On paper it sounds easy. If you want to not only survive—but thrive—in today’s increasingly competitive and global landscape, a company or organization has to stop focusing on competing in existing markets and create new markets.
But how, specifically, do you make that happen?
That’s the question author and management consultant Renee Mauborgne sought to address in a breakfast speech to local business leaders at the Renaissance Hotel.
In the mid-2000s, Mauborgne co-authored the best-selling business book Blue Ocean Strategy, which laid out the theory that the key to success for businesses, governments and nonprofit groups is to move away from “red oceans,” which are bloody with competition, to fertile, deep blue oceans, which hold the potential for new, untapped opportunities.
Her follow-up book, Blue Ocean Shift, which she discussed at this morning’s event, lays out some of the practical ways in which organizations can learn how to create new markets for themselves.
In general, there are three major things that have to happen, says Mauborgne, who co-authored the book with W. Chan Kim. First, organizations must change their perspective, expand their horizons and shift their understanding of where opportunities reside. Second, they need a road map with “market-creating tools and guidance” to determine what those opportunities are. Finally, they need to “create the emotional landscape for people to let go of what they know and be willing to change.”
Mauborgne cited the example of an international hotel chain that created a new opportunity in the “affordable luxury” market, which offers customers five-star comfort at three-star prices. By analyzing their industry they learned that what customers really want in a hotel are comfortable beds with quality bedding, quiet rooms and powerful showers. They began cutting costs on unnecessary personnel, eliminating costly front desk staff and downsizing their rooms, while upgrading the quality of the bedding, bathrooms and décor.
The company is now leading the market in the affordable luxury space, at the same time it has decreased its operating costs by nearly 50%.
She cited another example of a French kitchen appliance manufacturer that was losing market share to low-cost, foreign competitors. It identified “pain points,” things customers don’t like about existing products for whatever reasons, and created a new market around a small fryer that uses very little oil.
“They took an industry that had been declining by 10 percent a year and increased it by 40 percent,” she says. “Their product, Actifry, is now a global leader.”
Mauborgne says shifting the way organizations think isn’t easy, not is identifying those new markets and the opportunities. But it can be done through a strategic process, which she says is critical for organizations that want to thrive in the 21st century.
—Stephanie Riegel
