I was recently listening to a Nirvana song on the radio when it hit me why the band became so popular back in the early 1990s: they gave us something we had never heard before, and liked. By fusing punk with classic rock, the band created something fresh and new while at the same time appealing to two completely different sets of demographics, both uncovering and capturing new demand. Whether Nirvana was aware of it or not, their innovation was a form of creative destruction. Coined by economist Joseph Schumpeter, creative destruction can be defined as follows: “A way of describing the endless cycle of innovation, which results in established goods, services, or organizations being replaced by new models.”
According to the book Blue Ocean Strategy, which essentially builds on the idea of creative destruction, a blue ocean strategy is one that creates uncontested market space, makes the competition irrelevant, creates and captures new demand, breaks the value‐cost trade‐off, and aligns the whole system of activities in pursuit of differentiation and low cost. Blue Ocean Strategy is an important book for holistic marketers because it provides a framework for better understanding your product, service, or industry and not only forces you to uncover value, but creates a platform for building a sound marketing strategy.
Some companies that have capitalized on blue ocean strategies include Cirque du Soleil, iTunes, Home Depot, Bloomberg, Southwest Airlines, Intuit, Netjets, and Curves. For example, Cirque du Soleil redefined the market by blending circus and theatre, combining the best of both worlds while eliminating many of the costly elements of circus, such as the increasing cost of rent at venues, circus animal maintenance, and travel. Meanwhile, Home Depot blended the concept of a professional home contractor with a hardware store, and Curves combined the safety and comfort of a “home exercise environment” with fitness centers.
One of the main takeaways from Blue Ocean Strategy is that no company, industry, product, or service is indestructible. To remain competitive, here are six elements of competition that a company must look “across” to unlock new blue oceans:
- Industry – Investigate the alternatives to your products rather than just the substitutes.
- Strategic group – Research and understand strategic groups to uncover information about unmet needs and wants.
- Buyer group – Focus not just on who is a target buyer, but who can or should be a target buyer.
- Scope of product or service offering – Think about what happens before, during, and after your product is used to unlock additional information about complimentary offerings.
- Functional‐emotional orientation of an industry – Functionally oriented industries can often infuse commodity products with new life by adding in an element of emotion and, in so doing, can stimulate new demand. Conversely, emotionally oriented industries offer many extras that add price without enhancing functionality.
- Time – Identify underlying trends that are clear, irreversible, and have decisive impact.
Once this research has been perfomed, a company can next look at which features to reduce, eliminate, raise, or create in order to fashion a new value curve. I would recommend this insightful book for anyone who wants to better understand how to position their product or service from the standpoint of communicating inherent value. The benefits to employing a blue ocean strategy include having a clear understanding of value proposition, whole system alignment, (i.e. everyone working together for a common cause) and a strong platform from which to market from.