{On April 5, 2013, we will celebrate the 15^th Anniversary of the First Friday Book Synopsis, and begin our 16^th year.  During March, I will post a blog post per day remembering key insights from some of the books I have presented over the 15 years of the First Friday Book Synopsis.  We have met every first Friday of every month since April, 1998 (except for a couple of weather –related cancellations).  These posts will focus only on books I have presented.  My colleague, Karl Krayer, also presented his synopses of business books at each of these gatherings.  I am going in chronological order, from April, 1998, forward.  The fastest way to check on these posts will be at Randy’s blog entries — though there will be some additional blog posts interspersed among these 30.}
Post #16 of 30

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Synopsis presented September, 2005
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by  W. Chan Kim, Renée Mauborgne  (Harvard Business School Press.  2005)

For my second book selected from my presentations in 2005, I decided to focus on Blue Ocean Strategy.  It was a difficult choice – so many good books showed up in my list in 2005.  But this one was significant because it gave a name, a descriptor, for the new business environment that has now become so much better understood.

Here’s the deal.  You can try to just compete, with the same or very similar product, against established competitors.  You might or might not survive, and thrive.  And, yes, there is tremendous potential with that strategy.  (Does anyone remember Gibson’s Discount Stores?  Gibson’s came first to most communities, but Walmart left them in the dustbin of history.  By the way, the first actual “Walmart Discount City” opened on July 2, 1962.  Read a quick read on Gibson’s history here, from the Abilene Reporter News).

But to compete against established competitors is not an easy path to follow.  It might be smarter to try to create a new market space, a new niche, with a product or service in a corner of the crowded business universe that is still untouched, pure, pristine, virgin – a blue ocean, not a red ocean.

This is the premise of the 2005 book by Kim and Mauborgne, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant.  It is a good book.  One of those, “well, yeah, that makes sense!” books.  I think the book is right.  Not necessarily easy to implement…but right.

The biggest of the big examples of this strategy that the authors describe is the rise and spread of Cirque du Soleil.  From the book:

Cirque du Soleil succeeded because it realized that to win in the future, companies must stop competing with each other.  The only way to beat the competition is to stop trying to beat the competition.
Blue oceans are defined by untapped market space, demand creation, and the opportunity for highly profitable growth.

In a blue ocean, yesterday fades into irrelevance:

In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. 

And, to compete in this new and different environment, one genuinely has to think, and function, differently.

As red oceans become increasingly bloody, management will need to be more concerned with blue oceans than the current cohort of managers is accustomed to. 

One plus about this blue ocean approach is that it helps keep creativity, innovation, “uniqueness” just a little more alive.

Every great strategy has focus, and a company’s strategic profile, or value curve, should clearly show it. 
When a company’s strategy is formed reactively as it tries to keep up with the competition, it loses its uniqueness. 

And I really like this admonition:

A company should never outsource its eyes.  There is no substitute for seeing for itself.  Great artists don’t paint from other people’s descriptions of even from photographs; they like to see the subject for themselves.  The same is true for great strategists. 

Where does a company find that elusive successful blue ocean?  Not by looking at customers – but, noncustomers:

To maximize the size of their blue oceans, companies need to take a reverse course.  Instead of concentrating on customers, they need to look at noncustomers.

It really is long-held wisdom.  (I remember reading this phrase from Robert Schuller decades ago:  “Find a need and fill it.”):

Is there a compelling reason for the mass of people to buy it?  Absent this, there is no blue ocean potential to begin with.

This was an especially helpful and graphic description of the two oceans:

• Red Ocean vs. Blue Ocean Strategy

Red Ocean Strategy	Blue Ocean Strategy
Compete in existing market space	Create uncontested market space
Beat the competition	Make the competition irrelevant
Exploit existing demand	Create and capture new demand
Make the value-cost trade-off	Break the value-cost trade-off
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost	Align the whole system of a firm’s activities in pursuit of differentiation and low cost

We, of course, have seen some quite successful blue ocean strategies in the past few years.  No one owned a true  “Smartphone” until the iPhone hit, just two years after this book came out.  “Today, Apple is going to reinvent the phone….  What we want to do is make a leapfrog product…,” Steve Jobs said.  (If you have never watched the Steve Jobs launch of the iPhone, take 4:46 of your life and watch the first portion of this launch.  It is a true communication masterpiece!).

But, even that leapfrogging, breakthrough blue ocean product saw the ocean turn red in a very short time.   The hard work but comfortable, competition-free ease of a successful blue ocean strategy seems to have a shorter and shorter life span.

This book is, I think, one of the best (best = useful, provocative, keeps me thinking) books I’ve read over the 15 years of the First Friday Book Synopsis.  “What am I doing, what am I providing that no one else can match?”  If I have — if my company or organization has — an answer to that question, I am/we are still in a pretty good position.

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Now that I am well into 2005 with these posts, we have reached the point where you can purchase these synopses, with our comprehensive handouts, and audio recordings of our presentations, at our companion site, 15minutebusinessbooks.com.  The recordings may not be studio quality, but they are understandable, usable recordings, to help you learn.

(And though the handouts are simple Word documents in our earlier years, in the last couple of years we have “upgraded” the look of our handouts with a graphically designed format).

We have clients who play these recordings for small groups.  They distribute the handouts, listen to the recordings together, and then have a discussion that is always some form of a “what do we have to learn, what can we do with this?” conversation.  Give it a try.