In the landmark book, Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant, authors W. Chan Kim and Renée Mauborgne used the terms red and blue oceans to describe the market universe.
Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans.
Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite.
All of us strive for the Blue Ocean Product, the disruptive innovation that sets the market on their heels and becomes the next Facebook, or most of would be satisfied with the next P & G Swifter ;). Products like these capture the headlines. It is the dream of every entrepreneur. The problem is that it seldom happens, and the shame is that I think it could happen more often.
What happens is when most entrepreneurs go to market, we discuss all these great features and how the product will save or make us all this money. We run the numbers and analyze all the data and breaking the data down into very well thought out presentations. We will even create detailed implementation plans with market strategies to overwhelm the world and create yes that illustrious Blue Ocean. The theory looks great on paper, but it is flawed. The theory believes that customers will have an “Aha” moment.
You might think that I am getting ready to sell the virtues of The Lean Startup. Though, that may take care of part of the problem it still, may be one step off. Lean Startup is about testing product-market fit early and often which preempt many of these problems. However, I think the issues are more than that. It is the mindset on how we approach product/market fit.
What most entrepreneurs fail to realize is that the more you present that Blue Ocean Strategy, the fewer people will be willing to adapt. No matter how well you presented all the options, the message has to resonate with their existing knowledge and allow customers to question, why they are doing it this way. Stated in another way, it happens when customers question their own assumptions.
The quick solution to this is, we need to spend as much time in the early stages developing markets as we do developing product. We need to focus much more on the present mindset and concerns of our perspective customers, or in their Jobs to be Done (JTBD) as referenced by Tony Ulwick (What Customers Want). Ulwick claims that these three distinct outcomes are what organizations need to know in their marketing practices. Expanding on them….
- Jobs (to be Done) are the tasks or activities that customers are trying to get done
- Outcomes are what customers are trying to achieve
- Constraints something that may prevent a customer from using a product or service
It’s rare that people change their views when challenged with unconventional or new information. The way to engage is to build upon existing knowledge and experience (past and customer) rather than challenge it. It might even be better to use an Appreciative Inquiry approach, I dare say.
One of the closest approaches to this type of thinking is the Scenario planning sessions that Pierre Wack developed at the Royal Dutch Shell. What he found was that he needed to start through understanding and empathizing with management or in our case customers. I quick outline of Wack’s prescription:
- Understand and empathize with management perspectives
- Create Stories that connected with manager’s existing assumptions (Convention Wisdom)
- Validate many of their assumptions
- Expand manager’s view from different angles
The outline is greatly simplified, but Wack ended up calling this method “The Gentle Art of Re-perceiving.” When we introduce new products to markets or when we even view new markets for current products, we could go a long way by thinking of what we need to do as in viewing “The Gentle Art of Re-perceiving.” I actually think the concept of JTBD offers us a great gateway to begin with Re-perceiving. And it might allow ourselves a lesson or two when we are scrambling for market/product fit.
Material on Pierre Wack was derived from the book, Moments of Impact: How to Design Strategic Conversations That Accelerate Change.
One of the authors of the book joined me in a past podcast: Having an Effective Conversation