Kim & Mauborgne (2005) introduced the ‘Strategy Canvas’ for developing new blue-ocean strategies for organizations in any industries. These tools can be used to develop blue-ocean strategies within seemingly saturated markets – To identify those customer-value factors currently pursued by existing market participants, and more importantly those that are valued by customers but not adequately served. The example used in this article demonstrates how vastly different (in scale) competitors can end up with the same strategies if they persistently pursue known customers; and how ‘past-masters’ can be out-done by minuscule who look beyond existing customers and expanded the market in their quest for growth.
ANALYSIS
Take the video games console space for example. Sony and its PlayStation has been the dominant player in this field in much of the late 90’s and most of this decade (later with the addition of Microsoft and its X-Box), while the likes of Nintendo and Sega have fallen off the wayside from their dominate positions built during of the 80’s and early 90’s. Since the late 90’s and thereafter, games console manufacturer and games developers have all pursued a similar strategy – provide ever more powerful consoles that is capable of running ever more complex games, with faster and more realistic graphics, for dedicated gamers. This common strategy followed by games console manufacturers and games developers during the 90’s and up until 2006 is summarized in the following Strategy Canvas.
Figure 1: Strategy canvas for games console manufacturer \
Games consoles offered by Sony (PlayStation, PlayStation2 and Playstation3) and Microsoft (X-Box and X-Box2) all came with high-spec hardware and the latest technologies blue-ray) to give developers a solid platform to create games that are more realistic, more complex and more challenging – all necessities in justifying the price premium these consoles and their games command on the market.
Nintendo had been the dominant player in the video games space in the late 80’s and the early 90’s with its fun-filled games. But since then the low-key console maker has been steadily losing market share to the likes of Sony and Microsoft, who have captured the home console market with their more sophisticated console & games, and their much hyped marketing that goes with their product launches. Nintendo, unable to compete heads-on with limited resources, must embark on a journey of breakthrough in its quest for survival.
Recommended Strategies
Kim & Mauborgne (2005) proposed six available horizons upon which, organisations can look to in search for blue ocean ideas:
- Look across alternative industries: Identify markets outside your industry but serves the same function
- Look across strategic groups within industries: Avoid pursuing further niche in your industry. Rather configure your product/service to ‘switch’ customers from other market segments into yours<
- Look across the chain of buyers: Identify and study end-users carefully and to configure your product/service that maximize their utility. Be aware that buyers may not be end-users
- Look across complementary product and service offerings: Can you make it easier for your buyers to buy your product/service easier by offering complementary services?
- Look across functional or emotional appeal to buyers:Breakdown the qualities of the product/service you offer and focus on those that give end-users the best value, be it emotional or functional
- Look across time:Look for trends and changes in your space and evaluate how your product/service need to evolve in order to satisfy your existing/new customers’ needs
Inspirations and ideas can also be derived using one or more of the following:
- Innovation Transfer: Innovations mirgated from one discipline to another. E.g. IT to business-Process outsourcing
- Value Proposition: Alter your existing value proposition to form new products. E.g. Full-service to Low-cost airlines
- The Intersection: Christensen’s ‘The intersection’ in which new ideas form by the immersion of ideas from different disciplines. E.g. Computing + Molecular Physics = Molecular computing
- Open Innovation: Innovations are created externally but are used internally.
REFERENCE
Finkelstein, Harvey & Lawton (2007), Breakout Strategy, McGraw Hill
Kim & Mauborgne (2005), Blue Ocean Strategy, Harvard Business School Press
Leung W (2008), Framework for migrating innovations across industries, Imperial College Business School
Unknown, Wii, Wikipedia (online: http://en.wikipedia.org/wiki/Wii )
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