Red Ocean versus Blue Ocean: why differentiation is essential for a successful business model
Blue Ocean Strategy and Red Ocean Strategy are terms that have been coined by W. Chan Kim and Renée Mauborgne, two professors at the prestigious INSEAD. They describe two different ways to approach a market. Blue Ocean is the ideal way to do business. After all, a blue ocean is the colour it should be. It is calm and you sail right through. A Blue Ocean business model is the way to go for any entrepreneur. Red Ocean, on the other hand, is not something you should want. A red ocean is red, because of all that blood that has been shed by competitors who rip out each other’s throats to conquer a slice of the market place. A Red Ocean business model means having to continuously fight for your entrepreneurial life. It keeps you from doing business.
Originality in service or product is great, but not essential; your business model is more important
This might be recognisable: you are an entrepreneur and you have an idea that you want to market. Somewhere in the back of your head you hear this tiny, whining voice: ‘Surely that has been done before? Maybe not how you envisage it, but still… it is not completely original.’ You can safely discard this little voice, because chances are that it is bothering you unnecessarily. Originality in product or service is not what is most important for a successful company. First of all, achieving absolute originality is practically impossible in a world with eight billion people who are all connected. Secondly, it is not originality but the distinctive character of your business model that does the trick. This is why it is a good idea to apply Blue Ocean Strategy.
Don’t pick a fight, but choose to make your competition irrelevant
Most companies work in the same way. Let’s call it old school. Old school works with an existing market and existing demand. Competing in price/quality value and adapting to trends is typically old school. When, as a newcomer, you want to get on board in an existing market and stick to the old school way of doing business, you will either have to have a very special product or service, or a large marketing budget, to make it. Take for instance the cleaning sector. The most prominent way of competing in this sector is price fighting. Prices in the market are therefore terrible and the only way to be successful as a newbie in this branch is to buy yourself in. That’s the reason why many entrepreneurs don’t even go there. Totally unnecessary, because when your create your own market, demand and trends, you will do well, even in this sector. A seemingly saturated market still offers opportunities. Think, in case of the cleaning sector, for instance about innovative environmentally friendly cleaning services.
Strategy canvas + key values = unique business model
The trick is not to think from an existing framework, but from chances that have escaped your competitors’ attention. At Uisce, we therefore make a strategy canvas for every startup we coach. By mapping out what everyone else is doing, you get a clear picture of where opportunities arise. When you combine these with your key values, you get a unique business model, that not only suits your company to a tee, but also enhance your chances to conquer this market significantly.
Do you want to know what Uisce can do for your company? Please get in touch. No strings attached.