Understand the Strategy that inspires Innovation in organizations and sectors around the world
In a competitive market, there are possibilities of long-term growing; however, they must be uncovered. A few leaders understand and create new opportunities in their industry. When this happens, a “Blue Ocean” occurs, conquering space in the market, clients and especially results.
What are the characteristics of this Strategy?
The initial point is the value innovation, a new strategic focus. Creating a new demand of differential benefits in the market, the competition becomes irrelevant and the concept of value changes. Like, for example, Cirque du SoleilI, that reinvented the concept of circus. While the competition was focused on animal shows, they started offering emotion, drama and art. The demand for the product increased and, naturally, the prices.
The main points of this strategy are:
- Creation of a market not yea explored
- Create and capture new demands
- Make the competition irrelevant
- Break the importance of cost-benefit.
What must be done in practice?
- Go beyond the existent clients
Few companies have a good vision of who are the non-clients and how to reach them. A field research is the best way to challenge old methods and obtain new insights. This means: search for methods to attract this group, prioritizing the similarity between clients and non-clients, instead of dividing into multiple sectors.
- Questioning traditional approaches
Organizations must move away from the accepted boundaries that define how they compete. To create blue oceans, managers must have the capacity to observe systematically and go beyond these boundaries. The pharmaceutical company Novo Nordisk A/S followed this strategy. While competitors offered their products to doctors, they focused in patients, giving people the autonomy and presenting a new alternative for the demand.
- Analyze the emotional appeal
If the competition is focused on applicability, analyze the emotional appeal that the product has to the client. In Blue Ocean Strategy, you must question how new processes affect this value. In short: don’t let your business be boring!
- Engagement of the team
To hold a new promise of innovation, its necessary that people embrace this initiative. Build a strategy with the assistance of people from the beginning, generates trust and cooperation. So, request new ways of contribution for your team; promoting opportunities for debates and merits for different ideas. Explain the strategy for everybody, because with this understanding, teams will trust the intentions of their managers, even if they disagree with a specific change.
Intellectual recognition is connected to the motivational power. When there is appreciation of intellectual value of collaborators, they feel disposed to share the knowledge they have and go beyond the current reality, as there is an emotional connection with the strategy. This step and its success, is also important.
- Strategic Renovation
With time, all innovation is limited. The key to support this in a long term is strategic renovation. Thus, monitor continually the results and the market. When the occurrence begins to conquer space, this is the moment to create a new strategy for more blue oceans.
The strategy and the concept of red oceans (already existent demands, where companies compete against each other) and blue oceans (unknown demand, with a vast potential for companies that know how to explore this) is approached in the book Blue Ocean Strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant of W. Chan Kim and Renée Maubogne. The book was nominated best-seller by Wall Street Journal, BusinessWeek and Amazon.
Are you interested in this subject? In our program Contemporary Topics in Business Strategy this theme is deeply approached by professors of Pearson College London – click here to read more details of the program.
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