WEBVTT 00:00:00.000 --> 00:00:02.980 Hey, everyone. Welcome to the show. Do you ever 00:00:02.980 --> 00:00:05.719 feel like your business or maybe even just, you 00:00:05.719 --> 00:00:09.140 know, your own efforts are stuck in this brutal, 00:00:09.300 --> 00:00:13.220 exhausting wrestling match, you know, where everyone's 00:00:13.220 --> 00:00:15.880 fighting for the same customers? Profits feel 00:00:15.880 --> 00:00:18.559 squeezed tighter than toothpaste and everything 00:00:18.559 --> 00:00:20.399 just feels sort of commoditized. Yeah, it sounds 00:00:20.399 --> 00:00:22.440 familiar. Like there's no room to breathe, let 00:00:22.440 --> 00:00:25.600 alone grow. It's the reality for so many industries 00:00:25.600 --> 00:00:28.379 today, isn't it? You're constantly battling rivals 00:00:28.379 --> 00:00:32.759 head to head in markets that seem, well, increasingly 00:00:32.759 --> 00:00:35.320 crowded. And like you said, where products and 00:00:35.320 --> 00:00:37.219 services start to look interchangeable. Exactly. 00:00:37.219 --> 00:00:39.240 It feels like a constant battle just to hold 00:00:39.240 --> 00:00:40.780 your ground. But what if there was a different 00:00:40.780 --> 00:00:42.719 path? What if you didn't have to compete directly 00:00:42.719 --> 00:00:45.439 at all? Oh, OK. What if you could actually create 00:00:45.439 --> 00:00:49.100 entirely new market space where, like, you set 00:00:49.100 --> 00:00:51.429 the rules? That's a pretty bold promise. And 00:00:51.429 --> 00:00:53.189 it's really at the heart of the material we're 00:00:53.189 --> 00:00:56.009 diving into today. It challenges the whole idea 00:00:56.009 --> 00:00:59.329 that strategy is just about competition. Right. 00:00:59.509 --> 00:01:01.750 And the genre we're exploring, it's business 00:01:01.750 --> 00:01:05.150 strategy, specifically some truly groundbreaking 00:01:05.150 --> 00:01:08.510 thinking. If you're someone who loves uncovering 00:01:08.510 --> 00:01:10.670 powerful ideas that can genuinely change how 00:01:10.670 --> 00:01:13.689 you see the world, business or otherwise, please 00:01:13.689 --> 00:01:15.730 take a moment right now to like and subscribe. 00:01:16.090 --> 00:01:18.310 Yeah, it really helps the show. It's the best 00:01:18.310 --> 00:01:20.209 way to help us bring more of these deep dives 00:01:20.209 --> 00:01:23.019 to you. So our focus for this deep dive, pulling 00:01:23.019 --> 00:01:25.400 from the source material you shared, is the book 00:01:25.400 --> 00:01:28.680 Blue Ocean Strategy, How to Create Uncontested 00:01:28.680 --> 00:01:30.920 Market Space and Make the Competition Irrelevant 00:01:30.920 --> 00:01:34.299 by W. Chan Kim and Renee Maborn. It's such a 00:01:34.299 --> 00:01:36.340 refreshing perspective, isn't it? The link to 00:01:36.340 --> 00:01:38.140 grab your own copy is in the description, by 00:01:38.140 --> 00:01:40.390 the way. Good point. Our mission today is basically 00:01:40.390 --> 00:01:44.530 to unpack the core ideas, the practical tools, 00:01:44.650 --> 00:01:46.709 and some really vivid examples straight from 00:01:46.709 --> 00:01:49.090 the material you've given us to show just how 00:01:49.090 --> 00:01:51.670 powerful this concept of making competition irrelevant 00:01:51.670 --> 00:01:54.549 can actually be. Okay, let's dive right in then. 00:01:54.629 --> 00:01:56.709 The authors start by painting a picture of the 00:01:56.709 --> 00:01:59.329 strategic landscape using these two powerful 00:01:59.329 --> 00:02:02.489 metaphors, red oceans and blue oceans. Right, 00:02:02.629 --> 00:02:05.489 red oceans. Think of that as the world we know. 00:02:05.959 --> 00:02:07.659 All the industries that exist right now, the 00:02:07.659 --> 00:02:10.099 established market space. The boundaries are 00:02:10.099 --> 00:02:12.740 defined. Everyone knows the rules. And companies 00:02:12.740 --> 00:02:15.060 are basically battling each other fiercely to 00:02:15.060 --> 00:02:17.960 capture a bigger slice of the existing pie, the 00:02:17.960 --> 00:02:19.919 existing demand. And because everyone's doing 00:02:19.919 --> 00:02:22.740 this, focusing on beating the competition, the 00:02:22.740 --> 00:02:25.439 space gets incredibly crowded. Products become, 00:02:25.539 --> 00:02:27.479 well, commodities, right? Exactly. They start 00:02:27.479 --> 00:02:30.710 looking so similar that customers often... only 00:02:30.710 --> 00:02:33.009 see the price differences. And that inevitably 00:02:33.009 --> 00:02:36.629 drives intense price wars and shrinks profit 00:02:36.629 --> 00:02:39.349 margins for everyone. It's a market drenched 00:02:39.349 --> 00:02:42.969 in competition, hence the red ocean, blood in 00:02:42.969 --> 00:02:44.629 the water kind of thing. Makes painful sense. 00:02:44.810 --> 00:02:47.050 Yeah. So blue oceans are the complete opposite. 00:02:47.169 --> 00:02:49.110 They aren't about competing in existing space. 00:02:49.250 --> 00:02:52.020 They're about creating new space. Okay, uncontested 00:02:52.020 --> 00:02:54.879 space. Precisely. These are the uncontested market 00:02:54.879 --> 00:02:56.879 spaces, the unknown territories, if you like. 00:02:57.020 --> 00:03:00.080 In a blue ocean, competition isn't really the 00:03:00.080 --> 00:03:02.219 main factor because the rules of the game are 00:03:02.219 --> 00:03:05.280 being set by the creator. Ah, so the focus shifts. 00:03:05.659 --> 00:03:09.159 Completely. It shifts from simply dividing up 00:03:09.159 --> 00:03:11.860 existing demand to actually generating new demand. 00:03:12.330 --> 00:03:14.909 And that leads to opportunities for highly profitable 00:03:14.909 --> 00:03:18.629 growth. The whole aim here is to find a way out 00:03:18.629 --> 00:03:21.250 of that bloody red ocean and into the clear, 00:03:21.270 --> 00:03:24.349 open blue. OK, so how do you even do that? What's 00:03:24.349 --> 00:03:27.389 the fundamental concept that lets you make competition 00:03:27.389 --> 00:03:30.110 irrelevant? They call it value innovation, right? 00:03:30.250 --> 00:03:32.990 That's the cornerstone. Yep. And it's crucial 00:03:32.990 --> 00:03:36.080 to understand it's not just about value. And 00:03:36.080 --> 00:03:37.560 it's not just about innovation and isolation. 00:03:38.139 --> 00:03:40.560 It's the synthesis of both. Synthesis, okay. 00:03:40.719 --> 00:03:43.080 Value innovation happens when you align innovation 00:03:43.080 --> 00:03:46.020 with utility for the buyer, a strategic price 00:03:46.020 --> 00:03:48.819 point, and your cost position. All three together. 00:03:49.060 --> 00:03:51.419 OK, but doesn't that sound a bit like just, you 00:03:51.419 --> 00:03:53.659 know, standard innovation? How is this different? 00:03:53.719 --> 00:03:56.419 Is the making competition irrelevant the really 00:03:56.419 --> 00:03:58.939 key part? That's precisely the distinction. Yeah. 00:03:59.139 --> 00:04:01.659 Standard innovation might improve a product or 00:04:01.659 --> 00:04:03.960 process, but it's usually within the existing 00:04:03.960 --> 00:04:06.080 Red Ocean rules. You're still playing the same 00:04:06.080 --> 00:04:08.439 game, maybe just a bit better. Value innovation 00:04:08.439 --> 00:04:11.580 fundamentally changes the game. It creates such 00:04:11.580 --> 00:04:14.629 a leap in value. for buyers and for the company 00:04:14.629 --> 00:04:17.389 simultaneously, that it makes competitors' existing 00:04:17.389 --> 00:04:19.889 strategies less relevant. You're essentially 00:04:19.889 --> 00:04:21.930 operating in a space they haven't even defined. 00:04:22.209 --> 00:04:24.189 Got it. And this is how they talk about breaking 00:04:24.189 --> 00:04:26.850 that traditional value cost trade -off, isn't 00:04:26.850 --> 00:04:28.329 it? That old idea that you either have to be 00:04:28.329 --> 00:04:30.370 high value, which usually means high cost. Right, 00:04:30.370 --> 00:04:32.790 or be low cost, which often means less value. 00:04:32.910 --> 00:04:36.709 Yeah. Exactly. Value innovation. rejects that 00:04:36.709 --> 00:04:40.089 compromise. It's about finding ways to simultaneously 00:04:40.089 --> 00:04:43.050 increase value for the buyer and decrease costs 00:04:43.050 --> 00:04:45.509 for the company. Wow. By getting rid of stuff. 00:04:45.670 --> 00:04:48.769 Pretty much. By eliminating and reducing factors 00:04:48.769 --> 00:04:51.449 the industry currently competes on, but which 00:04:51.449 --> 00:04:54.089 might not add that much real value anymore. What's 00:04:54.089 --> 00:04:55.990 fascinating here is how relevant this feels right 00:04:55.990 --> 00:04:58.250 now. They argue that the need for blue oceans 00:04:58.250 --> 00:05:00.980 is actually like... increasing because of the 00:05:00.980 --> 00:05:03.860 current global economic climate absolutely we're 00:05:03.860 --> 00:05:06.720 seeing supply exceed demand in many areas globalization 00:05:06.720 --> 00:05:09.279 is tearing down geographical barriers that used 00:05:09.279 --> 00:05:11.879 to protect niche markets dot commoditization 00:05:11.879 --> 00:05:14.800 is accelerating and all of this is just fueling 00:05:14.800 --> 00:05:17.240 more price wars and squeezing margins even further 00:05:17.600 --> 00:05:19.699 Yeah, when everything looks the same, price becomes 00:05:19.699 --> 00:05:22.600 the only battleground in the Red Ocean. So finding 00:05:22.600 --> 00:05:25.660 ways to differentiate by creating genuinely new 00:05:25.660 --> 00:05:28.860 value is becoming less of an option and more 00:05:28.860 --> 00:05:31.819 of like a survival imperative. And this raises 00:05:31.819 --> 00:05:34.199 an important question. Yeah. If we want to understand 00:05:34.199 --> 00:05:37.279 how these blue oceans are created, where should 00:05:37.279 --> 00:05:41.500 we look? At specific companies, at entire industries. 00:05:41.699 --> 00:05:43.839 Right. What's the unit of analysis? Well, the 00:05:43.839 --> 00:05:46.610 author's research. based on analyzing historical 00:05:46.610 --> 00:05:49.790 strategic moves across loads of industries, led 00:05:49.790 --> 00:05:51.829 them to a different conclusion. They found that 00:05:51.829 --> 00:05:54.529 consistently excellent or visionary companies 00:05:54.529 --> 00:05:57.009 don't necessarily stay that way forever. Things 00:05:57.009 --> 00:05:59.629 change. Exactly. And industries themselves are 00:05:59.629 --> 00:06:01.930 constantly evolving, shaped by the players within 00:06:01.930 --> 00:06:04.509 them. So neither the company nor the industry 00:06:04.509 --> 00:06:07.569 alone is the most useful unit of analysis for 00:06:07.569 --> 00:06:09.910 finding the roots of profitable growth. through 00:06:09.910 --> 00:06:12.670 blue oceans. So what is the key then? Their study 00:06:12.670 --> 00:06:15.730 showed that the key lies in the strategic move, 00:06:15.870 --> 00:06:18.930 those specific actions and decisions that result 00:06:18.930 --> 00:06:21.750 in a significant leap in value and open up new 00:06:21.750 --> 00:06:24.290 market space. Companies might rise and fall, 00:06:24.410 --> 00:06:26.589 but it's these individual moves that create the 00:06:26.589 --> 00:06:29.110 blue oceans. OK, that makes sense. Focus on the 00:06:29.110 --> 00:06:31.829 action, not just the actor. So let's unpack the 00:06:31.829 --> 00:06:33.610 practical side. How do you actually formulate 00:06:33.610 --> 00:06:36.459 a blue ocean strategy? The material you shared 00:06:36.459 --> 00:06:39.300 highlights some powerful analytical tools. One 00:06:39.300 --> 00:06:42.279 of the core ones is the Strategy Canvas. Ah, 00:06:42.399 --> 00:06:45.019 yes, the Strategy Canvas. It's a great diagnostic 00:06:45.019 --> 00:06:48.279 tool, but also an action framework. It helps 00:06:48.279 --> 00:06:50.240 you visually map out the current state of play 00:06:50.240 --> 00:06:52.790 in an industry. Okay, so it's like a graph. Sort 00:06:52.790 --> 00:06:55.269 of. The horizontal axis lists the key factors 00:06:55.269 --> 00:06:57.310 that the industry competes on and invests in 00:06:57.310 --> 00:06:59.470 things like price, features, service, whatever 00:06:59.470 --> 00:07:02.750 is relevant. And the vertical axis shows the 00:07:02.750 --> 00:07:05.470 level of offering buyers receive across those 00:07:05.470 --> 00:07:07.790 factors, usually from low to high. So you can 00:07:07.790 --> 00:07:10.629 plot the value curve for different competitors 00:07:10.629 --> 00:07:13.689 or maybe the industry average showing where everyone's 00:07:13.689 --> 00:07:15.709 currently focusing their energy and investment. 00:07:15.810 --> 00:07:18.980 Yeah. Like a snapshot. Exactly. And the authors 00:07:18.980 --> 00:07:21.319 point out that an effective blue ocean strategy 00:07:21.319 --> 00:07:25.300 canvas or its value curve should have three complementary 00:07:25.300 --> 00:07:29.220 qualities that really stand out. Focus, divergence, 00:07:29.519 --> 00:07:33.079 and a compelling tagline. Focus, meaning you're 00:07:33.079 --> 00:07:35.459 not trying to be everything to everyone. You're 00:07:35.459 --> 00:07:38.079 concentrating investment on just a few key factors. 00:07:38.279 --> 00:07:40.959 Precisely. And divergence means your value curve 00:07:40.959 --> 00:07:42.819 looks different. It doesn't just mimic competitors. 00:07:42.939 --> 00:07:45.399 It stands apart. It has a unique shape. And the 00:07:45.399 --> 00:07:47.759 tagline, that's like the elevator pitch. Kind 00:07:47.759 --> 00:07:50.899 of. The clear, simple message that encapsulates 00:07:50.899 --> 00:07:53.800 the essence of your blue ocean strategy and really 00:07:53.800 --> 00:07:56.480 resonates with potential buyers. If your canvas 00:07:56.480 --> 00:07:58.480 is just a squiggly line trying to match competitors 00:07:58.480 --> 00:08:00.819 on everything, lacking that focus and divergence. 00:08:01.139 --> 00:08:02.779 And you can't summarize it easily. Then you're 00:08:02.779 --> 00:08:05.399 likely stuck in a muddled, probably high cost 00:08:05.399 --> 00:08:08.899 red ocean strategy. OK. They also mentioned a 00:08:08.899 --> 00:08:11.600 tool for looking at a company's current. portfolio, 00:08:12.019 --> 00:08:15.019 the Pioneer Migrator Settler Map. Yes, the PMS 00:08:15.019 --> 00:08:16.819 map. It's a way to figure out where you stand 00:08:16.819 --> 00:08:19.199 right now. They suggest looking at your company's 00:08:19.199 --> 00:08:21.560 offerings through this lens. So settlers are? 00:08:21.899 --> 00:08:25.060 Think of settlers as your Me Too products. They're 00:08:25.060 --> 00:08:27.500 just fighting for scraps in existing red oceans, 00:08:27.699 --> 00:08:31.660 basically value imitating. Okay. Migrators. Migrators 00:08:31.660 --> 00:08:34.539 offer maybe better value, perhaps differentiating 00:08:34.539 --> 00:08:36.779 a bit, but they're still fundamentally playing 00:08:36.779 --> 00:08:40.220 in the existing market space. Value improvement. 00:08:40.990 --> 00:08:44.230 But not creation. And pioneers. Those must be 00:08:44.230 --> 00:08:46.070 the blue ocean creators. Exactly. They're the 00:08:46.070 --> 00:08:48.330 ones opening entirely new ground, creating new 00:08:48.330 --> 00:08:51.870 value curves. So a company with mostly settlers 00:08:51.870 --> 00:08:55.549 has pretty limited growth prospects. Right. They're 00:08:55.549 --> 00:08:58.470 just treading water. Migrators are OK, but still 00:08:58.470 --> 00:09:01.370 vulnerable. Pioneers are where the exciting future 00:09:01.370 --> 00:09:03.350 growth lies. It helps you see if your current 00:09:03.350 --> 00:09:05.549 strategy is setting you up for future blue oceans 00:09:05.549 --> 00:09:07.669 or just reinforcing your position in existing 00:09:07.669 --> 00:09:10.429 red ones. Got it. Now, how do you actually design 00:09:10.429 --> 00:09:13.490 that new divergent value curve? That's where 00:09:13.490 --> 00:09:15.389 the four actions framework comes in, right? Yes. 00:09:15.450 --> 00:09:17.870 This is a really powerful way to challenge the 00:09:17.870 --> 00:09:20.769 underlying assumptions and the sort of conventional 00:09:20.769 --> 00:09:24.230 logic of an industry. It poses four key questions 00:09:24.230 --> 00:09:26.590 about the factors the industry currently competes 00:09:26.590 --> 00:09:29.759 on. Okay. What are they? Eliminate. Reduce, raise, 00:09:29.980 --> 00:09:34.000 and create. Eliminate. Like, which factors that 00:09:34.000 --> 00:09:36.740 the industry has long taken for granted, maybe 00:09:36.740 --> 00:09:39.559 things everyone thinks are competitive necessities, 00:09:39.559 --> 00:09:42.299 should just be completely eliminated because 00:09:42.299 --> 00:09:45.480 they no longer add real value? Spot on. Then 00:09:45.480 --> 00:09:48.440 reduce. Which factors should be reduced well 00:09:48.440 --> 00:09:51.000 below the industry standard? Perhaps they're 00:09:51.000 --> 00:09:53.279 over -engineered or companies are over -investing 00:09:53.279 --> 00:09:56.039 just because competitors are. Raise. Which factors 00:09:56.039 --> 00:09:58.379 should be raised well above the industry standard? 00:09:58.639 --> 00:10:00.539 These are often things where buyers are currently 00:10:00.539 --> 00:10:02.620 forced to compromise or where there's significant 00:10:02.620 --> 00:10:05.419 untapped demand. And finally, create. Create. 00:10:06.240 --> 00:10:08.779 Which factors should be created that the industry 00:10:08.779 --> 00:10:11.000 has never offered before? These are entirely 00:10:11.000 --> 00:10:13.320 new sources of value that can attract new buyers, 00:10:13.480 --> 00:10:15.740 maybe even non -customers of the industry today. 00:10:15.940 --> 00:10:17.720 This is where the examples from the material 00:10:17.720 --> 00:10:19.460 you provided really bring it home. Let's talk 00:10:19.460 --> 00:10:22.120 about yellowtail wine. The U .S. wine industry 00:10:22.120 --> 00:10:25.220 was like a super crowded red ocean. Oh, absolutely. 00:10:25.559 --> 00:10:28.220 Tons of wineries, really confusing choices for 00:10:28.220 --> 00:10:30.340 the average person, intense competition everywhere. 00:10:30.809 --> 00:10:33.509 So Casella Wines, the Australian company behind 00:10:33.509 --> 00:10:36.110 Yellowtail, they didn't try to compete on those 00:10:36.110 --> 00:10:38.889 traditional wine metrics, did they? Not at all. 00:10:38.929 --> 00:10:41.509 They used these four actions to create something 00:10:41.509 --> 00:10:43.950 entirely different. They eliminated and reduced 00:10:43.950 --> 00:10:47.210 things like the focus on tannins, oak complexity, 00:10:47.529 --> 00:10:49.809 the need for aging. All that wine snob stuff. 00:10:50.210 --> 00:10:53.080 Kind of. Also, the elaborate wine distinctions, 00:10:53.080 --> 00:10:56.000 the overwhelming choice of varietals. They even 00:10:56.000 --> 00:10:58.860 downplayed vineyard origin, which is huge in 00:10:58.860 --> 00:11:00.860 traditional wine marketing. Okay, so they simplified. 00:11:00.980 --> 00:11:03.899 What did they raise? They raised the price slightly 00:11:03.899 --> 00:11:06.320 above the really cheap budget wines, positioning 00:11:06.320 --> 00:11:08.940 it as accessible but suggesting better quality 00:11:08.940 --> 00:11:11.179 than the absolute bottom shelf. Than the created. 00:11:11.399 --> 00:11:14.940 And the created, an easy -drinking, fruity, slightly 00:11:14.940 --> 00:11:17.320 sweet taste profile that appealed to a much wider 00:11:17.320 --> 00:11:20.100 audience. Plus, incredible ease of selection. 00:11:20.360 --> 00:11:22.580 Initially just two types, a Chardonnay and a 00:11:22.580 --> 00:11:25.519 Shiraz. And that fun, approachable branding with 00:11:25.519 --> 00:11:27.580 the kangaroo. Right. Instantly recognizable. 00:11:27.799 --> 00:11:31.480 The result. They created a social drink. It was 00:11:31.480 --> 00:11:34.100 accessible not just to existing wine drinkers, 00:11:34.100 --> 00:11:36.840 but also to people who usually drank beer or 00:11:36.840 --> 00:11:39.600 cocktails. They attracted non -customers of the 00:11:39.600 --> 00:11:42.710 industry. Wow. And they became incredibly successful 00:11:42.710 --> 00:11:46.309 without massive advertising spend, simply because 00:11:46.309 --> 00:11:48.490 they offered something genuinely different and 00:11:48.490 --> 00:11:51.590 appealing. Their value curve looked nothing like 00:11:51.590 --> 00:11:54.009 the established players. It's such a clear illustration 00:11:54.009 --> 00:11:57.110 of not competing head -to -head. Another great 00:11:57.110 --> 00:11:59.429 example from your material is Cirque du Soleil. 00:11:59.549 --> 00:12:02.269 Absolutely. A classic. They looked at the struggling 00:12:02.269 --> 00:12:04.250 traditional circuits industry, which was really 00:12:04.250 --> 00:12:07.450 a red ocean. Fading fast. Yeah. Using the four 00:12:07.450 --> 00:12:09.700 actions. They eliminated expensive elements like 00:12:09.700 --> 00:12:12.419 star performers and animal shows and things like 00:12:12.419 --> 00:12:14.639 aisle concession sales. Get rid of the costly, 00:12:14.740 --> 00:12:17.080 controversial stuff. Right. They even reduced 00:12:17.080 --> 00:12:20.440 the focus on things like sort of slapstick fun 00:12:20.440 --> 00:12:23.100 aimed purely at kids and the pure thrill and 00:12:23.100 --> 00:12:25.200 danger element of animal acts. And what did they 00:12:25.200 --> 00:12:27.759 raise and create instead? Well, they raised ticket 00:12:27.759 --> 00:12:30.379 prices dramatically compared to traditional circuses. 00:12:30.379 --> 00:12:32.539 They positioned themselves as premium entertainment 00:12:32.539 --> 00:12:36.850 and they... Created things like a unified theme 00:12:36.850 --> 00:12:39.710 or story for each show, multiple productions 00:12:39.710 --> 00:12:41.870 running at the same time, a much more refined 00:12:41.870 --> 00:12:44.870 viewing environment, and integrated artistic 00:12:44.870 --> 00:12:47.350 music and dance drawing elements from theater. 00:12:47.570 --> 00:12:50.970 So less sawdust, more sophistication. Pretty 00:12:50.970 --> 00:12:53.210 much. They didn't try to make a better circus. 00:12:53.269 --> 00:12:55.830 They created a completely new form of entertainment 00:12:55.830 --> 00:12:58.850 that appealed to adult theatergoers, corporate 00:12:58.850 --> 00:13:01.370 clients, people who wouldn't traditionally go 00:13:01.370 --> 00:13:04.029 to a circus at all. Another blue ocean created 00:13:04.029 --> 00:13:06.129 by totally reconstructing industry elements. 00:13:06.389 --> 00:13:08.649 Okay, so we know how to build a new value curve, 00:13:08.789 --> 00:13:10.950 but how do you systematically find these blue 00:13:10.950 --> 00:13:13.330 ocean opportunities in the first place? This 00:13:13.330 --> 00:13:15.629 leads us to the six paths framework, right? Which 00:13:15.629 --> 00:13:17.990 is all about systematically reconstructing market 00:13:17.990 --> 00:13:20.789 boundaries. Exactly. This framework encourages 00:13:20.789 --> 00:13:22.909 you to look beyond the conventional lines that 00:13:22.909 --> 00:13:25.549 typically define your industry or market. Path 00:13:25.549 --> 00:13:29.809 one is look across alternative industries. Alternatives. 00:13:29.870 --> 00:13:31.590 Meaning industries that look different on the 00:13:31.590 --> 00:13:33.730 surface but actually serve the same fundamental 00:13:33.730 --> 00:13:37.970 purpose or customer need. Precisely. Like NetJets. 00:13:38.049 --> 00:13:41.480 They looked at two alternatives. Commercial airlines 00:13:41.480 --> 00:13:44.120 and buying your own private jet. Very different 00:13:44.120 --> 00:13:46.559 options. Right. Commercial travel is lower cost 00:13:46.559 --> 00:13:49.779 per seat, but involves hassles, airports, delays, 00:13:50.080 --> 00:13:53.320 fixed schedules. Private jets offer amazing speed 00:13:53.320 --> 00:13:55.620 and convenience, but come with massive fixed 00:13:55.620 --> 00:13:58.899 costs and high variable costs. So net jets didn't 00:13:58.899 --> 00:14:00.960 just compete with airlines or jet manufacturers. 00:14:01.279 --> 00:14:03.960 No. Yeah. By creating fractional jet ownership, 00:14:04.360 --> 00:14:06.720 they combined the speed and convenience of private 00:14:06.720 --> 00:14:10.039 jets with a much lower variable cost and, crucially, 00:14:10.200 --> 00:14:13.379 the avoidance of those huge fixed costs. They 00:14:13.379 --> 00:14:15.440 appealed to busy corporate travelers who wouldn't 00:14:15.440 --> 00:14:17.259 buy a whole jet but needed more than commercial 00:14:17.259 --> 00:14:19.559 could offer. Creating a market between the two 00:14:19.559 --> 00:14:21.919 alternatives. Exactly. Or think about iMode in 00:14:21.919 --> 00:14:24.480 Japan. They looked across cell phones and the 00:14:24.480 --> 00:14:27.159 PC Internet. Okay. Phone versus computer. Cell 00:14:27.159 --> 00:14:29.179 phones offered mobile convenience and voice calls. 00:14:29.340 --> 00:14:31.980 The PC internet offered data, information, services, 00:14:32.299 --> 00:14:34.919 but it was expensive back then, complex, and 00:14:34.919 --> 00:14:38.139 tethered to a desk. NTT Docomo combined mobile 00:14:38.139 --> 00:14:41.179 convenience with simple, always -on data services, 00:14:41.480 --> 00:14:45.139 email, basic info, games at an accessible price 00:14:45.139 --> 00:14:47.679 point. They essentially created the mobile data 00:14:47.679 --> 00:14:50.039 market for the mass consumer, targeting people 00:14:50.039 --> 00:14:52.740 who found the PC internet too complicated or 00:14:52.740 --> 00:14:55.659 just inaccessible. Okay, path two. Look across 00:14:55.659 --> 00:14:58.500 strategic groups within industries. What are 00:14:58.500 --> 00:15:01.259 strategic groups? Within any industry, you usually 00:15:01.259 --> 00:15:03.480 find groups of companies pursuing similar strategies, 00:15:03.720 --> 00:15:06.100 often defined by dimensions like price and performance. 00:15:06.419 --> 00:15:10.179 Think luxury versus budget car makers or full 00:15:10.179 --> 00:15:13.220 service versus discount brokers. Gotcha. Different 00:15:13.220 --> 00:15:15.759 tiers within the same industry. Yeah. The insight 00:15:15.759 --> 00:15:18.100 here is to understand why customers trade up 00:15:18.100 --> 00:15:20.179 or down between these groups. What makes them 00:15:20.179 --> 00:15:22.600 choose one over the other? Curves, the women's 00:15:22.600 --> 00:15:24.519 fitness company, is a good example. They looked 00:15:24.519 --> 00:15:27.120 across home exercise alternatives and traditional 00:15:27.120 --> 00:15:29.659 big box health clubs. Two different strategic 00:15:29.659 --> 00:15:32.159 groups for fitness. Right. Women might trade 00:15:32.159 --> 00:15:33.899 up to health clubs for motivation and better 00:15:33.899 --> 00:15:36.240 facilities, but they often traded down or avoided 00:15:36.240 --> 00:15:38.620 them due to cost, time commitment, or feeling 00:15:38.620 --> 00:15:40.519 intimidated or self -conscious. Makes sense. 00:15:40.620 --> 00:15:43.019 So Curves eliminated things like bulky machines, 00:15:43.460 --> 00:15:47.179 food courts, spas, pools, even locker rooms and 00:15:47.179 --> 00:15:50.759 mirrors. They reduced the workout time to just... 00:15:50.909 --> 00:15:54.529 30 minutes. And they created a women -only, non 00:15:54.529 --> 00:15:56.830 -intimidating, super quick, low -cost circuit 00:15:56.830 --> 00:15:59.350 training experience. So they deliberately targeted 00:15:59.350 --> 00:16:01.470 the reasons women abandoned both home exercise 00:16:01.470 --> 00:16:03.669 and traditional health gloves. Clever. Exactly. 00:16:03.889 --> 00:16:06.470 Path three. Look across the chain of buyers. 00:16:07.009 --> 00:16:09.870 Who does your industry typically focus on? Is 00:16:09.870 --> 00:16:12.370 it the person who actually pays, the purchaser, 00:16:12.490 --> 00:16:14.990 the person who uses the product, the user, or 00:16:14.990 --> 00:16:17.659 maybe someone who influences the decision? An 00:16:17.659 --> 00:16:19.659 influencer. Industries usually focus on one main 00:16:19.659 --> 00:16:22.659 group, right? Often, yes. Shifting that focus 00:16:22.659 --> 00:16:25.480 can unlock completely new value. Bloomberg is 00:16:25.480 --> 00:16:27.980 a classic example here. The financial data industry 00:16:27.980 --> 00:16:30.320 traditionally sold terminals to IT managers, 00:16:30.519 --> 00:16:32.139 the purchasers. Okay, the people managing the 00:16:32.139 --> 00:16:34.259 budget. But Bloomberg shifted focus to the traders 00:16:34.259 --> 00:16:37.720 and analysts, the users. By understanding what 00:16:37.720 --> 00:16:40.750 the users truly needed. Real time data, powerful 00:16:40.750 --> 00:16:43.190 analytics tools right there, even personal concierge 00:16:43.190 --> 00:16:45.450 type services because they had high incomes but 00:16:45.450 --> 00:16:47.669 very little free time. Ah, focusing on the end 00:16:47.669 --> 00:16:51.350 user's needs. Bloomberg made their terminal absolutely 00:16:51.350 --> 00:16:54.370 indispensable to the people who actually use 00:16:54.370 --> 00:16:58.149 the data day in, day out. They created such high 00:16:58.149 --> 00:17:01.169 demand from users that the IT managers basically 00:17:01.169 --> 00:17:03.590 had to buy it almost regardless of the cost. 00:17:03.830 --> 00:17:05.809 They empowered the user to drive the purchasing 00:17:05.809 --> 00:17:09.079 decision. Interesting. any other quick examples 00:17:09.079 --> 00:17:11.319 yeah the material mentions canon focusing on 00:17:11.319 --> 00:17:13.799 the user for their desktop copiers making them 00:17:13.799 --> 00:17:16.000 easy for anyone in an office to use instead of 00:17:16.000 --> 00:17:18.500 just the corporate purchasing department Or Novo 00:17:18.500 --> 00:17:21.240 Nordisk targeting diabetics directly with user 00:17:21.240 --> 00:17:23.259 -friendly insulin delivery systems like pens, 00:17:23.460 --> 00:17:25.759 not just focusing on selling bulk insulin to 00:17:25.759 --> 00:17:27.839 hospitals or doctors. Right, making it easier 00:17:27.839 --> 00:17:30.940 for the actual patient. Okay, path four. Look 00:17:30.940 --> 00:17:33.059 across complementary product and service offerings. 00:17:33.259 --> 00:17:34.900 This is about thinking about the total solution 00:17:34.900 --> 00:17:37.640 customers need to accomplish a task. What happens 00:17:37.640 --> 00:17:40.240 before, during, and after your product or service 00:17:40.240 --> 00:17:42.819 is actually used? What other things do they need? 00:17:42.940 --> 00:17:44.960 Okay, thinking broader than just your product. 00:17:45.180 --> 00:17:48.109 Exactly. Consider any buy buses. They sold buses 00:17:48.109 --> 00:17:50.490 to municipalities. They looked beyond just the 00:17:50.490 --> 00:17:52.809 initial purchase price of the bus. Which is probably 00:17:52.809 --> 00:17:55.029 what most competitors focused on. Right, and 00:17:55.029 --> 00:17:56.990 they looked at the total life cycle cost for 00:17:56.990 --> 00:18:00.170 the city. This included big pain points like 00:18:00.170 --> 00:18:02.819 maintenance, fuel consumption, and dealing with 00:18:02.819 --> 00:18:05.099 corrosion, especially in harsh climates. Didn't 00:18:05.099 --> 00:18:08.759 that add up over years? Hugely. So at ABI, started 00:18:08.759 --> 00:18:12.039 using fiberglass for the bus bodies. This eliminated 00:18:12.039 --> 00:18:14.720 corrosion issues and significantly reduced maintenance 00:18:14.720 --> 00:18:17.480 needs and even fuel consumption over the bus's 00:18:17.480 --> 00:18:20.119 lifetime, even though their initial purchase 00:18:20.119 --> 00:18:23.000 price was higher. The dramatically lower total 00:18:23.000 --> 00:18:25.920 cost of ownership created a blue ocean of value 00:18:25.920 --> 00:18:28.779 for the municipalities. Precisely. They also 00:18:28.779 --> 00:18:31.440 found ways to reduce manufacturing costs and 00:18:31.440 --> 00:18:34.519 increase interior space by using composite materials, 00:18:34.720 --> 00:18:37.220 which allowed for smaller engines and fewer axles. 00:18:37.380 --> 00:18:39.579 Another example mentioned was CMEX in Mexico, 00:18:39.819 --> 00:18:41.660 the cement company. Yeah, they didn't just see 00:18:41.660 --> 00:18:43.920 cement as a functional product, you know, bags 00:18:43.920 --> 00:18:45.859 of gray powder. They looked at the complementary 00:18:45.859 --> 00:18:48.859 service or goal, building a home addition, which 00:18:48.859 --> 00:18:51.000 for many people was seen as a really frustrating, 00:18:51.259 --> 00:18:54.420 long, complicated process. Right. Not just buying 00:18:54.420 --> 00:18:56.880 cement, but achieving the dream of a bigger home. 00:18:57.319 --> 00:19:00.180 Exactly. So Samix reframed cement as enabling 00:19:00.180 --> 00:19:02.559 the gift of dreams, and they added complementary 00:19:02.559 --> 00:19:05.339 services like financing options and construction 00:19:05.339 --> 00:19:07.920 know -how, essentially bundling the product with 00:19:07.920 --> 00:19:10.720 the total solution the buyer truly wanted, the 00:19:10.720 --> 00:19:12.759 finished home edition, delivered more easily. 00:19:13.019 --> 00:19:16.059 Path five, look across functional or emotional 00:19:16.059 --> 00:19:18.660 appeal to buyers. This one's about how industries 00:19:18.660 --> 00:19:21.440 often compete intensely on either the functional 00:19:21.440 --> 00:19:24.079 utility or the emotional appeal of their offerings. 00:19:24.930 --> 00:19:27.250 The idea here is to challenge that orientation. 00:19:27.670 --> 00:19:30.049 So if your industry is very functional, add emotion. 00:19:30.329 --> 00:19:33.089 And if it's emotional, add function. Basically, 00:19:33.190 --> 00:19:35.650 yeah. Or shoot the emphasis. The classic example 00:19:35.650 --> 00:19:38.509 is Swatch. The watch industry, especially at 00:19:38.509 --> 00:19:41.150 the lower end, was primarily functional, focused 00:19:41.150 --> 00:19:44.349 on telling time accurately, durability. Right, 00:19:44.430 --> 00:19:46.849 a tool. Swatch transformed the budget watch into 00:19:46.849 --> 00:19:49.210 an emotional fashion accessory. It became about 00:19:49.210 --> 00:19:51.849 self -expression, collecting, fun. They completely 00:19:51.849 --> 00:19:54.609 changed how people bought and wore watches, especially 00:19:54.609 --> 00:19:57.009 inexpensive ones. And the other way around. The 00:19:57.009 --> 00:19:59.809 body shop is a good example. The cosmetics industry 00:19:59.809 --> 00:20:02.130 was heavily driven by emotional appear promises 00:20:02.130 --> 00:20:05.740 of beauty, glamour, hope in a jar. The Body Shop 00:20:05.740 --> 00:20:08.000 added a strong functional and ethical appeal, 00:20:08.220 --> 00:20:11.240 focusing on natural ingredients, simple packaging, 00:20:11.359 --> 00:20:14.039 and actively challenging traditional beauty standards. 00:20:14.359 --> 00:20:16.480 Right. Appealing to practicality and values. 00:20:16.720 --> 00:20:19.220 And C -Mix, as we mentioned, added emotional 00:20:19.220 --> 00:20:22.880 appeal, the dream home, to a purely functional 00:20:22.880 --> 00:20:26.180 product like cement. Exactly. Path six, the last 00:20:26.180 --> 00:20:29.039 one. Look across time. This is about identifying 00:20:29.039 --> 00:20:31.299 key trends that are already unfolding, trends 00:20:31.299 --> 00:20:33.619 with a clear trajectory, and figuring out how 00:20:33.619 --> 00:20:35.819 your business can shape the future and capitalize 00:20:35.819 --> 00:20:38.339 on them, rather than just reacting incrementally. 00:20:38.380 --> 00:20:41.160 So looking ahead at decisive trends, like iTunes. 00:20:41.819 --> 00:20:44.559 Perfect example. Apple didn't just react passively 00:20:44.559 --> 00:20:46.480 to the trend of digital music and illegal file 00:20:46.480 --> 00:20:49.259 sharing. They saw the clear trajectory, but they 00:20:49.259 --> 00:20:51.339 also saw the major pain points for consumers. 00:20:51.619 --> 00:20:54.500 Like the illegality, the dodgy quality sometimes, 00:20:54.740 --> 00:20:56.759 the difficulty finding music, having to buy a 00:20:56.759 --> 00:20:59.319 whole CD for just one song you like. All of that. 00:20:59.500 --> 00:21:02.079 They capitalized on the digital trend by offering 00:21:02.079 --> 00:21:05.259 a better solution. A legal, super easy to use 00:21:05.259 --> 00:21:07.880 platform with a la carte downloads at an accessible 00:21:07.880 --> 00:21:11.599 impulse buy price, 99 cents. They created a massive 00:21:11.599 --> 00:21:13.960 blue ocean by addressing the compromises consumers 00:21:13.960 --> 00:21:17.200 were making with both physical CDs and illegal 00:21:17.200 --> 00:21:20.759 downloading. OK, so those six paths give you 00:21:20.759 --> 00:21:23.759 ways to find potential blue ocean ideas. But 00:21:23.759 --> 00:21:25.819 once you've used these frameworks and generated 00:21:25.819 --> 00:21:28.339 an idea, how do you know if it's actually viable, 00:21:28.539 --> 00:21:30.559 if it'll work in the real world? It's crucial. 00:21:31.099 --> 00:21:33.599 You don't want to invest heavily in an idea that's 00:21:33.599 --> 00:21:36.000 doomed from the start. They provide a sequence 00:21:36.000 --> 00:21:38.180 filter called getting the strategic sequence 00:21:38.180 --> 00:21:40.640 right. A sequence, meaning you have to pass the 00:21:40.640 --> 00:21:43.319 tests in order. Yes, exactly. It tests the idea 00:21:43.319 --> 00:21:45.839 against four key criteria in a specific order. 00:21:46.160 --> 00:21:49.299 Buyer utility, price, cost, and adoption. If 00:21:49.299 --> 00:21:51.579 you fail on any of these early on, the idea is 00:21:51.579 --> 00:21:53.759 unlikely to succeed commercially, and you should 00:21:53.759 --> 00:21:56.720 probably rethink or abandon it. Okay, first hurdle, 00:21:56.900 --> 00:22:01.819 buyer utility. Does your idea unlock truly exceptional 00:22:01.819 --> 00:22:05.140 utility for the mass of buyers? Is there a really 00:22:05.140 --> 00:22:07.160 compelling reason for people to switch from what 00:22:07.160 --> 00:22:09.420 they're doing now and choose your offering? Right. 00:22:09.519 --> 00:22:12.859 Is it genuinely useful in a new way? They suggest 00:22:12.859 --> 00:22:14.980 using tools like the buyer experience cycle, 00:22:15.119 --> 00:22:17.279 mapping the customer's journey from purchase, 00:22:17.460 --> 00:22:20.519 delivery, use, supplements, maintenance, all 00:22:20.519 --> 00:22:23.240 the way to disposal and the utility levers. Levers 00:22:23.240 --> 00:22:25.700 like simplicity, convenience, risk reduction, 00:22:26.039 --> 00:22:28.779 fun and image, environmental friendliness. To 00:22:28.779 --> 00:22:31.160 systematically identify and eliminate the biggest 00:22:31.160 --> 00:22:33.680 blocks to utility that customers currently face. 00:22:33.839 --> 00:22:36.220 The material mentions the Model T example here. 00:22:36.319 --> 00:22:38.059 Yeah, Henry Ford looked at the early car buyer 00:22:38.059 --> 00:22:41.579 experience and saw huge blocks. Cars were unreliable, 00:22:41.599 --> 00:22:44.180 so maintenance was a big risk. Roads were terrible, 00:22:44.339 --> 00:22:46.700 making them inconvenient. He addressed these 00:22:46.700 --> 00:22:49.140 directly by making the Model T simple, incredibly 00:22:49.140 --> 00:22:51.880 robust, easy to fix, and building a dealer network 00:22:51.880 --> 00:22:54.259 for service. That unlocked exceptional utility 00:22:54.259 --> 00:22:57.039 for the mass market, not just the wealthy hobbyists. 00:22:57.299 --> 00:23:00.000 Okay, so first, utility must be there. Next, 00:23:00.160 --> 00:23:03.940 strategic pricing. Yes. Is your price set at 00:23:03.940 --> 00:23:06.259 a level that's accessible to the mass of target 00:23:06.259 --> 00:23:09.579 buyers? And this is important. It means looking 00:23:09.579 --> 00:23:12.539 beyond your direct industry competitors. You 00:23:12.539 --> 00:23:15.500 need to understand the price corridor of the 00:23:15.500 --> 00:23:18.339 mass. Meaning? Meaning, what are people currently 00:23:18.339 --> 00:23:21.539 paying for alternatives that serve the same function 00:23:21.539 --> 00:23:24.160 or objective, even if they look completely different? 00:23:24.640 --> 00:23:27.180 Products or services in other industries or even 00:23:27.180 --> 00:23:29.720 totally different forms. So for Yellowtail, they 00:23:29.720 --> 00:23:31.980 didn't just look at other wines, but maybe beer 00:23:31.980 --> 00:23:35.130 and cocktails too. Exactly. That helps you find 00:23:35.130 --> 00:23:37.170 a price point that attracts the largest possible 00:23:37.170 --> 00:23:40.369 group of target buyers. This accessibility is 00:23:40.369 --> 00:23:42.650 really crucial, especially because many blue 00:23:42.650 --> 00:23:44.789 ocean ideas aren't easily protected by patents 00:23:44.789 --> 00:23:47.549 long term. A mass accessible price encourages 00:23:47.549 --> 00:23:50.210 widespread adoption and powerful word of mouth. 00:23:50.349 --> 00:23:52.329 Which can be a strong defense against imitators 00:23:52.329 --> 00:23:55.269 jumping in later. Precisely. Then, after setting 00:23:55.269 --> 00:23:57.930 the strategic price, comes target costing. Can 00:23:57.930 --> 00:23:59.910 you actually make money at that price? Right. 00:24:00.329 --> 00:24:03.720 Can you profitably deliver the offering? at the 00:24:03.720 --> 00:24:06.720 strategic price you've set. This usually isn't 00:24:06.720 --> 00:24:09.140 about just cutting costs incrementally. It often 00:24:09.140 --> 00:24:12.039 requires significant cost innovations or streamlining 00:24:12.039 --> 00:24:15.019 processes, like how Swatch radically simplified 00:24:15.019 --> 00:24:17.440 watch design and manufacturing. Or partnering. 00:24:17.640 --> 00:24:20.279 Or partnering strategically, yeah. Like SAP did 00:24:20.279 --> 00:24:23.160 for its enterprise software, or NTT Docomo did 00:24:23.160 --> 00:24:26.130 for iMode content. If hitting the cost target 00:24:26.130 --> 00:24:28.589 is really difficult, you might even need pricing 00:24:28.589 --> 00:24:31.109 innovation itself. Like Blockbuster changing 00:24:31.109 --> 00:24:33.470 the game from selling expensive tapes to renting 00:24:33.470 --> 00:24:36.130 them cheaply. Exactly. Changing the revenue model 00:24:36.130 --> 00:24:38.470 entirely can sometimes bridge the gap if the 00:24:38.470 --> 00:24:40.950 cost target seems unreachable through operational 00:24:40.950 --> 00:24:45.190 changes alone. Okay, utility, price, cost. What's 00:24:45.190 --> 00:24:48.539 the final hurdle in the sequence? Adoption. Have 00:24:48.539 --> 00:24:50.339 you thought about and planned for the hurdles 00:24:50.339 --> 00:24:52.519 to adoption? And this isn't just about customers 00:24:52.519 --> 00:24:55.000 accepting the new offering. It crucially includes 00:24:55.000 --> 00:24:57.619 your own employees, your business partners, maybe 00:24:57.619 --> 00:24:59.700 even the general public or regulators. People 00:24:59.700 --> 00:25:03.319 resisting the change internally. Yes. Or external 00:25:03.319 --> 00:25:06.079 partners being unwilling or unable to adapt. 00:25:06.599 --> 00:25:10.140 You need to anticipate fears, resistance, potential 00:25:10.140 --> 00:25:13.440 roadblocks, and address them proactively. This 00:25:13.440 --> 00:25:16.240 requires really open discussion and clear communication 00:25:16.240 --> 00:25:19.079 about the strategy and its implications. They 00:25:19.079 --> 00:25:21.039 contrast Morgan Stanley and Merrill Lynch here, 00:25:21.079 --> 00:25:23.339 don't they? Yeah. Morgan Stanley openly discussed 00:25:23.339 --> 00:25:25.019 the disruptive threat of the Internet with its 00:25:25.019 --> 00:25:27.380 brokers, got their input, and gained their buy 00:25:27.380 --> 00:25:29.640 -in for their online strategy. Merrill Lynch 00:25:29.640 --> 00:25:32.000 initially was less communicative, which apparently 00:25:32.000 --> 00:25:34.539 led to significant internal resistance and slowed 00:25:34.539 --> 00:25:36.680 down their response. So you need to bring everyone 00:25:36.680 --> 00:25:39.609 along. The book provides a tool. The Blue Ocean 00:25:39.609 --> 00:25:42.589 Idea Index or BOI Index. Yes, it's basically 00:25:42.589 --> 00:25:44.930 a checklist or scorecard to help you systematically 00:25:44.930 --> 00:25:48.009 test your idea against these four criteria. Utility, 00:25:48.069 --> 00:25:51.490 price, cost, adoption. Successful blue oceans 00:25:51.490 --> 00:25:54.109 like iMode tend to score highly across all four. 00:25:54.269 --> 00:25:56.349 And ideas that look promising but fail these 00:25:56.349 --> 00:25:59.410 checks during development. Philips' CDI multimedia 00:25:59.410 --> 00:26:02.250 player or Motorola's Iridium satellite phone 00:26:02.250 --> 00:26:05.369 system often end up as costly commercial failures 00:26:05.369 --> 00:26:08.289 despite the technological innovation. The business 00:26:08.289 --> 00:26:11.230 model wasn't right. OK, so even with a brilliant 00:26:11.230 --> 00:26:13.809 strategy and a commercially viable idea tested 00:26:13.809 --> 00:26:16.549 through that sequence, execution can still easily 00:26:16.549 --> 00:26:19.430 derail everything. The authors identify four 00:26:19.430 --> 00:26:22.809 common organizational hurdles. Yep. The execution 00:26:22.809 --> 00:26:25.710 challenge is huge. First is the cognitive hurdle. 00:26:25.910 --> 00:26:28.509 Meaning getting people, especially managers, 00:26:28.690 --> 00:26:31.710 to even recognize the need for a major strategic 00:26:31.710 --> 00:26:34.670 shift and accept a new reality, breaking free 00:26:34.670 --> 00:26:37.170 from the comfortable status quo. Exactly. We've 00:26:37.170 --> 00:26:39.369 always done it this way. Second. The resource 00:26:39.369 --> 00:26:41.910 hurdle, the perception or sometimes the reality 00:26:41.910 --> 00:26:44.970 of having limited resources, money, people, time 00:26:44.970 --> 00:26:47.109 to actually implement the new strategy. We can't 00:26:47.109 --> 00:26:49.089 afford to do this right now. Right. Third, the 00:26:49.089 --> 00:26:51.170 motivational hurdle. How do you get the mass 00:26:51.170 --> 00:26:53.990 of employees, the frontline troops, to be genuinely 00:26:53.990 --> 00:26:56.289 enthusiastic and actively work towards the new 00:26:56.289 --> 00:26:58.750 strategy rather than just complying passively 00:26:58.750 --> 00:27:01.650 or worse, resisting? Getting buy -in from everyone. 00:27:01.970 --> 00:27:05.779 And fourth, the political hurdle. Dealing with 00:27:05.779 --> 00:27:08.680 internal politics, powerful individuals or groups 00:27:08.680 --> 00:27:11.140 with vested interests who might actively resist 00:27:11.140 --> 00:27:13.259 the change because it threatens their power, 00:27:13.420 --> 00:27:16.259 status or resources. OK. Cognitive, resource, 00:27:16.519 --> 00:27:19.160 motivational, political. How do you overcome 00:27:19.160 --> 00:27:21.059 these? They propose something called tipping 00:27:21.059 --> 00:27:24.259 point leadership. The core idea is that you don't 00:27:24.259 --> 00:27:26.980 need massive resources or universal buy in from 00:27:26.980 --> 00:27:30.079 day one. Instead, you focus disproportionate 00:27:30.079 --> 00:27:33.039 influence on the extremes. Extremes. Like what? 00:27:33.180 --> 00:27:36.099 Like. Key influential people, specific acts or 00:27:36.099 --> 00:27:38.160 initiatives that have high visibility and impact, 00:27:38.400 --> 00:27:40.539 and critical activities that can create momentum. 00:27:40.980 --> 00:27:43.779 The goal is to rapidly tip the organization toward 00:27:43.779 --> 00:27:46.400 the new strategy with relatively low cost and 00:27:46.400 --> 00:27:48.559 effort by focusing your energy intelligently. 00:27:48.660 --> 00:27:51.039 Okay, how does that work for each hurdle? For 00:27:51.039 --> 00:27:54.259 the cognitive hurdle? Seeing is believing. You 00:27:54.259 --> 00:27:56.039 need to get managers out of their nice offices 00:27:56.039 --> 00:27:58.680 and expose them directly to the harsh operational 00:27:58.680 --> 00:28:01.650 reality. Make the problem undeniable. Like the 00:28:01.650 --> 00:28:03.650 example of William Bratton when he became chief 00:28:03.650 --> 00:28:06.829 of the NYC Transit Police. Exactly. He made his 00:28:06.829 --> 00:28:09.450 senior staff ride the chaotic, crime -ridden 00:28:09.450 --> 00:28:12.309 subway system day and night. Not just look at 00:28:12.309 --> 00:28:14.670 crime statistics, but experience the electric 00:28:14.670 --> 00:28:18.140 sewer firsthand. That forced them to confront 00:28:18.140 --> 00:28:20.859 the true extent of the problem and the need for 00:28:20.859 --> 00:28:23.680 radical change. Or getting leaders to meet directly 00:28:23.680 --> 00:28:25.980 with unhappy customers instead of just reading 00:28:25.980 --> 00:28:28.400 filtered reports. Yes, like the Boston Police 00:28:28.400 --> 00:28:30.920 District, for example, where understanding residents' 00:28:31.220 --> 00:28:33.920 real fears about minor quality of life crimes, 00:28:34.039 --> 00:28:37.119 not just major felonies, led to a strategic shift 00:28:37.119 --> 00:28:40.619 that actually made people feel safer. That visceral 00:28:40.619 --> 00:28:44.019 experience reveals the true pain points and galvanizes 00:28:44.019 --> 00:28:46.650 action. OK, how do you jump the resource hurdle 00:28:46.650 --> 00:28:49.009 with limited resources? You need to concentrate 00:28:49.009 --> 00:28:51.710 your existing resources on the hot spots, those 00:28:51.710 --> 00:28:53.869 areas or activities that have the highest performance 00:28:53.869 --> 00:28:56.829 impact if you improve them. And just as importantly, 00:28:57.069 --> 00:28:59.650 identify the cold spots. Areas that consume resources 00:28:59.650 --> 00:29:02.609 but have low impact. And actively redeploy resources 00:29:02.609 --> 00:29:05.089 away from them towards the hot spots. You can 00:29:05.089 --> 00:29:07.470 also engage in horse trading, swapping resources 00:29:07.470 --> 00:29:09.410 you have, but don't really need for ones you 00:29:09.410 --> 00:29:11.809 desperately do need from other departments or 00:29:11.809 --> 00:29:14.950 units. Bratton's buses example. fits here, right? 00:29:15.089 --> 00:29:18.369 Perfectly. He converted old city buses into mobile 00:29:18.369 --> 00:29:20.809 processing centers parked right outside subway 00:29:20.809 --> 00:29:24.049 stations. This wasn't a huge new resource investment, 00:29:24.329 --> 00:29:27.430 but it drastically cut the time officers spent 00:29:27.430 --> 00:29:30.650 processing minor arrests, so maybe 16 hours back 00:29:30.650 --> 00:29:33.109 at the station down to about one hour on the 00:29:33.109 --> 00:29:35.089 bus. Bring them up. Bring them up to actually 00:29:35.089 --> 00:29:37.289 patrol the subways, which was the high -impact 00:29:37.289 --> 00:29:39.690 hotspot they needed to focus on. Smart reallocation. 00:29:40.089 --> 00:29:42.569 Makes sense. What about the motivational hurdle, 00:29:42.710 --> 00:29:45.410 getting the masses on board? Here, you need to 00:29:45.410 --> 00:29:48.410 engage the mass of employees. One key is using 00:29:48.410 --> 00:29:50.490 fair process, which we need to discuss more, 00:29:50.529 --> 00:29:52.970 making people feel heard and respected. Another 00:29:52.970 --> 00:29:56.029 is identifying the kingpins. Kingpins. The natural 00:29:56.029 --> 00:29:58.430 leaders, the most influential people within the 00:29:58.430 --> 00:30:00.910 organization at various levels, whose buy -in 00:30:00.910 --> 00:30:04.450 and enthusiasm can sway many others. Focus your 00:30:04.450 --> 00:30:06.609 efforts on winning them over first. You also 00:30:06.609 --> 00:30:09.470 need atomization. Breaking it down. Yes. Breaking 00:30:09.470 --> 00:30:11.630 down the big, perhaps overwhelming strategic 00:30:11.630 --> 00:30:15.269 challenge into concrete, manageable tasks that 00:30:15.269 --> 00:30:17.769 people feel they can actually accomplish. Celebrate 00:30:17.769 --> 00:30:20.549 small wins along the way. Like how the NYPD under 00:30:20.549 --> 00:30:23.430 Bratton identified key precinct chiefs as kingpins 00:30:23.430 --> 00:30:26.589 and broke the huge goal of reducing crime into 00:30:26.589 --> 00:30:29.410 specific, measurable tasks like cracking down 00:30:29.410 --> 00:30:31.930 on fare evasion and cleaning up graffiti atomization. 00:30:32.430 --> 00:30:35.289 Success in those visible areas motivated everyone 00:30:35.289 --> 00:30:38.420 else. Exactly. Finally, jumping the political 00:30:38.420 --> 00:30:40.660 hurdle dealing with internal resistance. The 00:30:40.660 --> 00:30:43.740 toughest one sometimes. Often. You need to proactively 00:30:43.740 --> 00:30:47.420 manage the politics, identify your angels, those 00:30:47.420 --> 00:30:49.819 who strongly support the change, and leverage 00:30:49.819 --> 00:30:52.200 their influence. You also need to anticipate 00:30:52.200 --> 00:30:55.660 and neutralize or silence the devils. Those with 00:30:55.660 --> 00:30:58.180 vested interests who will actively try to undermine 00:30:58.180 --> 00:31:00.740 the change. Right. And having a politically savvy 00:31:00.740 --> 00:31:02.940 insider, someone who understands the internal 00:31:02.940 --> 00:31:05.700 landscape and can navigate the corridors of power, 00:31:05.779 --> 00:31:08.119 what they call a conciliar on your core team, 00:31:08.259 --> 00:31:10.750 can be absolutely invaluable here. OK, and this 00:31:10.750 --> 00:31:12.410 brings us to a concept that you mentioned ties 00:31:12.410 --> 00:31:14.809 formulation and execution together, building 00:31:14.809 --> 00:31:16.970 execution into strategy through fair process. 00:31:17.250 --> 00:31:20.269 This is so critical because strategy isn't just 00:31:20.269 --> 00:31:22.809 crafted by senior management in a vacuum. It 00:31:22.809 --> 00:31:25.190 has to be executed by everyone down the line. 00:31:25.470 --> 00:31:28.529 And if the process used to arrive at and communicate 00:31:28.529 --> 00:31:31.509 that strategy isn't perceived as fair by the 00:31:31.509 --> 00:31:33.490 people who have to carry it out... It breeds 00:31:33.490 --> 00:31:37.049 mistrust. Exactly. Mistrust, resentment, lack 00:31:37.049 --> 00:31:39.509 of commitment, which leads to resistance or even 00:31:39.509 --> 00:31:42.250 outright sabotage. The book's example of the 00:31:42.250 --> 00:31:45.690 coolant supplier, Lubber, is stark. Their sales 00:31:45.690 --> 00:31:48.490 force deliberately undermined a new expert system 00:31:48.490 --> 00:31:50.950 because they felt excluded from the decision, 00:31:51.170 --> 00:31:53.950 threatened by it, and hadn't been properly consulted 00:31:53.950 --> 00:31:57.160 or informed. The process felt unfair. So what 00:31:57.160 --> 00:31:59.680 are the principles of fair process? They emphasize 00:31:59.680 --> 00:32:02.779 three core principles, the three E's. First, 00:32:02.980 --> 00:32:05.480 engagement. Involving people. Yes, involving 00:32:05.480 --> 00:32:07.519 people in the strategic decisions that will affect 00:32:07.519 --> 00:32:09.720 them. Genuinely asking for their input, allowing 00:32:09.720 --> 00:32:11.539 them to challenge ideas, understanding their 00:32:11.539 --> 00:32:14.359 perspective. Second. Explanation. Even if you 00:32:14.359 --> 00:32:16.720 can't incorporate everyone's input into the final 00:32:16.720 --> 00:32:19.799 decision, you must clearly explain why decisions 00:32:19.799 --> 00:32:22.630 were made the way they were. Provide the rationale, 00:32:22.890 --> 00:32:25.430 the thinking behind the new strategy or the changes. 00:32:25.529 --> 00:32:27.750 Don't just announce it. Makes sense. People want 00:32:27.750 --> 00:32:31.029 to understand the why. And third, expectation 00:32:31.029 --> 00:32:34.730 clarity. Once the strategy is set, you need to 00:32:34.730 --> 00:32:37.309 clearly state what is expected of people under 00:32:37.309 --> 00:32:40.230 the new rules of the game. Define the new responsibilities, 00:32:40.670 --> 00:32:44.109 performance standards, consequences. No ambiguity. 00:32:44.529 --> 00:32:46.849 The material you shared highlights a contrast 00:32:46.849 --> 00:32:49.589 between two manufacturing plants, Chester and 00:32:49.589 --> 00:32:52.140 High Park. implementing similar changes. Right. 00:32:52.220 --> 00:32:54.680 At Chester, management brought in consultants 00:32:54.680 --> 00:32:57.440 secretly, didn't really explain the why behind 00:32:57.440 --> 00:32:59.680 the changes clearly, and basically fueled employee 00:32:59.680 --> 00:33:02.759 fears of job losses. The process felt imposed 00:33:02.759 --> 00:33:05.220 and unfair. And at Hyde Park? At Hyde Park, management 00:33:05.220 --> 00:33:07.599 engaged employees early, explained the competitive 00:33:07.599 --> 00:33:09.680 reasons for the changes thoroughly, listened 00:33:09.680 --> 00:33:11.660 to concerns, and set very clear expectations 00:33:11.660 --> 00:33:14.000 about new roles and processes. And the outcome 00:33:14.000 --> 00:33:16.750 was very different. Dramatically different. Chester 00:33:16.750 --> 00:33:19.630 employees felt unfairly treated, resisted the 00:33:19.630 --> 00:33:22.410 changes, even actively sabotaged new equipment, 00:33:22.529 --> 00:33:25.809 causing huge delays and costs. High Park employees, 00:33:26.230 --> 00:33:28.470 even those who weren't necessarily thrilled with 00:33:28.470 --> 00:33:30.930 every single aspect of the change, trusted the 00:33:30.930 --> 00:33:33.450 process. They felt respected. So they committed. 00:33:33.630 --> 00:33:35.789 They committed to the new strategy and voluntarily 00:33:35.789 --> 00:33:38.390 cooperated to make it work, leading to rapid 00:33:38.390 --> 00:33:41.700 and successful execution. Fair process isn't 00:33:41.700 --> 00:33:44.279 just a nice -to -have soft skill. The authors 00:33:44.279 --> 00:33:46.599 argue it builds intellectual and emotional recognition, 00:33:47.000 --> 00:33:50.180 fostering trust and commitment, intangible capital 00:33:50.180 --> 00:33:52.799 that is absolutely crucial for effective execution. 00:33:53.140 --> 00:33:55.579 Okay, so you found your blue ocean, formulated 00:33:55.579 --> 00:33:58.019 a strategy, filtered it for viability, and built 00:33:58.019 --> 00:34:01.119 execution through fair process. What about sustainability? 00:34:01.980 --> 00:34:04.059 Blue oceans won't remain uncontested forever, 00:34:04.319 --> 00:34:06.759 surely. Imitators will come. You're absolutely 00:34:06.759 --> 00:34:09.079 right. Success inevitably attracts imitators. 00:34:09.119 --> 00:34:12.000 That's the nature of markets. However, blue oceans 00:34:12.000 --> 00:34:14.599 created through genuine value innovation often 00:34:14.599 --> 00:34:17.019 have significant built -in barriers to imitation 00:34:17.019 --> 00:34:19.860 that can give you a valuable period of uncontested 00:34:19.860 --> 00:34:21.900 time. What kind of barriers are we talking about? 00:34:22.099 --> 00:34:25.500 Several kinds. The imitator's existing value 00:34:25.500 --> 00:34:28.699 curve might need such a radical shift to match 00:34:28.699 --> 00:34:31.440 yours that it just doesn't make sense for their 00:34:31.440 --> 00:34:34.000 established business model or brand image think 00:34:34.000 --> 00:34:36.940 brand conflict. Right. Like a luxury brand trying 00:34:36.940 --> 00:34:40.079 to copy a budget offering. Exactly. Yeah. Sometimes 00:34:40.079 --> 00:34:42.579 there's a natural monopoly effect where the market 00:34:42.579 --> 00:34:45.380 created really can only support one dominant 00:34:45.380 --> 00:34:49.110 player efficiently. Patents, if applicable, offer 00:34:49.110 --> 00:34:51.110 legal protection for a time. Okay, what else? 00:34:51.269 --> 00:34:53.769 You might gain significant cost advantages from 00:34:53.769 --> 00:34:56.050 the scale and experience you build rapidly in 00:34:56.050 --> 00:34:58.250 the new market, making it hard for followers 00:34:58.250 --> 00:35:01.230 to match your price -value proposition. Network 00:35:01.230 --> 00:35:03.329 externalities can also be powerful, where the 00:35:03.329 --> 00:35:05.750 value of your offering increases as more people 00:35:05.750 --> 00:35:08.360 use it. creating a virtuous cycle. Like social 00:35:08.360 --> 00:35:11.159 networks or online marketplaces. And sometimes 00:35:11.159 --> 00:35:13.739 the sheer scale of organizational change required 00:35:13.739 --> 00:35:16.179 for a large incumbent competitor to pivot and 00:35:16.179 --> 00:35:19.139 truly replicate your blue ocean strategy is just 00:35:19.139 --> 00:35:21.199 too high a hurdle for them to overcome quickly 00:35:21.199 --> 00:35:23.619 or effectively. Plus, if you've delivered that 00:35:23.619 --> 00:35:26.059 significant leap in value at an accessible price, 00:35:26.280 --> 00:35:28.800 you build strong brand buzz and customer loyalty 00:35:28.800 --> 00:35:31.699 very quickly, making it much harder for rivals 00:35:31.699 --> 00:35:34.269 to just come in and steal your customers. Imitating 00:35:34.269 --> 00:35:36.369 a whole system of activities designed for value 00:35:36.369 --> 00:35:39.610 innovation is much, much tougher than just copying 00:35:39.610 --> 00:35:42.809 a single product feature. Okay, so there are 00:35:42.809 --> 00:35:45.949 defenses, but imitation will likely happen eventually. 00:35:46.309 --> 00:35:48.869 When do you need to think about value innovating 00:35:48.869 --> 00:35:51.670 again? When do you launch the next blue ocean? 00:35:51.949 --> 00:35:54.449 The signal is when you start seeing competitors' 00:35:54.670 --> 00:35:56.789 value curves beginning to converge on yours again. 00:35:57.309 --> 00:35:59.409 When the competition starts to look more like 00:35:59.409 --> 00:36:01.889 you, threatening to turn your blue ocean increasingly 00:36:01.889 --> 00:36:05.960 red. So you monitor the strategy canvas? Constantly. 00:36:06.099 --> 00:36:08.440 The goal isn't necessarily to stay in one blue 00:36:08.440 --> 00:36:11.420 ocean forever. It's to swim as far ahead as possible 00:36:11.420 --> 00:36:13.579 in your current one, building scale advantages, 00:36:13.960 --> 00:36:16.840 brand loyalty, and profitability before you need 00:36:16.840 --> 00:36:18.980 to launch your next blue ocean strategic move 00:36:18.980 --> 00:36:21.670 to stay ahead. It's about being a moving target 00:36:21.670 --> 00:36:24.090 then, and understanding that long -term profitable 00:36:24.090 --> 00:36:27.130 growth comes not necessarily from perpetual excellence 00:36:27.130 --> 00:36:29.849 in one's space, but maybe from the ability to 00:36:29.849 --> 00:36:32.610 repeatedly create these new market spaces. That 00:36:32.610 --> 00:36:35.230 seems to be the core message. And importantly, 00:36:35.449 --> 00:36:38.030 their research shows that these blue oceans aren't 00:36:38.030 --> 00:36:40.030 just created by nimble startups out of nowhere. 00:36:40.309 --> 00:36:42.969 Most actually come from within existing industries, 00:36:43.190 --> 00:36:46.110 often by established companies that find ways 00:36:46.110 --> 00:36:47.929 to challenge their own boundaries and assumptions. 00:36:48.590 --> 00:36:51.489 That wraps up our deep dive into the really powerful 00:36:51.489 --> 00:36:54.909 ideas from Blue Ocean Strategy. It's such a compelling 00:36:54.909 --> 00:36:57.409 argument for shifting our focus, isn't it? From 00:36:57.409 --> 00:37:01.489 just battling harder in crowded spaces to actively 00:37:01.489 --> 00:37:04.030 finding and creating entirely new ones. Definitely. 00:37:04.400 --> 00:37:06.460 By using frameworks like this strategy canvas 00:37:06.460 --> 00:37:08.179 and the four actions to formulate the strategy, 00:37:08.440 --> 00:37:11.019 applying the six paths to discover new opportunities, 00:37:11.260 --> 00:37:13.760 testing viability rigorously with the strategic 00:37:13.760 --> 00:37:16.400 sequence, and then ensuring smooth execution 00:37:16.400 --> 00:37:18.260 with tipping point leadership and fair process. 00:37:18.519 --> 00:37:21.340 Yeah. The material really shows that making competition 00:37:21.340 --> 00:37:25.179 irrelevant isn't just some abstract ideal. It 00:37:25.179 --> 00:37:27.619 can be a systematic process. We really hope you 00:37:27.619 --> 00:37:30.119 found this exploration as fascinating as we did. 00:37:30.179 --> 00:37:31.780 Thank you so much for bringing these sources 00:37:31.780 --> 00:37:33.909 to us and for joining us on this deep dive. dive 00:37:33.909 --> 00:37:35.630 we truly appreciate you being here and listening 00:37:35.630 --> 00:37:38.449 in now we'd love to hear from you what was your 00:37:38.449 --> 00:37:41.650 biggest aha moment or maybe your favorite example 00:37:41.650 --> 00:37:44.489 from today's deep dive share it in the comments 00:37:44.489 --> 00:37:47.230 below we genuinely love hearing what resonated 00:37:47.230 --> 00:37:49.869 with you yeah definitely let us know and please 00:37:49.869 --> 00:37:53.230 if you found value in this discussion like the 00:37:53.230 --> 00:37:55.289 video and maybe share it with someone else who 00:37:55.289 --> 00:37:57.809 you think might find these ideas insightful and 00:37:57.809 --> 00:37:59.789 just as a final provocative thought for you to 00:37:59.789 --> 00:38:03.179 consider Perpetual excellence in any single company 00:38:03.179 --> 00:38:06.559 is incredibly rare, historically speaking. But 00:38:06.559 --> 00:38:09.639 maybe the ability to repeatedly create blue oceans 00:38:09.639 --> 00:38:12.239 by focusing on these kinds of transformative 00:38:12.239 --> 00:38:15.679 strategic moves is the real key to sustained 00:38:15.679 --> 00:38:18.679 long -term profitable growth. So take a moment 00:38:18.679 --> 00:38:20.909 to think. In your own professional life or even 00:38:20.909 --> 00:38:23.389 personal endeavors, are your efforts mainly focused 00:38:23.389 --> 00:38:26.150 on fighting harder in a crowded red ocean? Or 00:38:26.150 --> 00:38:28.510 are you actively looking for and maybe pursuing 00:38:28.510 --> 00:38:31.730 opportunities to create a clear blue one? Something 00:38:31.730 --> 00:38:33.510 to mull over. Definitely something to mull over. 00:38:33.650 --> 00:38:34.469 Until next time.