Are you ready for your Blue Ocean Strategy?
Tired of competing against all those "others" that you have been benchmarking yourself against for years, without much benefit?
Isn't it time you started to "create a new market space" and make the competition irrelevant?
That is what a Blue Ocean Strategy can help you create: a market space where you are the "only" — at least for a little while.
Blue Ocean Strategy was conceived by W. Chan Kim and Renée Mauborgne in 2005 to describe the contrast between opportunity-driven business strategies based on creating new, uncontested market space (blue oceans) and competitor-driven models based on existing wealth and rivalry in the known market (red oceans).
In recent years, more and more businesses are finding success using the theory, method and tools of Blue Ocean Strategy. The main appeal is how to rethink their value. How can you offer greater value at lower cost to open a new market space by creating demand that may be waiting for you? Once you're in your Blue Ocean, you make the competition irrelevant.
Can you too find your Blue Ocean? Why not!
To get a better understanding of how Blue Ocean Strategy can spark you to change your business model and find new, lucrative opportunities, here are three success stories that will inspire you to rethink your strategy completely — not the same but better, but an entirely new focus.
1. Wawa: Shifting the Core Business
With over 800 convenience retail stores, Wawa is one of the best chain stores in the Mid-Atlantic market. In 2009, Wawa was drifting into a red ocean, as competitors started catching up and threatening its market share. Determined not to let that happen, Wawa applied Blue Ocean Strategy to transform itself and redefine its existing target market.
Until then, Wawa’s strategy was based on three main offers, all under one roof: a convenience store, fuel service and food service provider. But the need for transformation became imminent, and they decided to become a quick-service restaurant model that is also a go-to store that sells gas and convenience goods.
The company started applying Blue Ocean Strategy in food service first because they identified it as their weakest link with a lot of growth potential. Wawa’s primary goal was changing people’s perception, as stores that sell gas aren’t usually associated with quality food. To achieve this, the company focused on applying Blue Ocean Strategy to improve their business operations.
Instead of visible changes like menus and store design, Wawa changed its logistics model to raise the quality, convenience and value of its food service for customers. Since they didn’t have the in-house expertise or facilities to achieve this, they developed a third-party logistics network to gain this vital resource at minimal cost.
In doing so, Wawa shifted its core business model to a fast-casual-to-go, built-to-order restaurant that still offers convenience goods and fuel, but at a much higher level. Now the company has non-fuel restaurant-stores and is looking to enter the home delivery and catering industry shortly — all the while using Blue Ocean Strategy to open a new market and increase the convenience and quality for customers.
2. Quicken: Defying Expectations
Quicken is a financial software package that allows people to manage their finances. To create it, Intuit relied on its Blue Ocean Strategy model to merge the speed and accuracy of financial software and the simple use and low cost of pen-and-paper financial management. This new concept transformed how people view this type of software and manage their finances.
First, Intuit created the Quicken interface to resemble the standard checkbook. This made it recognizable for consumers, but it also increased the speed and accuracy of financial calculations. The software package also eliminated professional accounting language, opting instead for easy-to-understand language and a few essential functions that consumers already were using.
Simplifying the process of financial management benefited Intuit in two ways. First, it cut the costs of production. Simpler functions were easier to develop which made Quicken more competitive and affordable. Secondly, the value innovation made it easier for consumers to adopt and use the financial software.
Now, 30 years later, Quicken is the best-selling personal financial-management software solution, which has turned it into the basic model for financial management, surpassing even the pen-and-paper alternative.
3. Estonia: Redefining Government and Country Reputation
With a population of approximately 1.3 million, Estonia is one of the most advanced digital societies in the world, according to Wired magazine. In 2017, the former Soviet satellite-state used Blue Ocean Strategy to redefine itself as an open e-society for citizens, business and government.
How did this small European country manage to do this? By reshaping external trends instead of merely reacting and adapting to them. Using Professors Kim and Mauborgne's Six Paths Framework, Estonia identified critical trends in digitalization and globalization. This forward thinking enabled it to become the country with the highest number of startups per capita on the continent, and the home of Skype (until it sold for $8.5 billion in 2011).
Estonia achieved this by providing a new solution to how citizens interact with government entities and services. Through e-Estonia, it created more than 3,000 fast, accessible and easy-to-use e-services, including:
• E-Government — gives citizens a simple, quick and online solution to government paperwork
• E-Business — offers entrepreneurs the ability to start a business online in 20 minutes and operate it remotely
• E-Schools — offers citizens a digitized education system that allows children to do schoolwork online and parents to monitor their progress
• E-Health System — offers citizens access to doctors and their health data, and the ability to schedule check-ups and receive prescriptions online
• E-Residency — a program that opened up Estonia to indirect customers, allowing people in the rest of the world to become e-residents of the country and access its e-services
All of this wouldn’t have been possible without Blue Ocean Strategy. The country changed its direction, offering value to its citizens and entrepreneurs while aligning the same principles with its e-Residency program. In this way, Estonia created a better:
• Value proposition — non-Estonians have access to all Estonian online services from their home countries, while citizens have access to more goods and services
• Budget proposition — the state developed a secure IT infrastructure and used it to increase its appeal for foreign business with e-Residency cards, now costing around $1
• People proposition — the country added so much value to its citizens and international trade that media and politicians generated free publicity (The Wall Street Journal, The Guardian, The New Yorker, Germany’s Angela Merkel and Japan’s Shinzo Abe among others)
Maximizing convenience, speed and value for its citizens and home and foreign entrepreneurs allowed Estonia to change people’s perception not just of government efficiency, but also of its reputation on the world stage.
More About Our Work with Blue Ocean Strategy
- Podcast: Ask Andi--Blue Ocean Strategy Step I
- Podcast: Ask Andi—Blue Ocean Strategy Step 2
- Blog: Mid-Year Update: SAMC's 10 Best Blue Ocean Strategy® Blogs/Podcasts/White Papers
Ready for Change? Perhaps a Blue Ocean Strategy is Right for You!
At Simon Associates Management Consultants, we can help you rethink your business strategy to find new opportunities for growth and success. Contact us to discuss how our team of specialized corporate anthropologists can work with you to discover, develop and apply a Blue Ocean Strategy that suits your business.
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