The CMO is a huge fan of Blue Oceans especially when swimming or surfing is involved. The CMO created a television show that focuses on one of the most difficult athletic feats on earth, crossing the English Channel by hand and foot, one stroke at a time. Fewer people have crossed the channel than have climbed Mt. Everest. Its 21 miles of cold water, unpredictable weather, strong currents, jellyfish, and other obstacles natural and man made create an environment that keeps most people out. No wetsuits allowed.
The book encourages readers to come up with their industry’s “standards.” The reader is then challenged with four questions to start pondering:
- Which of the factors that the industry takes for granted should be eliminated?
- Which factors should be reduced well below the industry’s standard?
- Which factors should be raised well above the industry’s standard?
- Which factors should be created that the industry has never offered?
In review of 108 companies, 86% of new product/service launches were line extensions of an existing idea and/or product line. These launches accounted for 62% of the revenues and 39% of the profits. 14% of the launches were Blue Ocean ideas. The Blue Oceans drove 38% of revenues and over 60% of the companies’ overall profits!
“The first example in “Blue Ocean Strategy” is Cirque de Soleil. The criteria/boundaries/rules for the circus industry that were “taken for granted” for decades included: animal shows, star/famous performers, multiple shows at the same time (i.e. 3 rings), and pushing concession sales. Rather than keeping a high emphasis on all the existing rules and then creating new ones, they either eliminated or reduced many of those rules and created a bunch of new ones. In the process, they increased value for their target market while lowering their own costs.”
Key observation: When an industry becomes decentralized, profits are not lost, they are only redistributed. The problem is that the analysts have a hard time counting and tracking the redistribution. As with the Circus business, no one has yet to come up with a name for Cirque de Soleil and does not categorize them in the pure “circus” play. Same goes for the music industry and its continual slide into massive decentralization.
Keep in mind that Blue Oceans seem easy to swim in, but the truth is that less than 14% of those studied actually attempt to cross the Blue Ocean. Are you willing to leave the bloody battle over market share in the familiar, warm waters of the Red Oceans to take the risk and conquer the unknown? The odds say NO!
Regarding the music industry, there are two companies that have decided to enter the “drowning” business and have found a Blue Ocean by surpassing the current rules of the competition. These companies do not fight for market share using the old paradigm. They have created a new paradigm.