This post is an extract of my forthcoming book on business model innovation. The innovation book looks at why business model innovation is needed and how it works. You can read more about it here. These posts are early drafts of planned content and I’m putting them out to get feedback. Please do comment below, or subscribe to these pages to get each new section as it is published. In today’s post, we will be looking at finding opportunities in this new world.
Back in the early 2000’s Kim Chan and Rene Mauborgne came up with the idea of a blue ocean strategy.
I used to camp on a beach on the east coast near a small town called Nenasi in Malaysia. A friend owns 5km of beachfront. That actually means he owned 5 km of mangrove swamps with a thin strip of sand. Being a nature lover, he’d let all the access roads decay until it was possible to only get in with a 4X4. Quite often, you would need a pull to escape the sand.
Almost 80 years before I camped there, two British battleships sailed north towards Thailand from Singapore. They were responding to the Japanese starting amphibious landings in northern Malaysia. The British expected that the 360mm guns on the Prince of Wales would smash the invasion. Unfortunately, the warships were found by Japanese aircraft. And they sunk just over the horizon from where I’d camp with my kids.
With so many men in the water, the sharks came and over 800 sailors died in their ships and the sea.
Red Ocean Strategy
When I think of the red ocean strategy, this image always comes to me – thousands of men desperately floating in a red sea with sharks fight each other for food even as they kept killing.
It’s a powerful image because it takes us away from how we normally look at the competition. Most of the time, we see the market from the viewpoint of a bobbing head in the water or as a triangular head opening its maw. When we look down from above and see the carnage, we have to think that life must be better than this.
Competition is about, in economic terms, the search for advantage and in an ideal world, again for economists, competition will reduce margins to the point just above where it makes sense to exist in the market. This gives the most benefit to the consumers (at least in the short term). Competition is to be encouraged if you can stand the blood.
The Blue Ocean
Years later, I swam in that same sea. I found a small island a few kilometres off the coast. With a couple of gel packs tucked up my sleeve, I slid into the water and used my arms to pull myself towards a distant shore.
It was the same ocean that the sailors from the Prince of Wales and Repulse had died in. I’m not going to lie and say that I was entirely happy. My legs, as they propelled me forward, seem to be like wriggling bits of bait better attached to a fisherman’s hook. I feared that up out of the deep, a mouth would come and close on one or both of them.
That nervousness aside, I enjoyed the freedom and the focus of sliding through the water. My arms pulling me rhythmically through. I looked down into the depths, seeing them slowly turn into darkness, and was wowed by the enormity of what I was doing – kilometres away from anyone else, my head is always hidden by the bobbing of the waves. Alone among the eternal sea.
This captures the sense of what Chan and Mauborgne think of as a blue ocean strategy.
To Innovation and Growth, The Blue Ocean Strategy
We don’t want to keep our companies in the melange of blood, bodies, and predators, we want to be in a blue ocean where we can roam freely. We want to get our corporations into a place where they are the only ones who can enjoy the peace of the open sea.
This book is not about their methodology, though it does come at the same problem from a different angle. The outcome is the same.
When you get business model innovation right, you are the company that manages to swim away from the mess of sinking ships and screaming men. In most cases, we want to be leaving everyone behind (this is a metaphor, so the morality of leaving the sailors behind is not relevant!). When you explore different business models, a constant question in your head is going to be, “Is this a blue ocean? Will I be alone? How long will it take others to follow me here? Am I going to be able to keep swimming out into the ocean when they do follow me?
For sure, you should be scared about the sharks, just as I was, but that is a useful fear. It makes you swim faster and with focus.
If You Want to Read More
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