Creating Breakthrough Growth In Your Business
Written by Jimi-Ha on 31 May 2012.
Bandar Seri Begawan – Businesses must know both how to compete effectively in known markets as well as how to create new market spaces in order to sustain high performance in the future.
This is what the Blue Ocean Strategy is all about, as was explained yesterday during the Asia Inc Forum’s seminar and workshop on the strategy, entitled, “Creating Breakthrough Growth in Your Business”.
The idea behind the strategy is that known markets (Red Oceans) incorporate all industries in existence today, with market boundaries known and accepted, competitive rules of the game known, rivals needing to be outperformed to grab a greater share of the existing demand and limited prospects for profit and growth.
New, unknown market spaces (Blue Oceans), on the other hand, include all the industries that have not yet existed, with market boundaries that are unknown with potential yet to be explored.
With Blue Oceans, the rules of the game are waiting to be set, while demand is created rather than fought over, and there is ample opportunity for growth that is both profitable and rapid.
On hand to facilitate yesterday’s seminar and workshop were two experts from the UCSI Blue Ocean Strategy Regional Centre, namely Dr Peter Ting, the Regional Vice President of Strategic Innovation and Market Creations, as well as Raj Kumar, the Director of Strategy and Innovation.
Dr Ting showed a lot of energy as he engaged his audience, first introducing the Blue Ocean Strategy then discussing its execution, and said that this involves overcoming key organisational hurdles and building execution into strategy.
On the point of organisational hurdles, he mentioned the resource hurdle, which can include an entrepreneurs being in a market that is too small, or owning a company that is too small, though he refuted that “being too small” actually allows for dynamic change.
While talking about the motivation hurdle, he said that entrepreneurs can see some benefits, but are not motivated to do anything about it.
His primary focus here, however, was on what he called the cognitive hurdle, which he explained as every entrepreneur’s own thinking, adding that we must identify the common enemies of the shift from normal thinking to strategic thinking.
The first “enemy” he described was the “good enough” mindset, which causes people to think that what they have achieved or attained with their business thus far is sufficient.. Next are denial and illusion, where one refuses to accept the truth about their business failing, or are simply not successful.
Arrogance and over-confidence make up the third enemy, followed by what he called the biggest lie – the “there is nothing I can do” mentality. He explained, “If we want to bring about change, then we must convince ourselves to believe it can be done.”
He stressed the importance of the role that one’s rnindset can play, explaining that the Blue Ocean Strategy is all about a win-win mindset and a systematic methodology. “Don’t just think about how you can win, but how your customers, stakeholders and employees can win,” he said. “First and foremost, you must have the right mindset.”
He also highlighted that we need to know how to duplicate ourselves into our management team so that they know how to do what they’re supposed to do. “Don’t just tell them to be innovative and creative,” he said. “You have to show them.”
He then went on to describe five strategic mindset shifts of the Blue Ocean Strategy, the first of which was to balance brand management with brand creation, ie the Red Oceans; known marketplaces, and Blue Oceans; unknown marketplaces.
Under this point, he differed between value improvement (costs, quality, best practices, following orthodoxies, efficiency and marginal growth) as opposed to value innovation (value creation, new business creation, skilful thinking, new idea creation, exploration and leapfrog growth), describing the latter as riskier, but adding that the Blue Ocean Strategy minimises the risk.
The second strategic mind shift is that innovation is about making money. Explaining this point, he quipped, “When people in business say they have ‘no need for money’, it’s for one of two reasons: they already have a lot of it, or it’s `for a higher purpose’.”
“If they say it’s for a higher purpose, they mean they have none,” he joked, before going onto his point: “Without cash flow, how can a business last?”
“Brand creation is not just about innovation,” he explained. “You have to think about whether it has commercial value.”
The third shift is about moving up the value chain or, standing out from a crowd, and he stressed the importance of mobility from low-value activities to high-value activities. “You need to list out what low-value activities you can outsource (using the example of outsourcing the activity of cleaning to cleaners), then focus on high value activities.”
On his point for the fourth shift, re-orientation of strategic focus, he urged business owners to, instead of competing within the same industry space, look across boundaries. This means, he said, looking at non-customers as well as customers.
Shift five involves accepting that sustainable growth is a continuous process. Citing Apple as an example, he said that as soon as their revenues start to drop, they come out with a new product, from the iPod to the iPhone and then the iPad.
At the end of his presentation, he urged his audience to “repackage” themselves “with a new storyline that is simple, direct and touching”, and said, “Start by changing your mindset and you will begin to see opportunities all around you.”
Raj Kumar then spoke about the Six Paths to the Blue Ocean Strategy the first of which involves looking across alternative industries. He used Cirque Du Soleil – which takes and combines all the plus points of both the circus and theatre – as an example, saying that this logic can be applied in the SMEs.
The second path is about looking across strategic groups, and he asked during his presentation, “In an industry, sometimes people trade up or trade down, so how can you create a new offering within that new industry?”
Looking across the chain of buyers is the third path, and involves three buyer groups: the purchaser, user and influencer. The purchaser is the person who pays for a product, while the user is the one who consumes it and the influencer is the one who can affect whether or not a product is bought.
As an example, Raj said that when a family is looking at a house, and th’e husband is the main wage-earner, if he says he doesn’t want the house because it is too expensive, his wife who likes the house’s kitchen could be the influencer that convinces him to buy it after all.
Targeting the users or the influencers as opposed to the purchasers can be very effective, he explained.
Looking across complementary offerings is the fourth path, where he cited Air Asia as an example, saying they dealt with the question: what happens before, during and after using a flight? He explained that they looked at a whole range of complementary services, including buses, the low-budget Tune hotels, and Tune talksim card service.
The fifth path deals with whether or not a product or service has functional or emotional orientation, which basically changes the way in which something is appealing to a customer, be it that it is effective at getting some done or affects the user in a certain way.
The sixth and final path is “look(ing) across time”, which looks at current trends, and as an example he showed a video about Tesco in South Korea.
In order to compete with their larger competitors, Tesco came up with an innovative idea to change waiting time to shopping time. Korean’s are considered the second hardest working people in the world, it was said in the video, and do not have much free time to go to supermarkets. Tesco placed pictures of their products on the walls of subway stations, each with their own QR code, which users simply had to take a photo of with their phone to order, and by the time they returned home, their groceries would have arrived.
Raj said that this shows how looking at and coming up with business ideas based on current trends can be effective for business.
—Courtesy of Borneo Bulletin