Many entrepreneurs want to start companies that are disruptive, groundbreaking, and influential. But often, these start-ups get lost in the shuffle because they are too similar to other existing businesses that are already getting the job done.
You may think, wouldn’t it be awesome if your company could be the trendsetter, setting the pace for other businesses and profiting from new markets in a league of its own? That’s exactly the goal of the blue-ocean strategy, a topic derived from the widely read book Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. Read on for more tips from this business mindset.
1. Blue vs. Red
If the blue ocean strategy is the ideal, what is the enemy? According to Kim and Mauborgne, it’s the “red ocean” conditions that are so prevalent in the modern marketplace. Businesses fight each other, competing aggressively to keep their customers and to steal someone else’s. The blue ocean strategy eliminates that problem, allowing companies to operate in an environment that has no competitors and is ripe for growth.
2. High Differentiation, Low Cost
The goal of the blue ocean strategy is to create a product that is brand new, in a market that is uncontested. What your business offers should be in a league of its own, making the idea of competitors completely irrelevant. If you look back a few decades, many markets and industries that were once unknown are now vibrant and thriving. It’s completely possible for entrepreneurs to reshape existing industries or launch brand-new ones from scratch.
3. Discovering Blue
Kim and Mauborgne advise entrepreneurs to use the “Four Actions Framework” when trying to find that elusive market that could be the next “blue ocean.”
- Raise: What factors should be raised well above the industry standard?
- Eliminate: Which factors that the industry has long competed on should be eliminated?
- Reduce: Which factors should be reduced well below the industry’s standard?
- Create: Which factors should be created that the industry has never offered?
Answering these questions will help business owners dissect the competition and rise above them. This also draws entrepreneurs’ focus away from simply making a profit, and instead gets them thinking about how to build a business that lends itself to higher revenue.
Kim and Mauborgne cite Cirque du Soleil as a business that turned the industry on its head. Cirque du Soleil created a completely new circus experience unlike anything people had ever seen. Competition didn’t matter, because Cirque drew crowds who normally weren’t circus customers – theatergoers, opera patrons, and ballet fans.
Finding your “blue ocean” means bringing something truly new to the table. This eliminates the problem of competition and allows you to hold onto more of your revenue. For more information on how to use this strategy and more to create the next winning small business, visit www.biz2credit.com, or reach out to one of our consultants for personal feedback and guidance.