Do you have any apprehension that your business will become obsolete? Do you think that you are in the rat race? Do you intend to do something different and be innovative? Do you like to stand out from the pack? Then the answer lies in three simple words, “Blue Ocean Strategy”.
The slogan sounds strange, right? It is very simple. It dwells at length about entering new domains and areas where there is no room for competition. The only thing it demands is your creativity and innovation. You need to do a lot of research first to find out the uncharted territories to pursue this strategy. It is always the trailblazers who stand out from the pack as they enter uncharted paths, touch, try, and test thus leaving a mark behind.
As we have Type A and Type B personality and Theory X and Theory Y categories, we also have two strategies—the Blue Ocean Strategy (BOS) and Red Ocean Strategy (ROS). As people are different in their styles and temperaments as per Type A and Type B and Theory X and Theory Y, the business leaders and entrepreneurs are also different like BOS and ROS.
What are BOS and ROS?
‘Blue Ocean Strategy’ is a book written by W. Chan Kim and Renee Mauborgne where it outlines the strategies to create new markets and products free from competition. It speaks about unconventional methods of building profitable businesses, products, and services. On the contrary, the 'Red Ocean Strategy' focuses on the conventional means of building business and beating competition. It is like getting into the rat race.
In ROS the companies endeavor to grab the share of others unlike in BOS where the companies innovate and create new spaces and places for promoting their businesses. In ROS, it is a 'dog eats dog' world with meager profits. It is more of high high-volume and low-margin business. In contrast, the BOS is more of a low-volume but high-margin business.
In BOS the companies enter into non-existing areas and establish themselves. They enjoy huge profits as there will be none to compete with them. The moment others enter their territory they smartly exit to other orbits and create space for themselves. These companies often bank on knowledge workers who remain the backbone of BOS.
ROS versus BOS
It is all about niche strategy. ROS focuses on the existing market and potential. It calls for innovative strategies to grab the existing market share of others. Sometimes it innovates within a narrow range in the same stream. However, BOS focuses altogether on different strategies of venturing into untrodden paths to explore, establish, and exploit the market's products and services. In ROS there will be unhealthy competition among the enterprises and ultimately consumers will benefit from it. However, in BOS there will not be any competition and customers have to pay the premium amount as there are no competitors and no yardstick to measure the profitability of producers. Over some time the BOS may become ROS as companies imitate others easily.
Due to the growing services sectors and knowledge workers, there will be premium services with premium prices that may deliver premium results for everyone.
Fathoming the blue oceans is more difficult than red oceans where you need to tread untouched, untested, and untried waters. You need to dig deeper to find out what is new. It requires a lot of patience and perseverance. Sometimes you may not get immediate results. But the efforts are worth it when you innovate and achieve new.
BOS Leaders
Instead of competing with contracting markets, these leaders search for space to stand out with innovative products and features. They continuously encourage research and line up their new projects in the pipeline. They spend heavily on research and consultancy. They are different and bank on knowledge workers.
Currently, there is a financial downturn. Business leaders are beset with several challenges such as erosion of margins, sales and ultimately drop in share prices. Blue Ocean leaders can attend and address all these issues through BOS.
The current complexity uncertainty and cutthroat competition call for blue ocean leaders to take forward humanity successfully for better living and prosperity.
Recession and Red Oceans
Recession is a boon in disguise where the leaders of red oceans can reinvent themselves and evolve as leaders of blue oceans. Several companies sprang up during the great depression such as Wal-Mart. Similarly current recession will pave the way for shedding excess flab and innovating new avenues and areas for growth and prosperity. It is the time for leaders of red oceans to think out of the box and create and occupy space as the leaders of blue oceans.
Be aware, the leaders of red oceans! It is time to shape up or ship out. It is time to evolve as leaders of blue oceans or to sink into the red oceans of competition.
Conclusion
The book ‘Blue Ocean Strategy’ has redefined the concept of competition. It differentiated blue oceans from red oceans. It emphasizes value innovation for profitability and growth where it needs the support of knowledge workers coined by Peter Drucker.
Whether you are an entrepreneur leader or manager small businessperson or job seeker you must understand and appreciate Blue Ocean Strategy (BOS). It helps the employees convert into employers. It encourages you to dare and dream big like entrepreneurs.
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“Things You Don’t Know about Professor M. S. Rao” http://professormsraovision2030.blogspot.com/2015/10/things-you-dont-know-about-professor-m.html
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Professor M.S. Rao, Ph.D.
Founder of MSR Leadership Consultants, India
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