Blue Ocean Strategy – Books that changed my life 9

This book is an absolute phenomenonandonandonandon. Little old writers like me can only look on in envy at the stellar success achieved by Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne. Like so many of these things, its a super simple idea, but one that is as powerful as a nuclear bomb. You can order it from the WTS? online bookstore here. I was lucky enough to get the lowdown on Blue Ocean thinking from Chan Kim first-hand, when he was my business strategy professor at INSEAD, back in (cue sound of creaking bones, and pass me that walking stick) 1992. There’s even a blog dedicated just to Blue Ocean thinking.

Chan Kim suggests that conventional strategy, as made famous by Michael Porter (Harvard Prof., and so arch enemy), is "red ocean" thinking. Why red? Because of all the blood in the water that comes from all the sharks taking bites out of each other as they ferociously compete for a share of the existing market space. Nice metaphor eh? Very smart.

The alternative of "blue ocean" thinking is to "create uncontested market space and make the competition irrelevant". In other words, create a new market where you have 100% market share. My favourite example from the book is Cirque du Soleil.

If you’d looked at the circus industry through a Porter-ian lens to understand how attractive it was, you would have concluded that it sucked. I know this to be true based on first hand experience. I sat through a sad couple of hours last week when the circus came to town, and played to about 20 people, of which my family made up 1/3. And think of the costs of training and insuring all those animals.

But Cirque du Soleil was able to reinvent the industry and create new market space by challenging the conventional assumptions about a circus. They created what Chan Kim calls a new "value curve" (see below). They took each element of conventional circus, and offered something different, sometimes more of it, sometimes less of it, sometimes new stuff (of course, you have to wonder if they did this quite as analytically, don’t you? But its a good illustration of the model, so let’s go with it). For example, they changed:
– Buyer group: from children (end-users of the traditional circus) to adults (purchasers of the
      traditional circus)
– Acts: ditch the expensive animals, and draw on inspiration from Broadway shows and the opera
– Ambiance: out goes smelly straw and uncomfortable wooden seats, in comes a plush and posh setting
– Price: bump it up baby 

So, a simple but powerful idea that we’ve tried to use with the brandgym to define a space we can own. In our case, the space is "brand-led business coaching". Being highly practical and business focused, instead of theoretical. Having only senior coaches, not a "factory" of junior people. Growing by franchising, not growing offices full of people. And using a coaching approach to help teams develop ideas, rather than teams of consultants "selling" solutions to clients. See, it sort of works!

You can also see here how the Blue Ocean thinking has been used by Nintendo with the wii. The company’s CEO has gone public on how he has used Chan Kim’s model to beat Sony and Microsoft.