“Blue Ocean Strategy” & The Product Life Cycle

“Blue Ocean Strategy” & The Product Life Cycle

For what seems like a decade now, business people have been aware of our world changing and struggling to find tools that would help them to survive and prosper in this new and changing world. Many jumped into Six Sigma® or LEAN as a way to cope with the pressures being exerted upon them. For many if not most, these endeavors have failed to provide the security for which they had hoped.

2005 saw the publication of a new book entitled “Blue Ocean Strategy.” It is about, “How to create uncontested market space and make the competition irrelevant.” While this provides a new approach to addressing the age old problem of “The Product Life Cycle,” it has done it in a new way that makes tremendous sense for our particular point in time. This is by far, the best book I have read in some time and I recommend it highly.

W. Chan Kim and Rene’e Mauborgne studied 150 strategic moves spanning more than a hundred years and thirty industries. In essence they have concluded that industries never stand still (Product Life Cycle) and that there comes a time when the competition creates a red ocean (decline stage) where profits are reduced as companies fight over the existing business. They contend, and I agree, that most strategy has focused on how to compete in this red ocean. The opportunity lies in creating new industries or recreating existing ones to create blue oceans where there is no competition and it will take some time for any potential competitors to catch up.

I loved the review of “In Search of Excellence” and “Built to Last.” Both of these Best Sellers highlighted companies that have since fallen from there perches as industry leaders. Once again, proving that the only constants are death, taxes and change.

Creating Blue Oceans depends on value innovation. The beauty of this book lies in the tools provided and the orderly steps outlined to achieve value innovation.

The first tool is the Strategy Canvas where a value curve is created that depicts a company’s relative performance across its industry’s factors of competition. Once the value curve is created, there are four actions including:

Which of the factors that the industry takes for granted should be eliminated?

Which factors should be reduced well below the industry’s standard?

Which factors should be raised well above the industry’s standard?

Which factors should be created that the industry has never offered?

Once in print, this all seems so obvious and when combined with an historical perspective, helps to point to obvious directions for the future.

The authors go on to suggest that there is a litmus test for commercial viability that must include “focus, divergence and a compelling tagline that speaks to the market.”

Sadly, most companies today concentrate their strategic planning effort on running numbers instead of thinking outside the box and developing a clear picture of how to break from the competition. The authors suggest that the first step is the creation of the Strategy Canvas. Step two is putting managers face-to-face with people using the product. Step three is to have the managers put together multiple new strategy canvases that will make the company stand out in it’s market including compelling taglines. Step four is to invite executives, noncustomers, customers of competitors and existing customers to the presentation of these strategies and let them vote on which ones they like best and explain why. This will provide great insight into the likes and dislikes of your market. Finally, combine this all into a new strategy canvas that will create a blue ocean and use it as a reference point for all investment decisions.

The book at 190 pages is an easy read and contains much more than I have presented here including examples of companies and how they have created blue oceans as well as how to execute new strategies. As my readers know well, I believe that successful change initiatives must include everyone and this book confirms that with the statement, “It is only when all the members of an organization are aligned around a strategy and support it, for better or for worse, that a company stands apart as a great and consistent executor.”

Unless you believe that you are in a blue ocean with no competition, I would highly recommend that you read this book and add it to your reference library. Pull it out before your next strategic planning endeavor and review it to make sure that you are looking at the big picture rather than at just an annual financial planning tool. And if you would like help looking at your red ocean in hopes of finding a new blue ocean, give us a call.