strategy
- The only way to beat the competition is to stop trying to beat the competition.
- Value innovation occurs only when companies align innovation with utility, price, and cost positions.
- …those that seek to create blue oceans pursue differentiation low cost simultaneously.
- the creation of blue oceans is about driving costs down while simultaneously driving value up for buyers.
- Effective blue ocean strategy should be about risk minimization and not risk taking.
- …you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to non-customers of the industry.
- Every great strategy has focus, and a company’s strategic profile, or value curve, should clearly show it.
- By applying the four actions of eliminating, reducing, raising, and creating, they differentiate their profiles from the industry’s average profile.
- A good tagline must not only deliver a clear message but also advertise an offering truthfully, or else customers will lose trust and interest.
- …companies must understand how to read value curves.
- Rarely do sellers think consciously about how their customers make trade-offs across alternative industries.
- What are the alternative industries to your industry?
- By looking across buyer groups, companies can gain new insights into how to redesign their value curves to focus on a previously overlooked set of buyers.
- What is the context in which your product or service is used? What happens before, during, and after? Can you identify the pain points? How can you eliminate these pain points through a complementary product or service offering?
- If you compete on emotional appearance, what elements can you strip out to make it functional? If you compete on functionality, what elements can be added to make it emotional?
- The process of discovering and creating blue oceans is not about predicting or preempting industry trends.
- Focus on the big picture, not the numbers.
- …the strategic profile with high blue ocean potential has three complementary qualities: focus, divergence, and a compelling tagline. If a company’s strategic profile does not clearly reveal those qualities, its strategy will likely be muddled, undifferentiated, and hard to communicate.
- A company should never outsource its eyes.
- A company’s pioneers are the businesses that offer unprecedented value.
- They should use innovation because, without it, companies are stuck in the trap of competitive improvements.
- Reach beyond existing demand.
- Do you seek out key commonalities in which buyers value?
- Non-customers tend to offer far more insight into how to unlock and grow a blue ocean than do relatively content existing customers.
- What are the key reasons first-tier non-customers want to jump ship and leave your industry?
- Harboring within refusing non-customers, however, is an ocean of untapped demand waiting to be released.
- …by looking to second-tier non-customers and focusing on the key commonalities that turned the away from the industry.
- What are the key reasons second-tier non-customers refuse to use the products or services of your industry?
- …explore whether there are overlapping commonalities across all three tiers of non-customers.
- …retrain existing customers and seeking further segmentation opportunities.companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.
- Does your offering unlock exceptional utility? Is there a compelling reason for the mass of people to buy it?
- Is your offering priced to attract the mass of target buyers so that they have a compelling ability to pay for your offering?
- Can you produce your offering at the target cost and still earn a healthy profit margin?
- The last step is to address adoption hurdles. What are the adoption hurdles in rolling out your idea?
- Yet it did so many different tasks that people count t not understand how to use it.
- Unless the technology makes buyers’ lives dramatically simpler, more convenient, more productive, less risky, or more and fashionable, it will not attract the masses no matter how many awards it wins.
- Create a strategic profile that passes the initial litmus test of being focused, being divergent, and having a compelling tagline that speaks to buyers.
- To secure a strong revenue stream for your offering, you must set the right strategic price.
- It is increasingly important, however, to know from the start what price will quickly capture the mass of target buyers.
- People will not buy a product or service when it is used by few others.
- …the strategic price you set for your offering must not only attract buyers in large numbers but also help you to retain them… an offering’s reputation must be earned on day one, because brand building increasingly relies heavily on word-of-mouth recommendations spreading rapidly through our networked society. Start with an offer that buyers can’t refuse.
- They key here is not to pursue pricing against the competition within an industry but rather to pursue pricing against substitutes and alternatives across industries and non industries.
- To hit the cost target, companies have three principal levers.
- Partnering, however, provides a way for companies to secure needed capabilities fast and effectively while dropping their cost structure.
- A business model built in the sequence of exceptional utility, strategic pricing, and target costing produces value innovation.
- In every organization, there are people, acts, and activities that excretes a disproportionate influence on performance.
- People remember and respond most effectively to what they see and experience: “Seeing is believing”.
- Numbers are disputable and uninspiring.
- Showing the worst reality to your superiors can also shift their mindset fast.
- You must create a culture of trust and commitment that motivates people to execute the agreed strategy - not to the letter, but to the spirit.
Have you read Blue Ocean Strategy? Did it make you rethink your business?
I'm always on the lookout for my next books to read this year. Please leave a comment with your favorite business books.