Tuesday, June 14, 2011

New Businesses Swim in Blue Oceans

I like the concepts introduced by "Blue Ocean Strategy." It's among the best articles we've studied so far.

The authors took an abstract concept and made it engaging to read by peppering in numerous examples of some of the most-successful "Blue Ocean" moments in business history (Model T, Cirque du Soleil and AMC). These strategies would translate well to small business entrepreneurs trying to break into an existing industry. If they can carve out new territory, it could save a small businessperson the typical troubles of a slow start with little to no profits.

A good local example is the Kobold Watch Co. Owner Michael Kobold founded the company in 1998. It's one of the few American watch-making companies, which means he entered an industry at an unattractive time. He's a "new entrant," the technologies for making the high-end, high-performance watches but he has pioneered a new value market that is attractive to celebrities, adventurers and other wealthy clients looking for a watch that can withstand sub-zero temperatures on Mt. Everest or undersea exploration.

Here's the story: http://www.pittsburghlive.com/x/pittsburghtrib/business/s_702482.html

Kobold had a Blue Ocean strategy that paid off. His high-quality watches and careful marketing to celebs made the worldwide competition irrelevant. It seems like it would be difficult for other new entrants to imitate. The high cost of the watches is a bit of a departure from the Blue Ocean model, but it seems to be appropriate to the brand and the technical expertise required to build the watches. Does it still qualify as a "Blue Ocean?" I think so.

I think the Blue Ocean strategy could serve as an excellent way to start a business plan for a new business or nonprofit. Envisioning how a new company could play to an un- or under-served market would be an excellent way to begin enticing investors to support the emerging business. It would serve as an immediate sign of innovation and confidence in the produce or service. Would venture capitalists essentially only be interested in companies with a blue ocean strategy? Particularly given the high profit potential of blue ocean concepts as opposed to the red ocean fighting among competitors.

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