Blue Ocean Strategy: New Market Space, no competition
“Given the current economic conditions and as organisations strive to grow in ever increasingly competitive markets, the new approach of Blue Ocean Strategy offers an exciting way of looking at strategy development through the creation of ‘new market space.’
This approach may be used to completely redefine an entire business’s strategy, or alternatively may address some part or component of the business whilst recognising that many components of traditional company strategic thrusts based around competitive strategy; will continue to deliver acceptable results in the future.
Nonetheless, whichever approach to strategy development is used, it is still necessary to ensure that strategy implementation is effectively managed throughout the organisation. The OnBoard Consulting Process identifies how Blue Ocean Strategy can be made to interact seamlessly to ensure successful realisation of strategic plans”.
(Source: Official website of OnBoard Consultancy)
“ONBOARD CONSULTANCY is a “results driven” business strategy consultancy that has a challenging but precise offering. To support our clients through a robust strategic process that ultimately creates new market space and unprecedented value to their businesses and to their customers. We have consulted, trained and coached senior managers and executives from a wide range of industries across Europe, US, Asia, Africa and the Middle East.
“It is important to stress that creating new market space or Blue Oceans does not mean turning your back on your core existing market – it’s all about seeking a fresh market-creating business opportunity, a process I believe every company should commit to. Nintendo, for example, were able to do this with their Wi gaming system." says Simon van Zuydam.
Industries and companies rise and fall and therefore there are no permanently great industries or companies. Instead, there are great strategic moves that propel companies and continuously create new market space. Could you be the next company in the headlines creating a breakthrough strategic move?
The past century has shown that successful new strategic moves have often been achieved during economic downturns. Ford Motor Company created the assembly line in 1913; Xerox launched the photocopier in 1949; Boeing launched the 707 jetliner in 1957 and Microsoft developed and marketed MS-Dos in 1981”.
(Source: Official website of OnBoard Consultancy)
Proshare NI in its usual manner sought to find out more the Blue Ocean Strategy by OnBoard Consultancy in making companies break free from competition and create new Market space.
In this interview with PETER OBIORA of Proshare NI, Simon van Zuydam, Blue Ocean Strategy Consultant and Coach discusses on issues relating to the advent of BOS, Investment climate in Nigeria and the Blue Ocean idea, benefits of Blue Ocean to Nigerian Companies.
Other issues discussed include Blue Ocean and global Meltdown, and what the Nigerian Government can do through this strategy to improve the standard of living of its citizenry amongst others. Excerpts:
What is Blue Ocean Strategy (BOS)?
It is the simultaneous pursuit of low cost and differentiation. It encourages organisations to drive down the cost of the industry; but at the same time, dramatically increase value to the end users. Organisations that have developed a Blue Ocean Strategy create new demand by bringing on noncustomers.
The cornerstone of BOS is value innovation which entails organisations to drive down the cost of the industry that they are operating in by eliminating and reducing as key factors that they have currently invested in and offer to customers. At the same time offering greater value to these users.
Most companies try and make the cost/value trade-off, by accepting that an increase in value to consumers, will relate to an increase in cost. What BOS companies do is break the value/cost trade-off.
From a Nigerian Government perspective, I believe they can benefit vastly from BOS thought process by offering the people of Nigeria greater value and a better living experience and simultaneously driving down government cost structures.
Advent of Blue Ocean
The BOS thought process, has been around for centuries and a case referencing Henry Ford; is used in the Blue Ocean Strategy book released in 2005. Professors Chan Kim and Renee Mauborgne were the creators of BOS. Professors Kim and Mauborgne; the Creators published a book on February 2005, and it was the most successful business book for that year and today it has sold 2.0 million copies in forty-one (41) languages.
What is powerful and convincing is the research based on 150 studies of strategic moves, which covered 30 industries over the last 100 years.
Examples include Dell Computers, South West Airlines, and Formula One Hotel and many more successful innovative companies.
Recently, Nintendo Games has created its own Blue Ocean by reaching out to noncustomers of the Gaming Industry that include parents and grand parents; who had never considered playing Computer Games and the Gaming industry had neglected.
Blue Ocean Strategy, according to its founder, Professor Chan Kim of INSEAD, is about challenging assumptions on strategy, redefining market boundaries and making the competition irrelevant, rather than competing on established ground.
It is geared towards creating ‘new market space’ and encompasses the entire value chain of product, service delivery, costs and pricing, instead of merely looking at any one function.
Companies start the process by establishing the 'value curve' of the industry they operate in and then identify how they can differentiate themselves from their competitors by ‘eliminating, reducing, raising and creating’ key elements within their core offering to their customer and non-customer groups and hence creating a new value curve which is significantly differentiated from their generic industry value curve.
Blue Ocean Strategy strives to identify new market space, where a different business model creates fundamentally new market opportunities where existing competition does not currently operate.
In today's dynamic business environment, one may already identify where companies in comparable industries have made such transformations in terms of their business models.
For example, the discount airline market in Malaysia, led by new entrants such as Air Asia, is currently offering millions of domestic air fares at prices ranging from 1 to 20 Ringgits. Such a business proposition would have seemed inconceivable several years ago.
(Source: Official website of OnBoard Consultancy)
Nigerian economy and Blue Ocean idea
I think the Government could look to Blue Ocean to identify how it can improve the services it offers to its citizens. Infrastructure for example is a major issue in Nigeria and perhaps BOS could provide insights on how to address the challenges and offer a better experience to those using the Nigerian infrastructure.
However, it is not going to be an easy task, Nigeria has a population of about 150 million people; and that is going to involve significant commitment. Other opportunist areas where BOS could provide insights are Agriculture and Tourism, and this would reduce the risk of Government relying solely on the Oil Industry as revenue. South Africa was a typical example of taking tourism from a ranking of plus six (+6) contributed to one of the top three (3) contributors to GDP.
Benefits of BOS to companies in Nigeria
If you talk about companies in Nigeria specifically, I think there are a number of areas; where companies can capitalise from Blue Ocean. For example the Banking industry has huge potential to unlock; an untapped Market of non-bank users. Research reflects that eight (8) out of ten (10) people in Nigeria do not have a Bank account, surely a Blue Ocean lies out their for the Banking Sector.
At the same time, Nigeria is one of the fastest growing markets in terms of mobile phone users. Therefore, you just put these two (2) industries together and you potentially have an idea for a new Blue Ocean business that includes the best of Banking and Telecommunications. Why can’t a new Blue Ocean mobile Bank be formed? It has never been used in this country before. Why do people have to open Bank Accounts?, technology can be saved, those Nigerian who do not have Bank Accounts can have a virtual Bank Accounts on their mobile phones; and they use their mobiles as well to transact business.
BOS and microfinance in Nigeria
Let’s take for instance, the microfinance sector; it is the hot topic of the moment, and this is surely got to be an area that needs to be explored further; creating new demand in this sector could contribute towards generating more income, for tens of millions of Nigerians, this will create demand in consumer products and services across the country and have a positive impact on the Nigerian economy.
What we need to understand, is why Financial Institutions are reluctant to push the button on offering microfinance to those who desperately need it. Perhaps exploring Blue Ocean could provide these institutions with the assurance that they could be in a position to unlock unprecedented value to those who are seeking capital for small business investment.
Simultaneously, I believe Blue Ocean could help those same Banks identify cost innovation that allows them to drive down the cost of providing the service and therefore, reducing their overall risk in the sector. There are a 150 million people in Nigeria and supporting the population with microfinance could be a start of a much bigger event.
Blue Ocean and Global Meltdown
I think it is critical that companies Managers don’t adopt ultraconservative strategies during this current global downturn. If we take a look at previous economic downturns, history shows us that several organisations; such as Ford Motor Company, Federal Express, Xerox, Microsoft and others adopted aggressive, highly innovative strategies and succeeded, I my view, organisations should be following similar philosophies and looking to invest in new innovative products and services that are going to be needed in the changing environment we are currently experiencing.
Environmental technologies and biotechnologies or two (2) sectors that I believe Blue Ocean thought process can support. Another key area is sustainability and consumer behaviour changing dramatically when it comes to purchasing products and services. For example, Super Markets are discovering that their customers want a lot more information on the products that they purchase. They want to know where the products are bought from, how they are made. And whether there is any negative environmental impact created by the product or the Production process of the product.
This I believe will be one of the largest impacts on consumer behaviour that we have ever witnessed and I confident that BOS approach can offer insights and solutions to those companies being impacted.