Blue Ocean Strategy vs. Technological Innovation
Why technology itself does not guarantee success.
Unlike blue ocean strategy, innovation is a very broad concept that is based on an original and useful idea regardless of whether that idea is linked to a leap in value that can appeal to the target mass of buyers.
Take Motorola’s Iridium. Was it an innovation? Sure. It was the first global phone and it was useful.
But was it a value innovation? No.
As Motorola learned, a breakthrough in technology is not necessarily synonymous with a breakthrough in value that can attract the mass of target buyers. The Iridium was a useful technological feat that worked around the world, including the far reaches of the Gobi desert, but did not work in buildings and cars, the precise places that global executives on the move most needed them to work. It failed to create a leap in value for its target mass of buyers — business executives.
Like Motorola, many technology innovators fail to create and capture blue oceans by confusing innovation with value innovation, the cornerstone of blue ocean strategy.
To capture a commercially compelling blue ocean, companies need a strategy that can align their value, profit, and people propositions in pursuit of both differentiation and low cost. When organizations fail to register the difference between value innovation and innovation per se, they often end up with an innovation that breaks new ground but does not unlock the target mass of buyers, keeping them by and large stuck in the red ocean.
Blue ocean strategy is not about being first to market and innovate. Rather it is about being first to get it right by linking innovation to value. One need only look to Apple here. From the iMac to the iPad, none of Apple’s breakthrough products have been the first in their category. But what they all successfully did was to link innovation to value.
Organizations that mistakenly assume blue ocean strategy is about being first to market all too often get their priorities wrong. They inadvertently put speed before value.
Corporate graveyards are full of companies that got to market first with innovative offerings not linked to value. Think about MITS, the company that created the first PC, or Ampex, first mover in the VCR market. Both laid the eggs only for other companies to hatch them. To avoid this trap, companies must remember that while speed may be important, linking innovation to value is absolutely essential. No company should rest easy until it achieves value innovation.
That being said, a company can also create blue oceans with or without new technology. Think of Cirque du Soleil, [yellow tail], JCDecaux, or Starbucks. None of these blue ocean strategic moves depended on new technologies. Even in blue ocean cases that involved technology, Apple’s iPhone, Intuit’s Quicken, or Salesforce.com, their success hinged less on technology per se than on the fact that buyers find these offerings so simple, easy to use, fun and productive. So when technology is involved, it is key that you link it to value by asking: how does your product or service offer a leap in productivity, simplicity, ease of use, convenience, fun and/or environmental friendliness.
Value innovation, not technology innovation, is what opens up commercially compelling new markets.
When companies mistakenly assume that blue oceans hinge on new technologies, their organizations tend to push for products or services that are either too out there, too complicated, or lacking the needed complementary ecosystem to unlock a new market.
Written by W. Chan Kim & Renée Mauborgne, authors of Blue Ocean Strategy. How to Create Uncontested Market Space and Make Competition Irrelevant.
Visit www.blueoceanstrategy.com to learn more
Follow us on Facebook | Twitter | LinkedIn | YouTube
Sign up to our newsletter for the latest news on how companies, organizations, and non-profits are applying blue ocean strategy around the world.
Drop us a line at news@blueoceanstrategy.com. We’d love to hear from you.
