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What is Growth Driven Design?

By: Renée Mauborgne and W. Chan Kim

Reviewed By: Bob Ruffolo

Blue Ocean Strategy is one of the most influential business books I’ve ever read. It aims to be a how to manual for creating uncontested market spaces where your competition becomes irrelevant—and it most definitely delivers.

The authors, who are professors and co-directors at INSEAD and the Blue Ocean Strategy Institute, use a study of 150 strategic moves that span more than 100 years and 30 industries to argue that we don’t succeed by going head-to-head with our competition.

Instead, we need to create blue oceans of uncontested market space and these strategic moves will deliver a leap in value for our company, its buyers, and its employees, while unlocking new demand and making the competition irrelevant. (1)

Sound good? I thought you might think so.

The book offers a framework and tools to help organizations like ours create and capture these blue oceans systematically. So I want to share some book excerpts and lessons learned, including some of the ways we’ve shifted the strategy canvas to position our agency as something unique in our industry.

I hope it inspires you to share feedback about some of the blue ocean strategies you’ve used at your organization.

The Blue Ocean Strategy Framework

Mauborgne and Kim cite Cirque du Soleil as a prominent example of blue ocean strategy. At its inception in 1984, Cirque faced a gauntlet of seemingly insurmountable hurdles. The circus business was (and still is) in decline, with alternative forms of entertainment, such as TV, sporting events and video, casting an increasing shadow.

Children, the target audience, seemed more interested in playing video games, and animal rights activists were challenging the wisdom of the using of animals in circus acts.

What’s more, major players like Ringling Bros. and Barnum and Bailey established and owned a paradigm for circuses that was nearly a century old. Instead of summarizing here, I thought it would be helpful to provide a few quotes that lay out the theme in the author's’ own words:

“How did Cirque profitably increase revenues by a factor of 22 over the last ten years in such an unattractive environment? The tagline for one of the first Cirque productions is revealing: “We reinvent the circus.” Cirque did not make its money by competing within the confines of the existing industry or by stealing customers from Ringling and the others. Instead it created uncontested market space that made the competition irrelevant. It pulled in a whole new group of customers who were traditionally non-customers of the industry—adults and corporate clients who had turned to theater, opera, or ballet and were, therefore, prepared to pay several times more than the price of a conventional circus ticket for an unprecedented entertainment experience.

To understand the nature of Cirque’s achievement, you have to realize that the business universe consists of two distinct kinds of space, which we think of as red and blue oceans. Red oceans represent all the industries in existence today—the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns the water bloody.

Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. There are two ways to create blue oceans. In a few cases, companies can give rise to completely new industries, as eBay did with the online auction industry. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. As will become evident later, this is what Cirque did. In breaking through the boundary traditionally separating circus and theater, it made a new and profitable blue ocean from within the red ocean of the circus industry.”(2)

“In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.”
- Renée Mauborgne and W. Chan Kim

Shifting the Strategy Canvas

Mauborgne and Kim further discuss the framework to fundamentally shift the strategy canvas of an industry: You begin by reorienting your strategic focus from competitors to alternatives, and from customers to the non-customers of the particular industry. Shifting your strategic focus from current competition to alternatives and non-consumers will provide insights about how to redefine the problem that the industry is currently focused on while providing the means for you to reconstruct buyer value elements that reside across industry boundaries. (3)

That’s what Cirque did: They ignored traditional industry-defined boundaries and focused on a non-consumer market segment, adults. In so doing they found reconstructed buyer value elements, Cirque is part circus and part theater, more in keeping with their sophisticated adult audience.

SouthWest was also cited, and the authors feature the airline in a strategy canvas framework that readers can then use to create their own blue oceans of opportunity. They recommend readers think about the standards of their industry, and then offer four analytical questions to help organization transform things from a blue ocean perspective:

Which of the factors that the industry takes for granted should be eliminated?

Which factors should be reduced well below the industry's standard?

Which factors should be raised well above the industry's standard?

Which factors should be created that the industry has never offered?

In Southwest’s case, airlines that were in bankruptcy or close to it remained stuck in the red ocean of competition. Southwest differentiated itself and created a totally blue ocean by attracting car drivers. They didn’t try to compete head-on against other airlines with better meals and perks. Instead, they attracted car drivers by making flying a lot like the car-driving experience. They offered the speed of airplane travel along with the economics and flexibility of driving. (4)

“Southwest created a totally blue ocean by attracting car drivers. They didn’t try to compete head-on against other airlines with better meals and perks. Instead, they attracted car drivers by making flying a lot like the car-driving experience.”
- Renée Mauborgne and W. Chan Kim

How To Apply The Lessons Learned

For me this book underscores the importance of taking a deeply consultative approach with our clients, where we help them achieve success by getting to the root of their business strategies and delivering ongoing help and coaching at senior levels of the organization. Other agencies in our industry are content to provide outsourced inbound marketing services for clients, and nothing else. But our goal is different: We partner with Purple Cow companies in the creation of something truly remarkable, something people really care about, as explained in our review of Seth Godin’s book by the same name.

“Blue Oceans underscores the importance of taking a deeply consultative approach with our clients, where we help them achieve success by getting to the root of their business strategies and delivering ongoing help and coaching at senior levels of the organization.”
- Bob Ruffolo

 

strategy-canvas

By actively seeking client feedback and listening to what prospects want and value during the sales process, we’ve been able to position our agency as something that’s truly unique for our clients. By shifting the strategy canvas we’ve been able to create a new and profitable blue ocean from within the red ocean of established inbounding marketing agencies:

“By shifting the strategy canvas we’ve been able to create a new and profitable blue ocean from within the red ocean of established inbound marketing agencies.”
- Bob Ruffolo

By ensuring that our clients don’t feel locked into long-term agreements. If our clients need to get out of the agreement for any reason, we let them. In order for this to make business sense for us, we have to create accurate cost estimates. Instead of estimating what we think you’re going to need over the course of 12-months and invoice with even monthly payments, we look at what you need in the next 90 days and provide a very accurate cost estimate with accurate monthly invoices.

To ensure that we retain our clients, we simply have to do a good job. That means setting clear expectations and gaining agreement on them in no uncertain terms before the work starts, and delivering on those expectations month after month consistently. We believe if we do a good job, our clients will want continue their programs, spend more money with us, and refer their peers to us because they’re seeing the value. If we’re not doing a good job helping our clients, it’s against everything we stand for and we should be fired. That’s what I would want at my own agency.

“To retain our clients, we simply have to do a good job. That means setting clear expectations before the work starts, and delivering on those expectations month after month consistently.”
- Bob Ruffolo

By implementing a collaborative approach. Unlike many other inbound marketing agencies that really want to run your program for you with minimum involvement from the client (and there is definitely a place for this), we strive to be a lot more consultative and collaborative. We do this by setting up regular communication with clients and by spending time educating them on what they should and COULD be doing based on our understanding.

By providing a high-level of knowledge and expertise in our service offering. To provide the benefits our clients would receive from an independent contractor, we’ve made a conscious effort to add that level of knowledge and expertise to our service offerings. We’ve added several experienced consultants to our team during the past six months, and plan to continue to invest in this area. Their services will be included in programs where our clients really need and value that higher-level business leadership and strategic expertise.

By maintaining speed of response and getting things done. One of the things I can say IMPACT has always done right is responsiveness/speed of activity completion. We’ve set up client service teams, which we call Pods, and this has enhanced our ability to get things done quickly and remain readily available to our clients. In fact, our remarkable responsiveness is one of the things our clients value most about us. I’m not sure why other agencies have a bad reputation in this area or haven’t made it more of a priority.

By providing tactical skills, capabilities, and expertise. Our clients have always valued our tactical expertise. This includes, but is not limited to, our content creation abilities, our strong grasp of social media and marketing software platforms, our expertise in using all the functions of HubSpot, our creative and design skills, and our front-end development capabilities. This is an area where we’ve always been strong and where we’ll continue to improve.

References:

1. Kim, W.C., Mauborgne, R., Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. (2005) Boston: Harvard Business School Press. ISBN 978-1591396192.

2., 3., Kim, W. Chan; & Mauborgne, Renée, Blue Ocean Strategy, Harvard Business Review, {October 2004}. Accessed June 11, 2015. https://hbr.org/2004/10/blue-ocean-strategy

4. McLaughlin, Michael. W. Chan Kim and Renée Mauborgne: Make the Competition Irrelevant, Management Consulting News, (Accessed June 12, 2015) http://managementconsultingnews.com/interview-w-chan-kim-and-renee-mauborgne/