Creating value through clear differentiation has endless benefits. It enables you to expand your markets while delivering more value and becoming more profitable. It is also tremendously effective in aligning your organisation behind your product and/or services and making the right day to day decisions to deliver on your strategic objectives.
I’ve found that using the Blue Ocean Strategy canvas in a great 4 step approach to steer your organisation away from highly competitive environments toward uncontested market space and give strategic direction around which your organisation can be aligned.
A Blue Ocean Strategy Approach
Blue Ocean Strategy is about making your competition irrelevant by creating uncontested market space. This is done through simultaneous pursuit of differentiation and reduction in cost to open up new market space and create new demand. This is known as ‘Value Innovation’ and is a combination of creating a leap in value for buyers and/or reduction in costs.
Most businesses, even with the best of intentions, may not succeed and will end up with a value proposition strong enough to differentiate them, but not enough Value Innovation to shift the barriers of the market. So, is the approach even useful when it doesn’t result in creating new demand and/or where the competition continues to be relevant? Is it only useful for new business or can the approach be used within existing business?
Yes, we live in the real world and even if you, for a period of time, manage to create a Blue Ocean, competition will eventually arrive. You can then evolve; the mindset of Blue Ocean Strategy is that you are more focused on breaking down the market barriers than comparing against competition. It is this opportunity-based thinking that forms the foundation of Blue Ocean Strategy. By asking fundamentally different questions it enables a business to leave behind the constraint of traditional thinking - and the competition.
Introducing this mindset often has great results and can fundamentally change a business. What we have also found, is that by applying some of the diagnostic tools and actionable frameworks from Blue Ocean Strategy, we can extract clearer value elements and positioning to guide the profitable marketing of businesses. In particular, we have found the Blue Ocean Strategy Canvas especially useful for this.
The Blue Ocean Strategy Canvas was developed by W. Chan Kim and Renée Mauborgne and is a fantastic, simple tool with multiple different application and uses.
It works by simply plotting identified value elements (competing factors) along the horizontal axis and then plotting the corresponding level of offering along the vertical axis. This can used for comparing product offerings within the same business, a business against competitors or even against substitutes and non-consumption. The possible applications are endless.
The purpose of the canvas is two-fold:
The key to success is the process of discovery in identifying the most significant value elements along the horizontal axis.
We have found that a great way to discover value elements is to:
We are often surprised about the difference in value elements between the internal perception and the customer experience. Value is often discovered in unlikely places and can be ranked significantly differently, depending on perspective.
If staff from top to bottom are interviewed individually and there are significant differences in the identified value elements or the level, it indicates a lack of focus and misalignment within the organisation. We would recommend further identification and alignment of the organisation to ensure everybody understands where value is delivered.
Internal <> external differences
A big discrepancy between internal and customer identified and ranked value elements can indicate multiple things; such as unidentified or unexpected value, or focusing on the wrong things. Customers may for example identify 'family bonding', ‘peace of mind’ or 'Instagram bragging rights', where your staff may see “best warranty” or “durability” as value elements.
It can be surprising to discover where customers see value, and customer “workarounds” often give insight into ways your customers are extracting value from your product/service, or opportunities to increase value, that you didn’t realise. Don't forget to consider jobs-to-be-done, customer pains and gains. We would recommend digging deeply into this through value proposition design.
After plotting the current play of state the next step is to model the strategy canvas and plot the future state of play. This would mean changing the level of value elements for the purpose of increasing differentiation and reducing cost. For the process and principles on this we refer to Blue Ocean Strategy book by W. Chan Kim and Renée Mauborgne.
Whether you continue with your original canvas or an amended one, we’ve found that transposing the final strategy canvas directly into shaping the marketing message, positioning and communication is often overlooked. Blue Ocean Strategy prescribes both divergence and a compelling tagline as success factors. These are paramount and create direction both internally and externally for a business, but the process stops short of taking all the identified value elements and transforming them into externally and internally communicated positioning.
We recommend that a business, as a minimum, must have a clearly identified position statement and an overarching compelling tagline that distils the strategy into words that a five year old could understand. However, we suggest going further.
Communicating additional value elements
We’ve found that by considering each value element, particularly the highly ranked ones, and analysing whether they are communicated before customers experience a product/service is a fantastic way to evaluate the degree to which the value proposition is communicated.
If you find that significant value elements are not communicated it indicates ‘underselling’. This is a reflection of an overarching tagline that can’t summarise all the value elements. It is important not to dilute the messaging by too many or excessively elaborate taglines, but we suggest additional ways should be considered for the purpose of how additional value elements can be communicated.
There are multiple ways in which a strategy may be designed and communicated. The four step approach below can be used to analyse whether your existing value elements and proposition are logical and woven into your organisation. Further, this process can be used to unearth roadblocks that may be preventing your value elements and proposition from working for your strategy.
Known and understood
Is your value proposition clearly identified and are the value elements rated? If no, we suggest value proposition design / strategy canvas mixed with the process of discovery suggested above.
Is your value proposition known throughout the organisation? If no, we suggest aligning the organisation to understand the value they deliver to customers.Is your value proposition communicated externally? If no, we suggest incorporating the highest value elements.
Is your product or service delivering on your key value elements?
Most critically, and tying in with ‘known / understood’: are the value elements you have identified for your product/service genuinely valued by customers? If no, revert back to value proposition design / strategy canvas.
This brief has focused on the discovery and communication, but the outlined 4 step process above is one that should be constantly reviewed and monitored.