Blue Ocean Strategy

While Lean Six Sigma is great for optimizing existing processes, it can sometimes inhibit the development of new products and markets. To start thinking outside of the box, you might want to create a blue ocean strategy.

What's a blue ocean strategy? Authors W. Chan Kim and Renee Mauborgne describe it as a way to create uncontested market space and make the competition irrelevant.

Competitors or Non-Customers

The authors argue that most companies develop strategic plans based on what they are going to do relative to their competitors. Defining yourself in comparison to the competition involves you in what they call a red ocean (i.e., a blood bath).

To find a blue ocean (without competition), you will want to think about the non-customers for your product or service and how to adjust it to meet their needs.

To do this, you need to decide what you are going to:

  • Eliminate (don't compete in this space)
  • Reduce
  • Raise (e.g., price for the new capabilities)
  • Create (new market space)

Cirque de Soleil, for example, eliminated animal acts and created themed, artistic productions designed for adults. Southwest Airlines eliminated first class and hubs, and delivered low cost, high speed transportation.

To do this, they use a Four-Action Grid:

Just fill in the blanks with how you're going to transform your existing product or service to compete in totally new dimensions. (P.S. This sounds easier than it is to break out of your old mindsets.) To assist you, the QI Macros contains a Blue Ocean template for Excel.

The authors also recommend creating a strategy canvas to show where you stand with respect to the competition. The strategy canvas is similar to the competitive analysis you might find in a QFD house of quality:

This example shows how successful new entrant Yellow Tail Wines differentiated itself from the premium and budget competition. They created the factors of easy drinking, ease of selection (only two varieties), and the fun and adventure of an Australian wine.

Start rethinking your product or service now.

Here's my point:

Sometimes it's not good enough just to improve your product or service, sometimes you have to redesign it in service of customers that you and your industry haven't even considered. Then, once you've reinvented it conceptually, then you can use Design for Six Sigma (DFSS) to create high performance processes to deliver high quality and lower costs.

What underserved market is waiting for you?

*Note: A Blue Ocean Strategy can be used in place of an Effort-Impact Quadrant.

To create a Blue Ocean Strategy using QI Macros...
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