Blue Ocean Strategy - The Path of Least Resistance: Steelcase

The Path of Least Resistance: Steelcase - Blue Ocean Strategy

“To break out of red oceans, companies must overstep accepted boundaries of how they compete. Instead of looking within these boundaries, businesses need to systematically scan across what Blue Ocean Strategy calls the Six Paths: Alternative industries, strategic groups, buyer groups, complementary offerings, functional-emotional orientation of an industry, and important trends. This gives companies fresh insight into how to reconstruct markets to open up blue oceans opportunities.” (Blue Ocean Strategy, p. 48)

A key quality companies should strive for is adaptability, always scanning and acting upon broad market opportunities. All companies face difficult or life-threatening challenges at one point or another, and it is their adaptability to make smart strategic moves which allow them to prosper even in the face of adversity.

We recently came across an example of this in a BusinessWeek article about Steelcase, the office furniture giant. Like other players in the office furniture industry, Steelcase was stuck in a Red Ocean of drastically reduced revenues and profitability in the recent past. In 2006, looking for a way to rebound, executives at Steelcase spearheaded a Blue Ocean Strategy-like approach of scanning across alternative industries. They began to focus on the health-care industry, which seemed like a logical new direction given its high-growth potential: The aging baby-boomer population is expected to drive annual spending on hospital construction beyond $30 billion by 2009, up from $19.8 billion in 2005.

The article reveals: “Initially, Steelcase executives assumed that hospital administrators and doctors' office managers were using their Criterion chairs in office environments. But when their salespeople talked in-depth with these customers [a core recommendation of Blue Ocean Strategy], they learned that physicians and hospitals were increasingly providing the comfortable chairs to patients and their family members in waiting rooms and physician-consultation areas, where they endure physical and mental stress.”

Having already entered the medical furnishings market without even knowing it, once Steelcase started researching opportunities for hospital and clinical furnishings, they discovered a fragmented market. Thus the birth of Nurture, a subsidiary company which could set itself apart and enjoy a market space to itself by offering compatible suites of examination tables, patient beds, physician desks, nurses' stations, and bariatric (for obese patients) waiting-room seats.

When companies chose to compete in their narrowly-defined industry, it draws them into the trap of wanting to continuously outperform competitors. Instead, Steelcase chose the path of least resistance: discover Blue Oceans, Blue Ocean Strategy, by actively overstepping industry boundaries.