Businesses must ask right questions

By Debbie Too
BANDAR SERI BEGAWAN

Monday, July 9, 2012

LOCAL businesses are regularly lamenting about the lack of market, or the difficulties of doing business in Brunei. From government approvals to intensive competition, to the small market size that Brunei has, it is evident that local businesses are having a difficult time trying to overcome challenges in sustaining and growing their business.

Before a business decides to call it quits and close their doors, Dr Peter Ting, regional vice president of Operations and Market Innovation and Raj Kumar, director of Strategy and Innovation at the UCSI Blue Ocean Strategy Regional Centre in Malaysia, asks companies to stop and ask themselves questions.

“They need to ask themselves what value they are creating, what value proposition do they have and have they maximised the market fully,” said Raj. Although there are businesses who have explained that one of the many challenges they face is Brunei’s small market, Raj thinks that businesses need to ask themselves whether they have really tapped into Brunei’s entire market.

He points out that businesses need to think about whether they have really captured as many customers as possible, and whether they have removed the barriers for their ‘non-customers’ to access their current product or service.

“If the answer is yes, then they need to look elsewhere in other markets, and if not then there is still a market to be tapped internally as well,” said Raj. As an example, he gave the example of how Tata, an Indian automobile brand, tapped into their non-customers, which was the majority of the Indian population that can only afford motorcycles. Tata then explored the ‘pain points’ of customers who were purchasing motorcycle and found that one motorcycle was being used to transport an entire family and not just one or two passengers. Their solution to this was to come up with a car that would cost the same as a motorcycle, and the company launched the cheapest car in the world valued at about USD$2,000, called the Tata Nano.

“People who rode the bikes had a lot of pain points, and these are barriers which I mentioned earlier, in terms of weather, safety and so on, which led Tata to the insight to create a low cost car that was also profitable,” said Raj.

This is one of the main aspects of the Blue Ocean Strategy. Raj explained it as a strategy to create a new market space, to help companies grow a demand instead of focusing on the competition. “You are actually focused on your buyers and non-customers and one of the challenges that SMEs face is to to create that new market space in terms of creating a demand or product or service, that is of high value and something that can go international as well,” he said.

While it is easy to ask companies to just ‘think out of the box’, the Blue Ocean Strategy provides companies with tools that will help them think out of the box systematically. During a recent workshop, Raj and Dr Ting provided with local businesses with the Blue Ocean Strategy Tools which allows them to map out their business clearer.

One of the tools that was provided was called a ‘non-customer analysis’, where businesses who want to look at future growth need to look at potential customers. “This is one important tool, because at the end of the day, businesses tend to delight their current customers and ends up not looking into expansion plans or future growth,” he said.

Dr Ting said that by maximising their market space, it doesn’t mean that companies need to redefine their product or service, but that it is also a “balancing act” of managing existing customers. He said that companies shouldn’t create something new just for the sake of being new, but that it must ultimately result in the bottom line being highly profitable with growth, and an increase in revenue.

“Sometimes even an increase in revenue may mean that you are decreasing your profit margin, and that is not a Blue Ocean Strategy,” he said. He added that the Blue Ocean Strategy helps companies create new demand and at the same time there has to be “true value innovation” and to reduce cost and structure, to help increase the profit margin and increase value for their buyers.

Asked about what sort of business should start looking into exploring the Blue Ocean Strategy, Raj said that any company that wants to grow and be sustainable while making money should look into it.

In particular companies which are in highly competitive industries where companies are fighting for the same piece of the pie.

“If this is the case then sustainability is going to be a problem, so the idea is to venture out into Blue Oceans in order to make the competition relevant and to create new opportunities,” he said.

If a company is already profitable, Raj recommends that they can also use the Blue Ocean Strategy to explore opportunities to further grow their business and look into areas which can be more sustainable. “We have a saying where, ‘A Blue Ocean eventually turns red because you have more and more competition’,” said Raj.The Brunei Times

Source: http://www.bruneitimes.com.bn/business-national/2012/07/09/businesses-must-ask-right-questions