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Red Ocean Versus Blue Ocean Strategy

via The StandardIn my own opinion, most businesses are operating under very challenging circumstances in Zimbabwe. In an environment where income streams are not well-defined and where there is political and economic challenges, businesses suffer. The social fabric of Zimbabwe has been stretched and we are going back to the years that we would rather have forgotten by now if we were ones to learn our lessons. The situation is definitely not one for the faint-hearted. It is one that needs businesses to be quite savvy if they are to remain operational and strong. Old methods do not quite suffice anymore in this new environment. As I was thinking of this, I thought about the book Blue Ocean Strategy written by Kim and Mauborgne which I read recently after it was recommended by my friend Jonah Nyoni. Besides that, it is a book penned by two friends, which by the way is something that I find so motivational. It is a book that light-heartedly spells out the reason why businesses need to be thinking at another level.

Most businesses are currently caught up in the Red Ocean Strategy. In this strategy, businesses compete in existing market space. In most cases, this market is flooded and tired. Companies strive to outcompete each other in this place. The strategies are about how we can beat the competition on our product and offerings. In the meantime, the competitors are also thinking about the same and meeting over the same strategies, which in most instances are repeated and are just camourflaged but are essentially the same strategy used over and over and exchanged by the competing companies. The Red Ocean Strategy is about exploiting the existing demand. Sadly, in an environment like ours, the demand is actually diminishing. The cake slice gets thinner and thinner every day and the business has to try and hold on to that little piece of the business. It is about the make value/cost trade off. This is the conventional belief that companies can either create greater value to customers at a higher cost or create reasonable value at a lower cost. This strategy can work in the short run but it is a lot wiser for people to fast embrace the Blue Ocean Strategy.

The Blue Ocean Strategy concerns itself with creating uncontested market space. It seeks to make the competition irrelevant. The strategy clearly brings out the fact that the only way to beat competition is to stop trying to beat it. Companies that use this strategy create new products that will create and capture new demand. New demand is always important if the company is to survive and grow. Sticking to old ways that are clearly not growing the company’s bottom line may prove to be frustrating and may cause a whole set of problems, including demoralisation of the staff. The Blue Ocean strategy can lead to expansion of the business through increased profits. A Blue Ocean Strategy may come out of a Red Ocean Strategy. Companies that are already in existence may make a solid decision to come out of the usual way of doing things and go into uncharted grounds.

Technological advancements make the Blue Ocean Strategy a must. How many of you still remember listening to music from the vinyl records? I doubt that my younger son would know what a vinyl record is if he were to see it now. Technological advancement saw music being put on cassettes and later on CDs. If the music companies had stayed put on vinyl, I wonder where we would be as a nation. These advancements and continuous improvements have seen supply exceed demand in most industries. Also, what has become clear is that in overcrowded industries, differentiating brands becomes harder in both economic upturns and downturns. This suggests that the strategy of the olden days is disappearing as the new strategists are now gunning for the Blue Ocean Strategy. Companies must no longer compete head-on in a given industry. Strategic moves from this kind of doing business must now take force.

In conclusion, Blue Ocean Strategy follows a strategic logic called value innovation. This is the cornerstone of this strategy. It focuses on making the completion irrelevant by creating a leap in value for buyers and the company, thereby opening up new and uncontested markets. Innovation without value tends to shoot beyond what buyers are ready to accept. This is not good for the company as it then tends to be more futuristic.

Till next week, keep reading and remain brand savvy.

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