Blue ocean strategy: Four value innovation steps to creating your own market

Why is it that managers are taught to differentiate, yet they don’t? Are you running stuck in the same spot? Can a blue ocean approach capture customers you never knew existed? Is it naïve to think that one just push a button and, AI -- part fad, part trend -- can replace the hard work of critical thinking?

Paradox is, the more companies compete, the more they look the same. When one scratches below the surface of Kenya’s crowded banking, insurance, hotel and hospitality, and professional services sectors, it’s very hard to tell one organisation from another.

With over abundant consumer choices and superfluous apps, upgrades and add-ons and features, brands and product offerings have become nearly identical as the efforts to outdo each other have pushed them into a dizzying herd of indistinct options.

Stuck in the soap opera of season 1, episode 1

Imagine watching a captivating popular drama series, talking about a season 1 episode, when the rest of the world is in season 7.

Why are we continually playing a game of catch up? Can one shift from playing the part of the dumb ‘wanna be’ all knowing make believe expert? Helps to avoid preconceptions when addressing a business issue, similar to how a true beginner would approach things.

Having a beginners mindset allows for more possibilities, creativity, and a deeper understanding -- by letting go of what one already knows, being open to new blue ocean perspectives and experiences.

Blue ocean strategy

Want to launch a successful business? Is it possible to avoid wasting time on competing for market share? Ideal is to focus on creating new value, expanding the current market space.

If you can create new value, you will find yourself in a highly profitable ‘Blue Ocean’ where the competition is irrelevant. This is the thinking of W. Chan Kim and Renee Mauborgne, first published in their 2005 book: Blue Ocean Strategy.

If two people are sitting by the side of the road selling tomatoes, do you join them as the third tomato seller? That’s the temptation. Competing -- thinking that one can be just a little bit different, drop the price slightly, give one away free, offer juicy ripe tomatoes, or sit closer to the matatu stop. That’s the easy conventional thinking, the default programming on how to do business.

Blue ocean strategy asks: How can you create value by addressing the needs, problems that customers face? And, go after ‘non-customers’ that others have not thought of.

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Market leaders like, for example, Tesla, South West Airlines, Ikea, and Cirque du Soleil all followed a blue ocean approach, attracting customers who the competition could not reach.

Even the money transfer platform, M-Pesa, the financial backbone of the Kenyan economy is an example of a blue ocean style approach. In 2024, 59 percent of the Kenya’s gross domestic product flowed through the phone app in your pocket, that has a 90 percent market share.

Four steps to value innovation

Value innovation is at the core of blue ocean strategy. Aim is to create an innovative new product at a remarkably low price. First step in value innovation is selecting your target audience.

Instead of focusing on ‘regular’ customers within your desired market – the existing customers everyone else is competing for -- focus on the customers on the edge of your market. These are the infrequent buyers and customers in adjacent market spaces, who either avoid your shop, or who have never heard of your market.

First step is to have a beginner’s mind and see differently. Focus on the needs, the problems faced by your potential consumers.

Next step in value innovation is to look at the typical business model in your market and ask four questions: 1) What processes can we eliminate? In other words, what adds cost, but really isn’t required? 2) What standards can we reduce? 3) In contrast, what quality benchmarks can be raised? 4) What ways of doing things, in systems and processes, can we incorporate from adjacent sectors - industries to create a new experience? Here one takes best practices that ‘Wow’ customers from outside of the conventional ‘business as usual’ space.

Coming up with a blue ocean strategy is tough. It requires solid facts and figures analysis, and big injection of ‘out of the box’ creative thinking. But the rewards are considerable, if you can create your own market, no one else is in.

The law of hype

Perhaps one should pray your competitors stick with the hype -- all the meaningless fluff -- with words like: transformation, future ready, AI- enabled and high stakes leadership. Notice that when things are going well, a company doesn’t need the hype. When you need the hype, it usually means you’re in trouble.

“No one can predict the future, not even a sophisticated reporter for the Wall Street Journal. The only revolutions you can predict are the ones that have already started.

Over the years, the greatest hype has been for those developments that promise to single-handedly change an entire industry. Real revolutions arrive unannounced in the middle of the night and kind of sneak up on you,” advised Al Ries and Jack Trout.

Avoid the path well trodden, have a beginner’s mind and break some rules.

Harvard Business School professor, Youngme Moon talks about those to watch out for: “In field after field, past experiences have taught us, that the ones to pay attention to, are the ones who understand the rules so well that they understand the urgency to break them.”

David J. Abbott is a director at aCatalyst Consulting. [email protected]