Currently the rivalry and the closed market forces companies to face competition, this is strongly strengthened by globalization and the demands of consumers to acquire products and services of higher quality and at a lower price. This requires both national and international companies not only to compete among themselves but also to seek to implement new market strategies.
Therefore, it is important that directors and managers put emphasis on studying the competition and the market in which they are immersed, so that they can transcend and achieve the success of their business; primarily focus on striving to achieve a competitive advantage for market share, and striving to differentiate and survive the current market.
Positively in these times it is remarkable to see how already several companies, and of those with high growth, are those that have paid little attention to the battle with rival companies and have focused on developing new markets in which competition has not been set; that is, exploring a market in waters that have not yet been navigated. This has ensured that they see their “competitors” as irrelevant, since developing a “Value Innovation”, the most important strategic movement of all, is the creation of blue oceans (Chan Kim & Mauborgn, 2005); that leaves aside direct competition (the so-called "red oceans"), markets where rivals fight for a reserve of profits and customers. Even in various business schools around the world they continue to focus on the cold path focused on competition,where all the companies are rivals and seek market share, leading to more competitors appearing under this scheme, causing the possibilities of profits and growth to decrease.
Background.
Innovation in value is a variant of the term Blue Ocean, which seems to be something new, since 2005 was when W. Chan Kim and Renée Mauborgne, professors of strategy and management at INSEAD (University of France), did it famous this term when publishing the book "The strategy of the blue ocean", in which I know that he proposes a new way to win markets, losing the fear of competition.
However, this phenomenon does not turn out to be new, proof of this is the Ford T of 1908, which economists like Marx called a relative surplus value or Schumpeter as creative destruction; making it known that the strategy of introducing innovative methods or goods opens the door to winning new markets.
Another sign that the blue ocean has been there for several years is found in observing sectors as basic as automobiles, aviation, petrochemicals, pharmaceuticals, etc. that they did not know but that they navigated in new markets by that time. 30 years ago cell phone, biotech, snowboard, coffee bar companies, to name a few, explored a blue ocean to grow in the market, none of these sectors existed.
The above shows that companies can create new sectors and recreate
existing. For example, the Standard Industrial Classification (SIC) system was replaced in 1997 by the North American Industry Classification System (NAICS), reflecting the existence of new sectoral territories: blue oceans.
However, Kim and Mauborgne were the ones who gave recognition and name to this strategy, after having carried out a study of 30 industries and 150 strategic movements from a period of almost one hundred years ago, observing that companies to achieve success do not need to battle against competitors, but to create market spaces "blue oceans" that are an "innovation in value". These generate redundancy validity value to the company, forgetting and leaving aside the competition.
Red Oceans.
Kim and Mauborgne consider that the ways to survive and stay in the market are two strategies, one of them is where industries and most businesses currently operate through direct competition among themselves; These represent what is called red oceans. It is the reality of all business, living a bloody competition (hence the red color of the oceans) where the organization is constantly exposed to the appearance of new competitors and rivalry strategies that stop its growth.
That is why these companies that belong to this ocean must have their limits and direct competences well defined. The red ocean aims to overcome and defeat the rival, direct competition, and gain a position in the market; where everyone is simply aware that it is a space where rivals and new competitors will appear diminishing profits.
The main characteristics of the Red Ocean industries are:
Table 1. Red Ocean strategies.
| Red ocean strategy. |
| Compete in the existing market space |
| Challenge the competition |
| Exploit the existing demand in the market |
| Choose between the value or cost trade-off |
| Align the entire system of a company's activities with the strategic decision of differentiation or low cost. |
Source: (Chan Kim & Mauborgn, 2005).
The blue Ocean Strategy.
Now, knowing and already having an idea of the red oceans; The blue ocean is based on the creation of unexploited markets that generate growth opportunities by navigating new waters, hence the concept of the blue ocean. That is why the blue oceans that have nothing to do with current industries, because the companies that navigate this strategy make competition irrelevant, they only care that the territory they have established is profitable and sustained over the long term. term.
A blue ocean seeks to create and emerge new markets, territories that have not been explored today; becoming viable spaces because they are opportunities to generate future growth.
The blue ocean is defined as that “space belonging to the market and that has not yet been used or exploited, and that consequently will generate an opportunity for profitable growth” (Wikipedia, 2015), and this usually arises from a red ocean.
The main characteristics of this ocean are:
Table 2. Blue Ocean Strategies.
| Blue ocean strategy |
| Create a space without competition in the market |
| Make the competition irrelevant |
| Create and capture new demand |
| Breaking the value or cost tradeoff |
| Align the entire system of a company's activities with the purpose of achieving differentiation and low cost. |
Source: (Chan Kim & Mauborgn, 2005).
Development of the blue ocean strategy.
The Blue Ocean Strategy is developed through four basic principles, described below:
- Create new spaces for consumption. It consists of creating the blue ocean, seeking that the business is innovative, an unexplored, original space that generates sufficient future profitability with a place in the market. The main characteristic is “to establish a structured process that manages to expand the limits of the market as it is conceived today” (Chan Kim & Mauborgn, 2005).
The paths that allow reaching this point are:
- Companies must not only fight with the competition, but with those companies that generate substitute products. Companies must study what alternative industries do. Companies must study the different strategic segments that are part of the market, opening up opportunities for new customers. The company can modify the conventional strategy, allowing an expansion in the market. Study and understand what happens before, during and after using a service or product. To create new spaces in the market, attention must be paid to consumer feelings and emotions.
- The important thing is the global idea, not the numbers . When you have to establish it is necessary to know how it will be applied and not look at the numbers, look at the globalization of the current world and specify how the distance from the competition will be done. Taking into consideration the Strategic Canvas, Visual Awakening, Visual Exploration, Fieldwork and Visual Communication. Go beyond the demand. The company needs should not focus on the needs of the current customer and not perform excessive market segmentation. Simply, the aim is to focus on those who are not yet clients and realize what their needs are, thus maintaining the list of current clients. Ensure feasibility. This will reduce the risk of implementing a new strategy, it can be supported by the following questions:
- Will the clients get an exceptional profit from the new business idea? Is the price set for the products or services available to the great mass of potential clients? Is the cost structure we have viable considering the price objective? What have we set ourselves? Are there obstacles to transforming our current value proposition?
Therefore, it can be seen that a blue ocean needs something new and exceptional to be presented to the consumer, this will set the tone for a product to be successful and make a difference. Another aspect that should not be left behind is the strategic price, which should attract and retain customers, all in order to generate customer loyalty.
Innovation in value.
As innovation is an essential factor to maintain and increase competitiveness. The success of the company is the contribution of value that it gives to the client, that is, the innovation in value, which is what a blue ocean moves on; since new and innovative market spaces are generated, searching and identifying markets that do not exist or have not been explored, creating a demand without disputes. It aims to increase the value of your products and services, and not to decrease costs like a red ocean.
Value innovation strategies are not focused on competition, but rather on searching among all the factors on which the sector competes, those that generate superior value. It does not waste its resources in offering a certain characteristic of the product or service, the blue ocean strategy is a different form of business, it divides its all into value components from the customer's perspective in order to influence their decision.
To create blue oceans, there are two ways: companies that give rise to completely new industries, and originate a blue ocean within a red ocean when the company modifies an existing sector, that is, innovates. Everything revolves around understanding who offers value, what weight each variable in the offer is going to have and what makes it different. Patricio O'Gorman, professor of the MBA at the University of Paler, points out that from there must emerge what is necessary to increase, reduce, add or remove innovation in value to achieve a business and make competition irrelevant.
- ERIC process.
It is named for the union of the concepts Eliminate-Trim-Increase-Create , proposed by Kim and Muborgne. This process seeks to create innovations in value, with information that can be obtained by conducting surveys and defining the following:
- Eliminate, what is not valued and is not important. Reduce , what is valued less and that is unimportant. Increase, what is valued more than is important and not very satisfied. Create, what no one is offering to address important tasks, stages or results that are not being satisfied.
How to achieve success with value innovation, a blue ocean.
Innovation in value is possible for a company when it aligns innovation with what the customer values. José María Sainz de Vicuña, mention that the keys to success in innovation revolve around the following points (euskadinnova, 2009):
- Corporate culture: that fosters not only innovation but also success in it. A company based on people, who work as a team contributing ideas.
- Innovative attitude: a critical mindset and one open to change, attentive to everything that happens Knowledge management and having sufficient investment Anticipation: timely innovation is an inalienable strategic principle Incorporation of the customer's voice from the beginning of the process: Satisfy customers, continuously amaze them Search for radical innovation: set ambitious goals Clear and balanced goals: Not utopian Right in the organizational strategy: Establish an autonomous team Constituted project team: Integrated all capacities to undertake all the facets of the subject. Role given to the Project Director: It is decisive for the success of innovation when it comes to ensuring that all components are oriented towards the objectives.
Conclusion.
It seems to be very clear that innovation in value, of a company, will continue and will undoubtedly be the best strategy as an engine of growth and survival in the market; since the red oceans mark perspectives in established market spaces and that they are shrinking in a sustained way in difference to the new explorations generated by the blue ocean.
Technology will continue to evolve and substantially improve industrial productivity that forces suppliers to produce enough products and services, disappearing market niches, which at the same time cause supply to exceed demand; generating the disappearance or destruction of the business, since products and services become commodities that fuel price wars and lower profits.
Finally, it can be said that the four main needs for an innovation of value "Blue Ocean", be a good port, are: the existence of a corporate culture with the conviction of the need for a long-term innovation plan to establish the development process of this potentially successful strategy.
Thesis proposal.
" Incorporation of the blue ocean into the curriculum of a school or educational institution, to enhance education and improve its prestige"
Objective.
Improve the educational level of an educational institution through the blue ocean, implementing an innovation in value to the curriculum.
Bibliography.
- Systematic Innovation. (2013). The value innovation strategy. Retrieved on September 26, 2015, from http://www.innovacionsistematica.net/innovacion/estrategia-innovacion/30-la-estrategia-de-la-innovacionen-valorChan Kim, W., & Mauborgn, R. (2005). Blue Ocean Strategy. USA: Harvard Business School Press.cnnexpansión (December 2009). The brightest minds of the year. Chan Kim and Renée Mauborgne. CNN Wikipedia Foundation Inc. (August 2015). Wikipedia. Retrieved on September 26, 2015, from Blue Ocean Strategy: https://es.wikipedia.org/wiki/Estrategia_del_oc%C3%A9ano_azulhbr.org. (2013). mktfca. Retrieved on September 26, 2015, from The Blue Ocean Strategy: http://mktfca.tumblr.com/post/35415805653/la-estrategia-deloc%C3%A9ano-azulMuruá, H. (2014). Clarin. Retrieved on September 25, 2015,of Blue Ocean Strategy: http://www.ieco.clarin.com/estrategia-Oceano- Azul_0_1231677353.html Sainz de Vicuña, JM (2009). euskadinnova. Retrieved on September 26, 2015, from How to achieve success in innovation: innovation in value: http://www.euskadinnova.net/es/transformacion-empresarial/noticias/como-lograrexito-innovacion-innovacion-valor/4775.aspx
(The Capital, 1867)
(Capitalism, socialism and democracy, 1942)
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