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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Apple Strategy to Beat Microsoft

The Apple strategy to take proven platform technology into what appear to be unrelated industries with more broadly based business and consumer applications in each case usually takes the competition almost completely by surprise. To other Corporations, are these lessons transferable into their respective businesses? Most definitely.

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"Blue Ocean Strategy" Creating Uncontested Market Place [Book Review]

This book will make you think. Powerfully. This book will challenge you to create, yes, "create," as if you are digging it out not merely discovering a new ocean on the globe. And, yes, this is an implementation book, not just a theory book.

The authors give clear steps how to create uncontested market space. After reading this book, it is like a science, this "blue ocean strategy," not merely speculation for only the highly evolved business mind. It's a strategy book that can be applied, albeit with innovative thinking and willingness.

The idea behind a "blue ocean" can first be understood by understanding what is meant by the "red ocean" of today's shark-filled marketplace. The current market could be described that way, for all the red blood spilled, as one company competes with another, produces a similar product to another's, and differentiates based on price, quality, and service, all courting the same customers.

This is the "red ocean" of competition, winners and losers in the market. It's like Coke vs Pepsi multiplied and divided hundreds of times over. This, the Red Ocean.

A "blue ocean" is created by developing a product or service that satisfies a new customer with such innovation and at such a price that you have no real competition. You are not just differentiating, you are offering something unparalleled. The authors suggest practical ways to do this.

At the cornerstone of a blue ocean strategy is what the authors call, "value innovation." It's where your focus is not on beating out your competition but by providing such a unique leap in value for your customers that the competition becomes irrelevant and you gain dominance in this "blue ocean" market you have created.

Several examples of companies that did this are discussed in the book. Cirque du Soleil, a circus in Canada that because of its innovative changes to its format, attracted a whole new audience, gaining heaps in revenue growth while Barnum and all other circuses continue to tough it out in the Red Ocean.

Or NetJets, which created a hugely profitable blue ocean in the leasing of corporate jets, by pricing down and providing more service. Unbeatable. Unmatchable. In the past seven years, 57 other jet leasing companies have tried and all have failed.

Or Curves, a fitness franchise for women, you probably have seen one in your town, that exploded in growth by tapping into a market for women with the right cost basis, and space and time allotment that satisfied an unserved population of women. They created a blue ocean in the health and fitness arena.

This book not only describes what a blue ocean is but, significantly, this book provides concrete strategies for thinking about how to create one in your industry. Each chapter explains practical, useful steps that require you to deliberately and carefully implement to create for yourself a blue ocean.

It shows how to look beyond the traditional market boundaries to engage "non-customers." It explains how to see beyond the existing demand and touch untapped needs in the market. It walks you through the organizational hurdles to involve properly all levels of a company in successfully strategizing a blue ocean.

This book, indeed, is one you that will urge you to think. It pushes you to imagine. It emphasizes value innovation. Seriously, this is a book for leaders.

Book Review: "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant" by W. Chan Kim and Renee Mauborgne

by Eugene Harnett

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Blue Ocean Strategy

pdf version of the book is now available. Click the link below:

Blue Ocean Strategy

The business universe consists two distinct kinds of space, which are blue and red oceans. Red oceans represent all the industry in existence today. The market space was known, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. On the contrary, blue ocean strategy denote all the industries not in existence today. Blue ocean strategy is about doing business where there is no competitor, focus on creating new land, not dividing up existing land. In designing blue ocean strategy, these concept must be considered:

1. Blue oceans are not about technology innovation. It is the product of strategy and managerial action.

2. Incumbents often create blue oceans and usually within their core business. Most blue oceans are created from within, not beyond, red oceans of existing industries.

3. Company and industry are the wrong units of analysis. The most appropriate unit of analysis for explaining the creation of blue oceans is the strategic move.

4. Creating blue oceans can build brand equity.

The creators of blue oceans never use he competition as a benchmark. They make it irrelevant by creating a leap in value for both buyers and the company itself. Blue oceans rejects the fundamental tenet of conventional strategy: that a trade-off exists between value and cost. When companies create blue ocean, they can pursue differentiation and low cost simultaneously. Blue ocean strategy also creates considerable economics and cognitive barriers to imitation.