Introduction
(Bligoo, 2009) The Ocean Blue Strategy, is a new Business Strategy conceived by W. Chan Kim in collaboration with Renée Mauborgne, who propose a new strategic thinking through the analogy of the oceans and companies; While the oceans, the red oceans symbolize the majority of current companies, the blue oceans represent business ideas that have been unknown until now (Expansión, 2009) summarizes it as a new way of winning markets, without fear of competition or the very words of its creators "nothing towards the open sea seeks, identifies, innovates and develops non-competitive niches".
Based on (García), several examples can be mentioned such as: Ford's “T” model, Jobs' IPod with Apple, Starbucks and its targeting of coffee consumers in various places and at a higher cost; Curves, fitness for women based in Texas and now with more than six thousand locations and Cirque du Soleil, which moved away from the traditional circus without losing its roots and focuses on a market with greater purchasing power.
Biographies
W. Chan Kim
Korean strategist born in 1952, he is a professor and Co-director of the INSEAD Blue Ocean Institute of Strategy in Fontainebleau, France; Member of the European Union and the World Economic Forum; They won in 2008 the Nobel Prize Colloquia for Business Leadership and Economic Thought, as well as the Eldridge Haynes Prize for the best original field work in the field of international business, he is considered a management guru and obtained the second Ranked 50th in 2013. For his research in The Blue Ocean, he won the Thinkers2011 Strategy Award, his book was recognized as the leading business book of the past decade, and he was selected for the 2011 Leadership Hall of Fame for the FastCompany magazine.He also won the Prix des Dirigeants Commerciaux (DFC) of France in 2009 in the Strategie d'enterprise category. He co-founded the Red Blue Ocean Strategy, which is a global community that is founded on the principles of the strategy with the same name. (Leigh Bureau, W. Colston Leigh, Inc, 2013)
Renée Mauborgne
Distinguished member. Co-Director and professor of strategy at INSEAD; Member of the advisory council of North American President Barack Obama, of the World Economic Forum, Co-author with W. Chan Kim of various articles and the book The Ocean Blue Strategy; She co-founded the Blue Ocean Strategy Network.
The ocean blue strategy or the blue ocean strategy
(Correa, 2009) Kim and Mauborgne see the business world as two oceans, one red and the other blue; The reason for the colors is very simple, in the Red Ocean the rules of the game are already established and are known to all participants, here are the bulk of current companies such as Chrysler, Ford, Nissan etc., who are fighting a war Fierce day by day to achieve a position in the market and make profits, which are diminished by the large number of competitors and barriers to entry faced by many industries, this causes standardization and decrease in profits; instead in the blue ocean there is calm, there are those companies such as Cirque du Soleil, Starbucks, Curves and IPod that created their own market and therefore there are no competitors, there is value innovation1,the rules of the game are being implemented by themselves.
How to develop a blue ocean strategy
According to (Business, 2006) and (Sperat, 2007) the main objective of the blue ocean strategy is to reduce costs as much as possible and increase the value that the final consumer gives to the product, that is, there must be innovation in the product, to achieve all this, it is important that the entrepreneur understands the differences to achieve a difference, therefore, the differences between the two are shown in the following table.
Differences between the red ocean and the blue ocean
Red ocean
- Competency-based economy Competitor depredation Exploitation of the same demand Differentiation (innovation or low cost) No generation of innovation Limited growth Strategy focus, competition
Blue ocean
- Innovation in value, value curve Creation of new spaces free of competition, making it irrelevant Creation of new demand Change of paradigm, differentiation (innovation) is sought at the lowest cost Definition of new frontiers Strategic market movement Systematic approach
Create new market spaces
(Consultoria-pyme.com, 2004) For a company to find or rather create its blue ocean, it must stop trying to predict industry trends, it must also avoid trial / error, rather, it must focus on formulation of a strategy that manages to broaden its own horizons and therefore those of the market, for which the company must be guided in the following procedure.
- The company should stop fighting only against its direct competitors, but should also worry and focus on competitors with substitute products, since ultimately the consumer has a wide range of options that includes them both. For example, the competence of a taco shop is not only other taco shops, but all restaurants, cinemas and places where people can go to distract themselves and have a good time. Blue oceans do not necessarily arise from alternative industries, it also They can do from their own industry, that is, you can create a market segment within an existing industry. For example, a luxury car of a good brand at the price of the market segment. Change one target market for another, that is,change the strategies of the game and therefore the market can expand Analyze the value chain, identify problems in the production chain, maintenance or customer service. Do not focus on value for money, seek to go further, how to search a feeling or emotion of the customer.
Analytical Tools Strategic Canvas
It refers to identifying where the competition is investing, that is, determining the key success factors, once the objective has been achieved is to look for new success factors to create a new “blue ocean” (Correa, 2009)
(Sperat, 2007) It is a tool that helps in the diagnosis and execution of the OA strategy, since in the first instance it captures the current state of the “competitive game” of the market and helps to identify in which key points the competition invests. that is, the key factors on which the competition has its "differentiation".
The following variables are placed on the “x” axis or horizontal axis: price, enology2, marketing, age, winery, complexity and variety; while on the y-axis or vertical axis the intensity of each factor is measured, whether it is high, medium or low. In such a way that a value curve is constructed.
The price tunnel
It is related to ensuring the viability of the new blue ocean, it is a support tool to determine the price of the product in relation to its value. This implies the interrelation of exclusivity (barriers to entry, patent protection) and competition itself, which occurs in businesses in the same sector or substitutes.
The cross of the four actions
(Sperat, 2007) In order to create the four elements of value, the company must first ask the following questions: What factors should be created, something that the industry has never offered? What factors should be reduced as much as possible possible, well below industry standards? what factors taken for granted should be removed? And which should be increased well above the industry standard ?, hence the four actions are:
Create, discover sources of value, with which a new demand will be generated and therefore the strategic price of the industry will be displaced.
Reduce all those factors that were created with the aim of beating the competition but that ultimately had no impact on it, since they were over-designed.
Eliminate all those factors used by competition in a traditional way and that to a certain extent differentiates them from the others.
Increase, discover and eliminate the commitments that the industry "forces" its customers to obtain. All of the above can be done through the use of various conventional tools that serve for strategic business diagnosis such as: analysis of macroeconomic factors, product life cycle, analysis of value inequality, analysis of the state of competition or hyperocompetence.
The CREA matrix
(Sperat, 2007) It is the third tool for the creation of a company with blue ocean and is a complement to the cross of four actions, here companies are not only forced to answer the questions that the cross proposes, but must act on them in order to generate new value curves.
- The company must seek at the same time the differentiation and the reduction of costs to break with the idea of value-cost. The matrix indicates those companies that focus like most on increasing and creating, which causes an increase in production costs and an over-design in the product, which in many occasions causes that the client cannot acquire it for the high price or even worse that it is not functional. It is easy to understand, so managers of any hierarchical level They can apply it and commit to it. The company must structure each competitive factor in its industry carefully, to find the range of assumptions on which it has been competing.
The six principles of the blue ocean strategy
(Sperat, 2007) Kim and Mauborgne propose four principles for formulating the blue ocean strategy and two more for its execution, and in turn, each principle is focused on minimizing the basic risks of any innovative strategy.
Principles for formulation
Reconstructing the borders of the market
Focus on the innovative idea, not the numbers
Go beyond existing demand
Get the right strategic sequence
Attenuating risk factor
Search risk
Planning risk
Scale risk
Business model risk
Principles for implementation
Overcome organizational obstacles
Incorporate management into strategy
Attenuating risk factor
Organizational risk
Management risk
Principles for formulation
Reconstructing the borders of the market
(Sperat, 2007) Companies that are in a red ocean tend to analyze their strategic position in the market in a very traditional way, however, companies that are in their blue ocean have managed to mitigate the risk of searching and analyze everything from another perspective, in such a way that
|
Analysis of the market positioning of a company in red ocean |
Analytical perspectives for a company in its blue ocean |
| It defines the company in the same way as its competition and tries to be the best in the industry in which it develops. | Perspective # 1- Alternative industries: Determine what factors the consumer analyzes to select the product of the analyzed company |
| They come to the industry with their strategic groups and they tend to compete to be the best of their group. | Perspective # 2 Strategic groups in the industry: carefully analyze what the final consumer is looking for to come and go between the different levels of "competitor groups" in the industry. |
| They focus on the same group of buyers, users, and even influencers. | Perspective # 3-Customer chain: It is important for the entrepreneur to evaluate and define his chain of buyers, that is, to define who he sells to |
| They define in the same way the way of getting your product or service | Perspective # 4 - Complementary products and services: it is important to follow up on the product itself, what criticisms exist regarding it and if
improvements can be made or failures can be eliminated. |
| Accept the emotional or functional orientation of the industry in which they operate | Perspective # 5-Functional or emotional appeal: It is important to determine if elements can be added to the product to make it more "exciting" in case it has always been
very "functional" or vice versa. |
| They focus on a time frame to formulate their strategy | Perspective # 6-Intertemporal analysis: the entrepreneur must ask himself the feasibility of offering a product that provides a greater utility than that already granted. |
Focus on the big idea, not the numbers
(Sperat, 2007) In order to reduce the risk of planning Kim and Mauborgne propose to focus on the following steps:
- Visual awakening: firstly, the entrepreneur must compare his company with his competition (based on the strategic canvas) to later determine what needs to be changed. Visual exploration: the entrepreneur must carry out a field study that analyzes the competition factors in the industry, based on the six perspectives (of the reconstruction of the market frontiers), observe the distinctive characteristics of both direct and indirect or alternative competitors and finally use the C-REA cross in conjunction with the matrix of the 4 shares. Visual strategic analysis: it is important that all staff are aware of the difference evolution implies, that is,migrate from a red ocean to a blue one and this will be achieved through the comments and suggestions of alternative strategic canvases of the different market members, such as: real clients and potential clients, which is the same as saying no clients and clients of competition, with the aim of creating a future strategy based on feedback.
Since the staff had participated in the brainstorming, it is important to inform them of the progress, so they will be distributed the current and future strategic canvases so that they can carry out a comparison of them and in this way they can support the or projects that catapult the company to success through a new strategy.
Go beyond existing demand
(Sperat, 2007) In order to reduce the risk of scale, it is important to avoid segmenting the demand in the blue ocean, that is, it is necessary to try to introduce the greatest amount of demand, which will allow the company to focus on the non -clients and thus determine their characteristics. There are three types of non-client layers:
- The next to board the ship Those who deny the industry in which they are competing Those who belong to distant and unexplored markets
Get the right strategic sequence
(Sperat, 2007) Here the company focuses on reducing the risk of the business model by verifying its commercial viability, which will be achieved by following the order of: profit, price, cost and adoption, each of which is briefly described below:
- How to discover exceptional utility for the buyer: A systematic analysis must be carried out using the matrix called "Buyer's Utility Map" where the "x" axis includes: purchase, delivery, supplements, maintenance and disposal; while in the axis of the "and" are: productivity, simplicity, convenience, risk, fun / image and kindness with the environment. Once the matrix is completed and analyzed, prices can be defined. Fixing the correct price: An offer is not always enough, it is important to analyze the economic capacity of the client. Normally companies only focus on the competition of their own industry and do not go further, so that the exercise is insufficient.One way to know the price sensitivity of potential buyers is through an analysis of products and services that: first, although they are different they have the same functionality and second, they have different form and function but with the same objective. Once this is done, the entrepreneur will have the possibility to discover which is the mass price broker, that is, to recognize the range of minimum and maximum prices that attracts a greater number of potential customers and thus find his place or level within The aforementioned broker From strategic price to objective costing, at this point the profitability of the model must be analyzed, that is, the costs are calculated from the price at which the profit margin is subtracted. Here eliminating and reducing are important actions, since they allow reducing costs by:streamline and modernize activities, through cost innovation, alliances with third parties, price innovation (change the price model of the industry in question) such as: leasing. It is important to remember that the objective is to reduce costs without moving the strategic price. Adoption of the new offer: All evolution implies change, which in many occasions generates resistance due to fear, this fear or resistance can be generalized at the business level among employees, customers and even suppliers, which is why it is imperative that the company dedicate time to “educate” all of them in a planned wayIt is important to remember that the objective is to reduce costs without moving the strategic price. Adoption of the new offer: All evolution implies change, which in many occasions generates resistance due to fear, this fear or resistance can be generalized at the business level among employees, customers and even suppliers, which is why it is imperative that the company dedicate time to “educate” all of them in a planned wayIt is important to remember that the objective is to reduce costs without moving the strategic price. Adoption of the new offer: All evolution implies change, which in many occasions generates resistance due to fear, this fear or resistance can be generalized at the business level among employees, customers and even suppliers, which is why it is imperative that the company dedicate time to “educate” all of them in a planned way
Principles for implementation
Overcome organizational obstacles
With this tool, the company will apply a different strategy of negotiating, that is, it will change the form of business to which it is traditionally accustomed, in such a way that it seeks to reduce organizational risk and when applying it, managers have encountered 4 barriers:
- Cognitive, refers to making employees understand the need for change, to see how "crude the reality of the company is", this can be achieved by visiting disgruntled customers. Of resources, since the company is cutting resources, the important thing is to distribute the existing ones to achieve qualitative and substantial contributions in the effectiveness of the change. The motivational one, is based on concentrating the change effort on the "key influencers" within the company, making them come to light and fuel the objectives so that they are achievable in the short term. The policy is about maintaining relationships with people in well-placed positions, such as managers.
Once all of the above has been achieved, it is important to internally apply the “fair game” which is about 3 simple basic principles: involvement, explanation and expectations.
Sustainability and renewal of blue ocean strategies
Once a company discovers or creates its blue ocean, it must remain in constant movement, that is to say innovating, it would be a mistake to remain static and “rest on its laurels”, since the competition sooner rather than later will arrive, the question is not When? If not, what barriers to entry are there, how easy is it to imitate the strategy?
Some of the barriers to imitating the blue ocean strategy are:
- Value innovation does not make sense for a company that has not changed its thinking and still follows the traditional model of the industry. On some occasions, the market itself is the one that cannot “support” a second competitor, Patents, Low company costs give you a competitive advantage, which can discourage your competition, Innovation requires changes at various levels and levels Customer loyalty
conclusion
When we want to start a family business, we usually think of the same thing, a stationery or a little store in the corner; If my dad had a hardware store, well, I'm going to do the same, no matter that there is a lot of competition, after all, the cake is very big and it is enough for everyone. But what if we suddenly had a fleeting idea, an ace of light that would allow us to glimpse a new horizon? Or, on the other hand, what would happen if we see how our company is slowly dying from competition and requires RPC urgently ?, Of course we can not give cardio-pulmonary respiration to the company, but we can inject innovation, change of mind and course.
I believe that the important thing is not to satisfy an existing need, but to create a need, that is to say, a new market and all that is required is an innovative idea, systematic thinking and a lot of push to not give up.
Bibliography
- Leigh Bureau, W. Colston Leigh, Inc. (2013). Retrieved on February 24, 2014, from No. 2 of the 50 thinkers of 2013: Chan Kim: http://www.leighbureau.com/speakers/CKim/Bligoo. (2009). Bligoo. Retrieved on February 24, 2014, from the Blue Ocean Strategy: Winning by Not Competing, a New Vision: http://luzvanzulli.bligoo.com/Consultoria-pyme.com. (2004). Consultaria-pyme.com, Develop to the maximum the potential of your company. Principles for the development of a Blue Ocean strategy Correa, AL (2009). ManagersMagazine. Retrieved on February 26, 2014, from The Blue Ocean Strategy: http://managersmagazine.com/Expansión, C. (2009). CNN expansion. Retrieved on February 24, 2014, from The Brightest Minds of the Year: http://www.cnnexpansion.com/García, M. Á. (sf). ESDEN,Higher School of Business and Technologies. Retrieved on February 24, 2014, from The «Ocean Blue» strategy: http://www.esdenonline.com/datos/articulos/archivo11.pdfNegocios, E. y. (November 29, 2006). Strategies and Business. Retrieved on February 25, 2014, from "The Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne: http: // EstrategynegociosPereda, AM (May 21, 2012). Pymeware. Retrieved on February 26, 2014, from Sales and Marketing, hypercompetition: https://pyme.com.mx/Sperat, S. (2007). Summary: Blue Ocean Strategy, How to create unreachable market spaces and make competition irrelevant. Retrieved on February 24, 2014, from ocean strategy.pdfWikipedia. (February 04, 2014). Wikipedia, the free encyclopedia. Retrieved on February 24, 2014, from W. Chan Kim:
