by: Idris Mootee

 

Kim and Mauborgne, co-author of best selling Blue Ocean Strategy suggested that companies should focus their efforts on creating uncontested market spaces and make the competition irrelevant. The main idea of Blue ocean strategy is too many companies are swimming in the red ocean of bloody competition where there is limited room for real growth.

Through value innovation, a company can create a blue ocean strategy that competes based on a different set of competitive dimension. Typically, companies in the red ocean pursue incremental improvements for customers through either low cost. This might be useful ideas for those who are overly occupied with day-to-day market share battles. It is a simplistic view of strategy--either you compete on the same game or you compete by reinventing the game. While it is true that a firm needs to think strategically how it differentiates and how it break out of the commodization cycle, but the goal is to own the Red Ocean as this is where the mass market and growth is. The truth is, as I argued, for any strategic innovation is to get to the Red Ocean as quick as possible and that is where a business can achieve the economics of scale and scope advantages. This is where the market and brand power of a firm comes into play and allow it to diversify and play in a number of different Blue Oceans.

The heart of this is the lesson that all businesses are both a "competitor" (you have to be a player to compete) and an "evolver". To prosper in the long run, a company must know how to manage its strategic evolution as it is at managing its current market space. It must be both a "competitor" and a smart "evolver", and be able to change it strategic postures depending on the situation. This means excelling at conflicting goals simultaneously. Companies need strategies that are both robust and focused; strategies that enable you to adapt to the external environment; operating conservatively and innovating radically; maintaining diversity yet establishing standards and routines; maintaining scale and maintaining flexibility. Historically the view of strategy has focused on sustainable competitive advantage, but not on "strategic flexibility". Click on the slide to view my full summit presentation.

Original post: http://mootee.typepad.com/innovation_playground/2007/05/innovation_and__1.html

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