How To Build A Blue Ocean Business
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We all know that feeling… the grind of a crowded market. Competitors slashing prices, playing copycat, and making those profit margins thinner than a supermodel’s waistline. It’s the classic red ocean scenario — a feeding frenzy where everyone’s fighting for the same dwindling resources.
Frankly, it’s exhausting.
That’s why it’s time to ditch the red ocean mindset and embrace Blue Ocean Strategy. Forget trying to outcompete everyone in an existing space. Instead, let’s create new markets, redefine the rules, and make the competition irrelevant.
Think you’ve got the blue ocean mindset? Here’s a gut check:
The “So what?” test: Can you clearly articulate what makes you DIFFERENT, not just better?
Untapped potential: Are you unlocking demand from customers the industry usually overlooks, or even those who aren’t customers yet?
Value innovation: Have you found a way to deliver an exceptional experience while also streamlining costs? That’s a sweet spot.
It’s easy to dismiss examples like Cirque du Soleil and Southwest as outliers, special cases. But here’s the thing: every company that carved out a lucrative blue ocean was once in your exact shoes.
The truth bomb: Blue Ocean Strategy isn’t a magic bullet. It requires questioning assumptions, ruthless prioritization, and a willingness to take calculated risks. But those are things successful entrepreneurs already thrive on, right?
Mapping Your Escape from the Red Ocean
Now we talked about why blue oceans are the place to be. But talk is cheap, so let’s get tactical.
How do you actually chart a course to those uncontested waters?
Enter my favorite Blue Ocean Strategy tool: the Strategy Canvas. Forget about those fancy business model diagrams. The strategy canvas is all about simplicity, visualization, and pinpointing those areas ripe for a revamp. It does two main things:
Visualizes the status quo. It plots the key factors your industry competes on (think price, features, etc.) and how you currently rank against rivals. This unveils your industry’s unspoken rules everyone plays by.
Opens space for innovation. It forces you to ask, “What if we cranked this factor up? What if we got rid of this one? What if we added something no one else offers?”
Let’s make it real: Imagine you’re in the restaurant game. Your strategy canvas might look something like this:
Map out the status quo…
Customer profile
Price point
Menu
Entertainment
Location
Drinks
Apps
etc.
Now you have your baseline.
Here’s where it gets fun.
Blue Ocean moves:
Novel ideas: What if you nailed the ambiance and a hyper-focused menu, ditching the need for tons of staff and those long wait times?
New factors: Could you add an experience element, like live music on weekends, that no one in the area offers?
The point is: The canvas forces you to visualize where you’re wasting resources to merely match the competition and where there’s room to break the mold.
Now, this is a simple example, but the strategy canvas is surprisingly powerful, even for complex industries.
Forget ‘target market.’ Find your blue ocean customers
Next up. Customers.
I’m gonna let you in on a little secret. Most “market research” is backward.
Everyone’s busy obsessing over their competitors existing customer base, trying to squeeze a few more drops of revenue out of a market that’s already tapped out.
True Blue Ocean Strategy means flipping that script.
Instead of asking, “How do I sell more to the same people?”, we need to ask: “Who ISN’T buying, and why?” That’s where the gold lies.
Here’s a framework for identifying your blue ocean customers:
Noncustomers, Tier One: These are people who use minimal amounts of your industry’s offerings. They might be occasional customers out of necessity, not actual fans. Why are they on the periphery?
Noncustomers, Tier Two: They actively avoid your industry’s solutions. They might use workarounds or just live with the pain point. Understand their deep objections.
Noncustomers, Tier Three: These folks are in distant markets, seemingly completely unrelated to what you do. But could deeper needs and motivations actually align?
Let’s try an example: Say you’re in the fitness industry.
Tier One: People who begrudgingly renew their gym membership but rarely use it.
Tier Two: Folks strongly opposed to gyms, maybe because they feel intimidated or find the whole scene pretentious.
Tier Three: People passionate about outdoor adventures; rock climbers, surfers, etc. They might not see traditional fitness as relevant.
The magic happens when you dig into the “why” behind these tiers Maybe Tier Twos want fitness on their terms — could you offer home workout programs with minimal equipment? Perhaps Tier Threes value community and challenge — is there a way to blend outdoor activities with a fitness component?
Remember: Don’t just try to convert noncustomers into your current model. Meet them where they are, with solutions that fit their existing lifestyles and values. This takes creative thinking, and there’s no guarantee. But that’s the nature of blue oceans — they’re uncharted territory!
From Blue Ocean Ideas to Execution
Alright, we’ve come a long way.
We’ve shattered the red ocean mentality, visualized the industry landscape, found areas for innovation and pinpointed those hidden customer groups.
Now it’s time for the tough but exciting part: turning blue ocean insights into reality.
Here’s a final dose of Blue Ocean Strategy wisdom to guide you:
Don’t chase perfection. Start with a Minimum Viable Offer (MVO). It’s a scrappy version of your new value proposition meant to quickly test whether you’re on the right track.
Find your champions. Early adopters within those underserved customer groups are invaluable. Get their feedback and make them feel like co-creators.
Focus on the big moves. Doubling down on a few key differentiators is more impactful than tinkering around the edges.
Tell your blue ocean story. Why does this matter? Craft a compelling narrative about the unique problem you’re solving and the people you’re empowering.
Remember, Blue Ocean Strategy isn’t a one-time event. It’s a mindset shift — a commitment to continuous questioning, experimentation, and a relentless pursuit of creating new value for both your business and your customers.
Cheers,
Scott