Blue Ocean Strategy: Finding Untapped Markets for Business Growth
The magic formula for business development is to choose a set of simple, effective marketing and sales tactics — a set of “things to do” — and then execute them consistently. Focused effort requires clear goals and a selected strategy that can actually take you there. Research confirms there are no permanently excellent companies or industries. To improve results, you have to study what made a positive difference in the past and strive to replicate it systematically.
Examples & Insights
The U.S. computer industry can be traced back to 1890, when Herman Hollerith invented the punch card tabulating machine to shorten the process of data recording and analysis for the U.S. Census. The tabulator completed that census five years earlier than the preceding one, but it was expensive, difficult to use, and required constant upkeep. There was no market for tabulators in ordinary business settings — data processing was handled with pencils and ledgers, which were easy to use, inexpensive, and accurate.
Thomas Watson, an executive at National Cash Register Company, recognized there was enormous untapped demand to help businesses improve their inventory and accounting methods. Under Watson, tabulators were simplified and modularized, and education, maintenance, and vendor leasing were provided alongside them. Businesses could get the speed and efficiency of tabulators without needing to hire specialists or train employees, and without the high capital expenditure of buying the machines outright. Vendor leasing provided a recurring revenue stream — and IBM was born.
Fast forward to Steve Jobs and Apple Computer. In a 1994 interview, Jobs offered this insight:
“When you grow up you tend to get told the world is the way it is, and your purpose is just to live your life inside the world. Try not to bash into the walls too much. Try to have a nice family life, have fun, save a little money. That’s a very limited life. Life can be much broader once you discover one simple fact: everything around you that you call life was made by people no smarter than you. And you can change it, you can influence it, you can build your own things that other people can use. Once you learn that, you’ll want to embrace it, change it, improve it.”
Every great strategy has a focus. Southwest Airlines built its business around only three factors: friendly service, speed, and frequent point-to-point departures. Focusing this way let Southwest price against car transportation — it doesn’t invest in meals, lounges, or seating choices. Its competitors continued investing in all the airline industry’s traditional competitive factors, resulting in more costly business models serving a fundamentally different market.
Visualizing where you would like to be is a forceful wake-up call. Developing a “strategy canvas” helps you predict and plan your future: what you can visualize, you can achieve. Identify the activities that will take you there, and stay proactive — it’s the best way to shape what comes next. Some say the future cannot be predicted. Others say the only way to predict the future is to create it.
Have a question about business strategy, succession planning, or structuring your business for growth? Contact us or call (708) 460-6686. We also offer a free monthly Brown Bag Lunch Q&A — bring your questions, no charge.