Blue ocean shift beyond competing

The process of making a Blue Ocean shift involves a systematic five-step sequence. This approach is designed to guide businesses from competitive markets, known as red oceans, to uncontested market spaces, or blue oceans, that are ripe for growth. The first step involves selecting the right area to focus on for your blue ocean initiative, taking into account any organizational constraints. This helps to ensure that the transformation is not overly ambitious.

The subsequent steps involve understanding your current position, imagining potential future scenarios, and identifying how to create commercially compelling new market spaces. This involves redefining the strategic playing field and formulating well-constructed strategies. The final step guides businesses in deciding which blue ocean move to pursue. This is achieved through a fair process that consolidates people’s commitment to the chosen move, culminating in alignment that allows top management to select the best option to move forward.

Step 1: get started

The first step in launching a Blue Ocean initiative is to select an appropriate area for transformation - one that offers significant potential gains but is not overly ambitious and can feasibly accommodate your strategic plans. A useful tool for this process is the Pioneer-Migrator-Settler Map, which can help you visualize the competitive landscape of your industry and evaluate the innovativeness of your company's products and services. This map is divided into three segments: Pioneers, who offer market value innovations and are positioned for robust, profitable growth; Settlers, who compete by making incremental changes to their offerings or prices and tend to become commodity offerings over time; and Migrators, who offer a value improvement over the competition but do not provide breakthrough value innovations.

By creating a Pioneer-Migrator-Settler map for your own offerings, you can assess your strategic vulnerability or innovativeness. This exercise will help identify which of your offerings are merely "me-too" products and which are genuine value innovations. You can also represent the respective revenues of each product or service on the map. Understanding your company's current portfolio and planning for its future positioning are crucial for two reasons: it allows you to look beyond current revenue figures to identify areas of vulnerability that require action, and it prepares your organization to launch Blue Ocean initiatives to foster innovation. This top-down view also helps prioritize changes, preventing the common pitfall of attempting to change everything simultaneously

Step 2: understand where you are

In assessing the current state of your industry, it's crucial to build a comprehensive understanding of the competitive landscape. This understanding can then be used to build internal consensus on whether to venture into a new Blue Ocean market opportunity. A useful tool for this process is the Strategy Canvas Tool, a one-page visual aid that helps you understand how your organization's offerings compare to those of your competitors. This tool allows you to succinctly articulate how you integrate the four key elements of business strategy: the factors you compete on, the level of offerings buyers receive for each factor, your strategic profile and cost structure, and your competitors' profiles and cost structures.

To use the Strategy Canvas Tool, first identify the key factors (between 5 and 12) your industry traditionally competes on and invests in. These factors could include price, technical support, delivery lead times, after-sales service, customer financing, performance, inventory availability, and ambience. For each factor, determine whether your customers receive a high-level or low-level offering. Then, connect these points to create a visual profile of your current business strategy. Add your competitors' performance on each factor to the canvas to create their strategic profiles. This exercise will provide a visual snapshot of your industry's current state, showing whether there is a differentiated approach or convergence in business strategies. To make a Blue Ocean shift, you'll need to develop a strategic profile that is unique and distinctive, diverges from the industry's average profile, focuses on offering buyers a leap in value while simultaneously lowering costs, and has a compelling tagline that honestly communicates what your offering provides. This process often leads to a growing sense that change is necessary, which can drive your team to take ownership of this change and see it through to completion.