Today globalisation generated a new demand for leaders. They need to expand their leadership capacity of being able to not only create a vision but to create the future as well. I believe one of the keys to competitiveness is how much creativity and innovation potential an organisation has.
Blue Ocean Strategy written by W.Chan Kim and Renée Mauborgne says: “The only way to beat the competition is to stop trying to beat the competition.” This is a very powerful and inspiring statement!
According to their theory there are two types of oceans:
Red Ocean represents all the industries in existence today. This is the known market space, where industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of the existing demand. As the market space gets more and more crowded, prospects for profits and growth are reduced. Products become commodities and cutthroat competition turns the rend ocean bloody. It keeps companies locked into making incremental improvements. It is a kind of number-crunching exercise. Red oceans will always matter and will always be a fact of business life.
Blue Ocean denotes all industries not in existence today. This is the unknown, untapped market space. It is about demand creation; therefore, there is a great opportunity for highly profitable growth. In Blue Ocean competition is irrelevant because the rules of the game are waiting to be set. One of the cornerstones of Blue Ocean is Value Innovation. The reason it is called value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers, clients and your company, thereby opening up new and uncontested market space.
Questions for Leaders and Entrepreneurs:
- Where is your business reality?
- Which direction are you sailing?
- How many crafts of your fleet are sailing on Red Ocean and how many on Blue Ocean?
- How bloody is your Red Ocean?
- What are the weather conditions?
- How could you focus more on Blue Ocean instead of Red Ocean?
- How do you steer your CRAFT?
- What kind of CRAFT do you have?