In part 1, we have talked about the benefits of a good competitive analysis tool and model, how to choose a powerful model, and some points to keep in mind when using the model. In part 2, let’s “dive” into what Blue Ocean Strategy canvas is, how to use it, and explore a case study about the MOOC market.
Note: I also created a template for you to try it out yourself. Please feel free to utilize it!
What is Blue Ocean Strategy?
“Blue ocean strategy” is a concept created by Chan Kim & Renée Mauborgne, suggesting any companies can choose to move away from competing against low-cost and features and find a new market space with untapped demand, where there is little or no competition.
To find or create that space, the authors have created the “Blue Ocean Strategy Canvas”. The canvas visualizes an overview of how competitors are competing in the market, what they are competing on and how they perform in each aspect. From there, you can devise how you affect the key competitive factors, to stand out from the competitors.
How to use Blue Ocean Strategy + Case study with MasterClass
In this example, I want to look at the E-learning market, which is predicted to grow to $325 billion by 2025. While big MOOC (massive open online courses) platforms like Coursera, eDX or Udemy have already taken away a big piece of the market, MasterClass — a platform where video lessons are conducted by celebrity professionals in their fields, still managed to find its space and unique advantages in the market.
Before we discuss how MasterClass did it, let’s use the Blue Ocean strategy canvas on the existing competitors, such as Coursera and Udemy, to explore their performances on some key competitive factors. As you can see in the canvas, the X- axis includes the factors other companies are competing for or investing on. And the Y-axis shows their focus on the factors on the scale of 0 to 6.
As visualized in the chart, Coursera is focusing on providing in-depth and technical courses hosted by qualified university professors from accredited institutions. On the other hand, Udemy offers a higher variety of courses. But the courses can be made by anyone, so the quality and depth varies hugely.
To successfully enter the market, MasterClass needed to position ourselves differently from the existing competitors. Chan Kim & Renée Mauborgne said there are 4 ways to do so:
- Eliminate: Which of the factors that the industry takes for granted should be eliminated?
- Reduce: Which factors should be reduced well below the industry standard?
- Raise: Which factors should be raised above the industry standard?
- Create: Which factors should be created that the industry has never offered?
Now, let’s see how MasterClass fits into the picture:
MasterClass realizes there is an untapped market space where online courses can be visually pleasing, entertaining and enjoyable like a documentary. And instead of university professors, what if the lesson conductors are celebrities who are truly successful and famous in their respective field, such as Gordon Ramsay, Jane Goodall or Neil deGrass Tyson?
This is how MasterClass created a unique positioning for itself:
- Eliminate “Accredited value” and “Learning commitment”: Coursera courses are mostly created by well-known universities around the world. Some specializations on Coursera can be counted as university credits, which also makes Coursera’s completion certifications look credible on the students’ resumes. On the other hand, MasterClass’s lessons do not follow a formal syllabus or hosted by any institution. The students mostly take it only to know more about a subject.
- Reduce “Affordability” and course diversity: Many of Udemy and a few of Coursera courses offer free access. Usually, the courses cost under $55. There are also financial aid options which are very easy to apply. On the other hand, MasterClass charges you $90/course or $180/year. Additionally, while Udemy provides around 150,000 courses and Coursera is reaching 3,500 courses, MasterClass only has around 90 courses at the moment.
- Raise the quality of the instructors: Professors in a university might be very knowledgeable about a subject due to years of researching. But information they share can be too theoretical and inapplicable in life sometimes. On the other hand, MasterClass gives you the most realistic picture of a career field by having real people who have outstanding track records in that field share their own experience.
- Create “Cinematic quality”: MasterClass offers what other platforms can’t — an experience of a cinematic documentary. They invest heavily on filming studios, video directors and various equipment to make the lessons as engaging and visual as possible. This is a whole new category of online lessons, where other existing competitors cannot enter or replicate.
MasterClass has created its own space by creating a unique customer experience that other MOOC platforms cannot replicate. As a result, the subscribers number is growing exponentially. The number of visits to their websites grows around 70% monthly. Especially with the lock down implemented worldwide, MasterClass’s demand is seeing an unprecedented growth. The company is now valued at around $100M to $500M, after closing its round D at $80M in 2018.
Conclusion
Blue Ocean Strategy Canvas is a powerful tool to visualize the positioning of the competition to find out potentially new unique value proposition by changing your area of investment focus or creating new key competitive factors.
Now, would you want to try filling in a Blue ocean canvas yourself?
Or you can continue to read other parts here: