Wednesday, July 21, 2010

Applying Blue Ocean Strategy to Product Development

Henry Ford didn't invent the car. He wasn't even the first manufacturer of the car. In fact, when he jumped into the industry, there were more than 500 manufacturers building automobiles. That's a heavy market. It's what some call a red ocean, tainted by the battling competition. So, why is it that we think of Ford when we think of cars? Because he didn't sail that red ocean. He made a blue ocean strategy that not only built long-term brand equity, but brought the cost of a car down from $1,500 to $250 in a matter of a few years, sending him into uncontested market space.

Not long ago, W. Chan Kim and Renée Mauborgne detailed the benefits of a blue ocean strategy in the Harvard Business Review. They define a red ocean as an existing industry where value is lost to cost-cutting warfare. On the other side, a blue ocean strategy is one that creates new markets through differentiating, much like Ford.

This same strategy should be applied to new product development. Of course, innovating product lines to win the competition's customers and cutting manufacturing costs with better designs is important, but creating entire new markets and categories untouched by competition and keeping costs low paves the way for real success.

Recently, we worked with a Canadian company, Calego, which focuses on matching character licenses with a variety of products, some of which fight in a red ocean. They were seeking new innovations for licensed characters. We could have slapped these images on current products with hopes they would sell by the license alone, but it would have been a waste of the value. Instead, we decided to search for a blue ocean strategy. What's something new? What's something no one has done in the market?

We found that consumers with young children were having difficulty keeping the children focused at the dinner table. With toys and technology vying for dinnertime attention, children are often not sitting still, much to the grievance of their guardians. So we set forth to open this doorway with a line we call interactive mealtime parents. We set a goal to turn otherwise normal mealtime products, such as plates, cups and bowls, into real attention-grabbers for children.

We created the Dinner Spinner(TM), a plate that spins at a touch of a button; the Talking Tumbler(TM), an interactive cup that talks when a child picks it up; and the Slide Show Tumbler(TM), which sends a lighted film strip rotating around the cup when activated.

Taking this blue ocean strategy approach for our client, Calego, has led to an almost endless supply of products for us to experiment with in design -- and without the fear of a lot of competition standing in our way.

Build value and brand equity by becoming recognized in markets without a lot of competition. Applying a blue ocean strategy to product development gives you room to grow comfortably and it places you in plain view of your customers. Otherwise, you'll be forced to bump shoulders, nearly invisible in a crowded sea of competitors, and forced to sacrifice value to make it all work.

by George Davison

For nearly 20 years, George Davison has focused his life on helping inventors, people with ideas and corporations with product development, licensing and patenting. He is the founder and CEO of George Davison's Inventionland. Learn target="_new" more at his blog.

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