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Don't Compete with Rivals; Make Them Irrelevant
By: Lou Lasday
Don't compete with rivals; make them irrelevant! That's the concept of the "Blue Ocean Strategy" advanced by educators Chan Kim and Renee Mauborgne. Their concept has just been introduced at the top-rated graduate business schools in the nation, according to the American Marketing Association. They suggest that companies have long engaged in head-to-head competition in search of sustained profitable growth, for competitive advantage, market share and differentiation.
Yet, in today's overcrowded industries and service professions, competing head-on results in nothing but a bloody "Red Ocean" of fighting over a crowding profit pool.
This is true if you are a leading Gulf Coast Realtor with dozens of up-scale, well-groomed multimillion-dollar associates, a community bank having recently published the best numbers of its history, a law firm with partners doing well or an entrepreneurial firm showing sharp increases.
The argument here is that tomorrow's leading companies will succeed not by battling competitors but by creating "Blue Oceans" of uncontested space ripe for growth. Such strategic moves - termed "value innovation" - create powerful leaps in value for both the firm and its buyers, rendering rivals obsolete and unleashing new demand for your Gulf Coast enterprise. It's like waking up to find more of the waterfront at your doorstep.
According to Kim and Mauborgne, demand is created in blue oceans rather than fought over. And the way to create a blue ocean is either to launch a new industry, as eBay did, or create a blue ocean from within a red ocean by expanding the boundaries of an existing industry.
The strategic moves to accomplish this are highlighted by six directional paths.
Think each principle through as it specifically relates to your own enterprise. If you focus on the Big Picture and step away from micro managing, you'll reconstruct existing market boundaries. Here are your six paths to greatness:
Path #1: Instead of defining your industry within its peer group and focusing on being the best within it, look "across" alternative industries. For example, if your field involves personal finances, people can use financial software, hire a CPA, ask a tax lawyer, meet with their community banker, a stock adviser, their installment-loan guru or simply use pencil and paper. Now, before a service provider says "it's not my job," think of the opportunity to capture and build a new financial relationship and offer your wares in other situations.
Path #2: Instead of looking at your industry as Target Groups, such as luxury automobiles and striving to stand out with direct competitors, look within your target groups. If you are a Gulf Coast upscale auto dealer, consider breaking traditional marketers' narrow tunnel-vision by understanding which factors determine customers' decisions to trade up or trade down from one group to another.
Path #3: Rather than focus solely on the same buyer group horizontally, consider the influencers; a purchasing agent as with office furniture; a neighbor-friend as with an automobile; or an internal accountant as with group insurance. Look across the chain. Often, industry practices are not questioned. The purchaser who pays for the product or service may differ from the actual user or the influencers. What is the chain of buyers in your industry? Which buyer group does your industry typically focus on? If you shifted within buyer groups in your industry, can you see how to unlock new value?
Path #4: Define the score of products and services in a different manner than offered by everyone else in your industry. Look across complementary offerings. Can the Gulf Coast lawyer contacted to handle a building's closing also handle the title insurance, advise and determine how to own the property and perhaps write a new trust document and then review the client's will to reflect this major asset? That's where untapped value is often hidden. Think what happens before, during and after your service is utilized. Then seek to solve the major "Pain Points."
Path #5: Step away from your industry's functional or emotional orientation. Look across the spectrum by reinventing your service or product to get out of mainstream competition.
Path #6: Look ahead! Focus on new strength and opportunities in the future. Envision how your product or service can be enhanced and reshaped to a more unique value reposition. Find insight in trends that you can observe both in your Gulf Coast scenario and on the national scene through your trade press.
Visualize the future of your enterprise. Reach beyond existing demand to unlock a new mass of customers that did not exist before. This kind of forward thinking is a steep challenge. Properly thought out, conceptualized, communicated and initiated, you'll lop off much of your everyday competition. Then, you won't have to compete with rivals. You'll truly make them irrelevant!
Lou Lasday, an independent marketing advisor residing on Longboat Key, creates action-oriented Strategic Marketing Initiatives for Gulf Coast emerging companies. A career Direct Response Executive; he has been a general partner of a major national marketing communications firm and Regional President of the American Marketing Association. Mr. Lasday can be reached at [email protected]
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