Blue Ocean Strategy for Small Businesses

blue ocean strategy

Advice on developing a competitive strategy often focuses on beating the competition. However, the Blue Ocean Strategy takes a different view: Don’t compete. Instead, create a new marketplace for your business that allows you to write the rules.

Here’s a look at the basic premise of Blue Ocean Strategy, and how you can apply it to your small business strategy.

  1. Find your space in the blue ocean—and build your blue ocean strategy.

    The book Blue Ocean Strategy, written by W.Chan Kim and Renee Maugborgne, was published in 2005 based on studies of 150 strategic business moves that took place over the course of a century. It became an international best-selling business book and was recently updated in 2015. While the strategy is quite complex, the concept is simple: When you identify your business’ “blue ocean,” you control your destiny. You don’t react to moves the competition makes, nor do you position yourself directly against them. You write the rules and exist in an open market space.

    Cirque du Soleil is a classic example of Blue Ocean Strategy in practice. It doesn’t compete with traditional circus acts; it redefined the meaning of a circus experience. Therein lies the value of what Blue Ocean Strategy offers small business owners: You don’t have to have an idea that’s never been presented to the market. You present it differently.

    With that in mind, apply these questions to inspire your own competitive strategy based on the premise of the Blue Ocean Strategy. (If you do want to execute the Blue Ocean Strategy from start to finish, you can find the best-selling book and several interactive tools at the Blue Ocean Strategy official website.)

  2. When/where does the customer’s need for my product or service start?

    This question can change your customer acquisition strategy to market where your competition isn’t. Suppose you own a lawn care company, for example. You could market to customers based on events like the purchase of a new home, or the onset of spring. With that strategy, you’re in a crowded space (known as a “red ocean”). Your messaging is reactive, based on where the competition markets. Look deeper into the path your customer takes to purchase, however, and you may find your blue ocean.

    Consider this example: the purchase of a new home as a trigger for lawn care service needs. In a red ocean strategy, you market to the customer shortly after they buy the home (right alongside your competitors). A blue ocean strategy identifies the events that happen before they customer knows they have a need. In turn, it reveals different points of entry. For example, a realtor works with both buyers and sellers, guiding them on the maintenance required to make the home appealing to buyers (like lawn care). A person searching online real estate sites for a home to buy may also have property they need to prepare for sale. Market your services at these points, and you’re in acquisition channels your competitors aren’t.

    When Southwest Airlines strategically positioned itself as an alternative to car travel by promoting affordable pricing and lack of typical airline industry “frills”, it stopped competing directly with other airlines and invented a blue ocean of its own.

  3. How does my customer experience what I sell from start to finish?

    Understanding the intimate details of the customer experience can reveal mutually beneficial changes for your business and its customer. Consider how your customer currently moves through your purchase funnel:

    • How do they find information about product, services, and suppliers?
    • How do they receive a price quote or estimate, then compare prices and payment options?
    • How do they move from initial interest to purchase? Do they have to call, meet with a rep, order online, or wait for an item to ship?
    • What interruptions or inconveniences do they encounter?
    • Is the interaction over once they receive their item? Do they want it to be?Once you investigate the details of the customer’s reality, you can use it for further exploration.
    • How is your detailed process similar to and different from competitors? Which factors, based on your exploration, appear to be the most “ripe” for elimination, creation, or change?

    Take those ideas in front of your customers and noncustomers for feedback. Based on their insights, create two process maps: Your current customer experience, and the proposed one. Compare them to identify where gaps and opportunities for identifying your own blue ocean might exist. For example, changing pricing may not be viable, but a process improvement that reduces your costs and improves customer satisfaction might work.

  4. What hurdle can I remove?

    In Blue Ocean Strategy, the authors point out a truth often underestimated in small business strategy: “Industry structure can always be reshaped by the players in it.” Consider how companies like Zappos, Warby Parker, and Saleforce addressed industry-specific hurdles to create their own blue oceans.

    As a small business, you have the advantage of agility, and the freedom to research and rally the resources you need to minimize customer pain points. Kim and Mauborgne recommend businesses identify six “utility levers” to discover hurdles that, if removed, could lead to a blue ocean: customer productivity, simplicity, convenience, risk, fun/image, and environmental friendliness.

Thanks to social media, the Internet, and online review sites, customers now have a louder voice than ever before. Make their life just a bit better, and they’ll help you spread the word.

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