Occasionally an unknown company or one that is looked upon as an underdog breaks barriers and creates a completely new market for its products or services. How do these companies make it happen when other players in the market have not even though of it? Is there something common that they share? A clear picture can be obtained by analyzing characteristics blue ocean companies mentioned in the case study “Blue ocean strategy”.
The most convenient logic in economics everyone takes for granted is, when there are players making profit in a market exploit it by entering it. Build resources and advantage to beat competition. And retain customers by market segmentation and product customization. But blue ocean creators do not work this way. What separates blue ocean companies from others is that these companies have a strong sense of purpose. What exactly they want to do and why they are doing it. They question status quo by deviating from the market, believe that markets can be created or shaped and create unprecedented products that are value for money.
The second most important characteristic is these companies look ahead in future. When Red Ocean companies seek to provide solutions for existing problems and spend considerable resources to fight competition. Blue Ocean creators answer problems that might arise in the future and spend resources on research and development. When the problem shows its face in time these companies already have a perfected solution while others still try to understand the problem. This gives them the first mover advantage in market and helps them to establish as a market leader.
However, the most important characteristic is Blue Ocean creators keenly observe, correct and influence the internal and external world through a constant feedback mechanism. If we take Cirque du Soleil’s example, they clearly identified chinks in their internal structure. They identified what elements of their entertainment worked and eliminated unwanted components. They identified customer likes and dislikes and how demand for the market as a whole was diminishing rapidly. This prompted them to mix and match elements from other entertainment sectors and came up with something so unique, which never existed before.
They reinvented an existing process. Their incumbent advantage and experience helped them simplify an existing art form and give variety. As a result, they attracted a new customer base and built a brand for themselves. The initial cost incurred in realizing this was compensated when customers realized that value and price was aligned. Once more customers were willing to pay, it automatically brought the cost down creating a win-win situation for the industry and the consumer.
Though the characteristics mentioned above are not exhaustive, they address the basic question. What is so different about blue ocean creators? How they start creating markets, design products, services and how they eliminate factors that hinder their growth? In a crowded world market like ours, we see increasing instances of blue ocean creators rising repeatedly. Creating blue oceans may perhaps be the best way for anyone who is looking forward to create an ever-lasting company