Flash – Strategy (1) – “Blue Ocean strategy”
Quite often, we receive requests for pieces on strategy.
Strategy is linked to Project Management and not only as far as the planning part is concerned, indeed.
Therefore, let’s dedicate this Flash to Strategy! 🙂
Today we will comment on just one of the concepts contained in the famous book ‘Blue ocean strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant’.
As it is written on the site http://www.blueoceanstrategy.com/boo/book.html, visited on January 29th, 2010, ‘Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth.’
Basically, we understood it this way: instead of fighting competition, one should create his/her own market.
We shall begin by highlighting the afore-mentioned part: ‘…spanning more than a hundred years and thirty industries …’. From our point of view, that makes something more than a mere century and just 30 industries: not nearly enough to really challenge the knowledge of millennia of strategic thinking and practicing.
Let’s go back to quoting the website: ‘Companies have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. Yet in today’s overcrowded industries, competing head-on results in nothing but a bloody “red ocean” of rivals fighting over a shrinking profit pool’.
We can’t help agreeing on a part: fighting is taking place, especially in these times of crisis. But … is fighting really avoidable? In our opinion no, whatever you may do: even if you manage to create or discover a new market, competitors will arise immediately and jump on you with all their strength. Even if they do something different, as soon as they smell business they will “invent” a product doing exactly what yours do, or so will they claim.
Again from the website, the most important sentence ‘Blue Ocean Strategy provides a systematic approach to making the competition irrelevant.’
Let’s say immediately we don’t think competition can ever be irrelevant.
For millennia man has written on strategy; the conclusion has always been the same: one must fight to obtain something, be it a fight against meteorological conditions or a fight against a raider.
All of us know we would like things to be different: all of us have an inborn necessity for freedom, therefore “forgetting enemies” is a popular utopia because enemies (or competition) limit our freedom. When we feel “restrained”, we tend to make errors: that is why “traditional” strategy exists, i.e., to help us dealing with enemies/competition.
Another name for (traditional) strategy is “experience”: why throwing away millennia of proven human experience to please our psychological necessities? Unfortunately, failing to accept reality leads to dire consequences.
Mind, we are fond of progress and innovation, but only when they have clear and proven advantages.
Someone makes a simile between “Blue Ocean strategy” and Sun Tzu (“The art of war”), for Sun Tzu recommends to begin fighting when the fight is already won.
We do not agree with that, for Sun Tzu’s strategy implies both attack and defence: saying one should manoeuvre so as to be the winner before fighting (or even to avoid fighting) is quite different from saying “Abandon the field before fighting and go in search of other places where to live in peace”.
Be sure that as soon as you have found a profitable new area, enemies (or competition) will arrive; worse, by then you will have acquired the fame of a conceding opponent, therefore competition will be more savage than ever.
Real competition deals with profit, whatever may be producing it; it will jump on you, even if its products aren’t in truth competing with yours.
In this era of marketing, advertising, networks and so on, competition will “destroy” your products and promote its own, even if they are no match for your products.
Will you fight or run?
Will you stay to protect your investments, or will you flee abandoning the field and profit?
Mind, the Strategy-of-old states: when your enemy is on the run, take the occasion and annihilate him/her. Do you really think competition, which is not applying Blue Ocean strategy, will let you go unscathed?
Do you really think your customers will stay with you after you have left the field? How long has it taken to acquire your present customers?
We know well how things work, for we introduced Prince2 in virgin areas.
You know, no real competitors, but … we got fierce competition. Mind, especially in these times of crisis, competition makes use of whatever means is at its reach.
Our practice does not adopt exclusively defensive or aggressive tactics: it uses what is needed at the right time, exactly as advised by millennia of thinkers.
One can stay on the defensive when dealing with competitors, but he/she must go on the offensive to get markets.
A simile: if you play chess, you know that staying exclusively on the defense is a sure receipt for defeat.
And … you can’t run from the chessboard: if you want to play, you have to fight, either you win or lose; better to fight well by making good millennia of experience, isn’t it?