A Better Way to Formulate ‘Blue Ocean’ Strategy
Many readers may be familiar with the 2005 global best-selling book “Blue Ocean Strategy” by professors Renee Mauborgne and W. Chan Kim. In the book, they introduced the concepts of red and blue ocean markets, which are still helpful today for leaders operating in competitive markets.
Yet, while the concepts of red and blue ocean markets remain relevant, a new, better method for creating blue ocean markets (i.e., uncontested market space that renders the competition irrelevant) has emerged with the “jobs-to-be-done” approach to innovation. Hence, the ability for companies to create their own blue ocean market space has increased dramatically. Before I explain how, let’s do a quick refresher on the concepts of red and blue ocean markets.
A red ocean market is characterized by firms:
- Competing in the same market space where the boundaries are well-defined and accepted and the competitive rules of the game are known
- Trying to beat the competition
- Competing on common competitive dimensions in order to exploit existing demand and grab a greater share of a fixed market
- Defending their current position
This competition gets bloody (hence “red ocean”) and is most intense in markets where there is an oversupply of a good or service which causes firms to lower their pricing to gain market share, which in turn drives margins down and further commoditizes the market.
The way out of this bloody mess is to create a “blue ocean market space” in which firms:
- Create uncontested market space
- Make the competition irrelevant
- Compete on different dimensions that create new value for customers
- Create a valued and unique position in the market
The key is understanding how to create a blue ocean market. You can read Blue Ocean Strategy if you want to learn how the authors suggest you do it, but there is a new and better way: the jobs-to-be-done innovation approach.
The jobs-to-be-done innovation approach is built upon the insight that customers “hire” products and services to get jobs done. For example:
- CFOs/CEOs hire public accountants to get financial and accounting jobs/tasks done, e.g., create financial statements, conduct an audit, forecast sales, etc.
- Executives hire private jet services to maintain their productivity
- Consumers hire razors to get a close shave
This insight — that people hire products and services to get jobs done — enables companies to obtain their target customers’ needs as job statements that are purely need statements separate and distinct from any solutions they ‘hire’ to get the job done. It turns out that people can tell us what they want when we ask them what they want to accomplish rather than asking them for product or service specifications. This enables firms to obtain a comprehensive set of the jobs their customers are trying to accomplish in any market in a format that can be put into a survey and deployed to a representative sample of target customers (i.e., your customers and your competitors’ customers).
In the survey, target customers are asked to rate each job for how important it is to get done, and how satisfied they are in getting it done given their current product/service solution. An important unsatisfied job is an opportunity for innovation and growth. The more important and less satisfied it is, the greater the opportunity for innovation and growth it presents. An important unsatisfied job is uncontested market space, i.e., a blue ocean.
This is a way for companies to engineer a valued and unique position in the market and make the competition irrelevant. We know this even before generating a solution because if your offering helps customers get an important job done better, customers will value it. And if your offering helps customers get an unsatisfied job done better (that means the competition is not satisfying it), then your offering will be unique. Hence, companies can determine where to focus and what to do to create a value and unique position in the market with confidence.
This is an exciting development for any leader who is eager to make the competition irrelevant by delivering unique value to customers. More and more, leading firms are learning how to find and address their customers’ important unsatisfied jobs, that is, to find and capitalize on blue ocean markets and drive growth. You can, too.
(A version of this article first appeared in The Business Journals, January 23, 2017.)
As a facilitator, I have found the applying the concepts of the JTBD framework to be much simpler and easier to process for participants than those of Blue Ocean Strategy. While the BOS framework is interesting and relevant, creating strategy maps can be a very difficult exercise for participants. The JTBD framework, while far from simpler, seems more intuitive and, therefore, easier to grasp.