Blue Ocean Strategy authors, Chan Kim and Renée Mauborgne would argue that approach is exactly why you’ll fail.
Instead, they ask you to imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. Red represents all the industries in existence today or our current market space. Blue oceans denote all the industries not in existence.
The red ocean or existing market space gets crowded as more compete for a greater share of existing demand. Cutthroat competition turns the ocean red. Blue oceans, in contrast, consist of untapped market space where there is opportunity for sustainable growth and where competition becomes irrelevant.
Ringling versus Cirque:
The premise of Blue Ocean Strategy is aptly described by the authors through the exploration of Cirque du Soleil, one of Canada’s largest cultural exports. In less than 20 years, Cirque has achieved revenues that took Ringling Bros. and Barnum & Bailey—the global champions of the circus industry—more than 100 years to attain. What makes its success remarkable is its achievement in a declining industry. Cirque has succeeded by creating a new, uncontested market space that has made the competition and declining circus market irrelevant. They have appealed to a whole new group of customers: adults and corporate clients rather than children.
While you may feel like you run a three-ring circus that happens to have a 501c3 status, you’re not alone. Kim and Mauborgne encourage you to quit competing with so many peers, and instead, create your own uncontested market space.
A nonprofit planning perspective of Blue Ocean Strategy®
We asked Heather Gowdy, coauthor of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model (2012), to discuss the merits of Blue Ocean Strategy with us in light of her unique perspective on business planning.
CausePlanet: Heather, thank you for serving as our guest author for this interview. As a member of the La Piana Consulting team and coauthor of The Nonprofit Business Plan, you bring a unique and welcome nonprofit perspective that’s especially relevant to this business book and to building a successful business model. What do you appreciate most about Kim and Mauborgne’s Blue Ocean Strategy®?
Heather Gowdy: First and foremost, I love the emphasis on stepping back and taking the time to truly think strategically about your market, your customers and your noncustomers. So often organizations get trapped in the same grueling competitive cycles, searching for ways to incrementally adjust what they do to better meet the needs of clients, customers, individual donors or institutional funders. There is real value in thinking “out of the box” and looking for blue ocean strategies that might better enable you to advance your mission–strategies that may not be at all obvious now, but will lead to greater impact and sustainability in the long term.
In what color ocean does your current plan have you swimming? What appeals to you most about the Blue Ocean Strategy®? In my next post, watch for more interview excerpts with Heather and why you should be seeing blue instead of red.
Image credit: Cirque du Soleil