Wednesday, April 15, 2015

Hair Salons- Carving out a Blue Ocean

In reading Blue Ocean Strategy and “Why Good Companies Fail to Thrive in Fast-Moving Industries”, I am left questioning how one would enter a Blue Ocean even though good management practices can ultimately lead to failure.

Aside from this master’s program, I am working towards a passion project that addresses economic development. More specifically, I would like to open hair salons that operate as cosmetology schools for low-income women. The biggest challenge is that the industry of hair products and salons seem to be a Red Ocean. There are currently both high and low-end hair salons offering similar services with a variety in pricing. With this understanding, I wonder how I will be able to strategically enter a Blue Ocean that will not lead to failure.

W. Chan Kim and Renee Mauborgne suggest that Blue Ocean strategy is achieved “only when the whole system of a company’s utility, price, and cost activities is properly aligned.” Additionally, they suggest that brands no longer matter as customers are basing their purchase choices on price. In crafting the business model for my passion project I plan on creating a luxury experience for the customer at an affordable price. From the reading, this seems to be the best way to increase value while maintaining a competitive price point. However, I understand that I should be weary of decisions made about financial resources, as Clayton Christensen explains that customers and investors dictate spending.

Taking from Christensen, it seems the best strategy is to improve decision-making processes instead of implementing rigid management criteria. This means crafting leaders instead of the traditional managers. The reason being is that good management requires constantly appealing to customers’ immediate needs. However, this has the potential to lead to my failure because I would not be focusing my efforts on innovation and creating barriers to entrance.

 I believe this concept has been previously presented in Your Strategy Needs a Strategy, in which the authors detail the importance of creating employees with prepared minds. The main takeaway in moving forward with my passion project is that I must first strive to obtain the characteristics of a leader, and not just of good management skills. This means crafting a team of individuals who can critically identify portions of the market to invest in that will optimize my brand while enhancing the value of our product to the consumer. 

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