Blue Ocean Strategy For Startups, Part 2

Blue Ocean Strategy For Startups, Part 2 by Edward Donoghue

In the previous article we discussed the necessity of identifying uncontested market spaces - where competitors are rendered irrelevant.

We discussed that in order to do this, we must pursue value innovation - recognizing the value system behinds people's market choices structuring enterprise resources into a superior, innovative alternative.

But how? What metric do we use to build these superior, innovations?

Blue Ocean Strategy gives us this metric.

This metric lets us recognize how other enterprises are positioned, and to identify overlooked niches.

Position Yourself Along the Emotional-Commodity Axis

For example, products are generally seen as either having an emotional appeal or of being merely commodities. By shifting a product's position along this emotional-commodity metric, we often find the uncontested market space we're looking for.

As an example, investment advise has traditionally had a heavy emotional element, heavily based on a personal relationship and trust between the client and the broker. However, enterprises like Charles Schwab and Vanguard Mutual funds, by shifting their offerings more towards the commodity end - offering low-cost, no-frills service - have acquired a huge customer base, people uninterested in the traditional niceties of investment management companies.

Focus on Buyers, Users, or Influencers

Another metric is customer type. Customers can be divided into buyers, users, and influencers. By switching focus from one customer type to another, competitors can often be completely outflanked.

When the financial information vendor, Bloomberg, started, most financial information systems providers focused on buyers. These buyers - purchasing agents in IT departments - tended to value low price and standardized easily maintained machines.

Bloomberg, however, recognized that the users - the traders - were people with high disposable income but little time.

He added features to allow them to do online shopping during downtime on the trading floor. He also added features for easy financial calculations - features most IT purchasing agents were oblivious to.

Think in Terms of Product Line Rather Than Product

A corollary of Blue Ocean Strategy is to improve marketing efficiency and drastically reduce cost structure by thinking in terms of product line rather than product.

Doing so, marketing efforts are not wasted because of the failure of a particular offering.

For example, when Fred Weiss started his web site AllMath.com, a site devoted to math puzzles and exorcises, he met with limited success. He went on to start AllWords.com, which also had limited success. However, he struck it big when he started AllLottery.com, a provider of nationwide lottery data, partially due to the branding of the word "All."

Another example is Black and Decker, the power tool company. Faced with increasing competition and unable to anticipate whether the market would demand electric drills or electric hammers etc. from year to year, they instead built a "meta" tool. A power tool platform which could easily be extended as an electric hammer or electric drill or any one of their tool line.

This meta-product approach, with its standardized parts and flexibility, gave Black and Decker a cost structure far superior to their competitors.

About the Author
Edward Donoghue is the principal of clickTechJobs.com, a cluster of skill specific job boards for IT people, which includes clickStartUpJobs.com.

This article is part of the clickTechJobs job seeker library which offers tips on resume writing, telephone interviewing, outsourcing, difficult bosses, changing careers, etc.

Learn more at http://www.clickTechJobs.com/article_library.php

Source: Blue Ocean Strategy, Business Strategy information at goarticles.com