Archive for August 8th, 2009

I couldn’t resist, at this point, to explore too, the Blue Ocean Strategy, and his famous book, added by prestigious community. Running the book like a novel, staring at methods, and looking at guilty people, like a polar story. Guess, now, that everybody could be guilty, guilty not moving and staying in Red mindset competition…We have all had some behaviors we recognize in that book, and the minus we stand after being exposed with these lines, is to be clever enough, to go further. I had to analyze more the PMS matrix, that drives us on the road of portfolios scorecard, like BCG famous portfolio one. I discovered, a cute adaptation (freely inspired, and freely to be shared with anyone wants to use it!), adding some concepts I found between the lines, helping more understanding and uses of that matrix. These opinions are my point of view and don’t engage in any case Blue Ocean Strategy famous authors.

Blue Ocean book, identified 3 groups, in therefore portfolio: Pioneers, Migrators and Settlers. They obviously have each of them, own components, keys and point of interests. As I did, I would like to make a nice looking graph, that could be “at-a-glance” be understood, as value oriented, but guided by two axes as seen: size of market/customers and growth expectations for one way, and competition, stated by type of purpose (products/services). I hope that’s really in the fidelity lines from the book, but ore illustrated, giving to readers and managers, a straight picture to take decisions.

Settlers, are the most present, and represent the worst value, but also often, take place in Red Ocean, because of reinforced competition, sharing wealth with several customers. But we also underline that, the innovation is low, near “me-too” competition, blinding potential customers for choosing solution. To end, expectation for value is low and ability to grow toward Blue zones is near zero level. No customers will like neither recognize any innovation, and will consider products in this portfolio, as basic ones, without any original shape. The problem, as I showed in my graph is not really size of markets, or customers target, but really ability to run “out of the box”, to reach an original position, with a high revenue level, in a niche market. This can be realized with, light organization, light process and industry, or customized solutions. And the ability to adapt fast forward, to new need/function, identified in bulk of customers. Be a fast mover, with a competitive advantage, and temporary entry barrier, could jump you to Blue niche.

Migrators, are just like dilemma activities in BCG portfolio, in the way they can swap to any category, according with the wind blows…They can be strong potential, if you know how to lead them. But they can quickly fall into Red side too, because they’re only value driven, despite innovation value driven. Then, it’s a threat to move too slow, and without any competitive shielding barrier, they have no chance to survive and maintain the revenue expectation, sustainably.
I identified another population, that may be interesting, but too much focused on following than innovation: attracted by bulk, and built on mass models, they think on innovation, but as followers. They believe that market is large enough to bring enough value and revenue for several competitors, but don’t see that they only late the moment where they will be in Red Oceans twirl: scarcity of demand, fall of innovation, loss of fidelity from customers, while they would have sized them, for mass game. The only thing to do for them: jump out of the box and create from scratch the kill app, keeping and capitalizing on their huge base of customers. After the rain, the sun…

Then the stars…Pioneers. They bring what we call “unprecedent value”, while they really create something new, able to seduce consumers, and lead them to new needs, or new ways to feed them. Having a real step forward from “competitors” (we called them like that to understand as they’re is no relevant competition yet there…), they create value innovation, recognized and valuable by the customers. Pioneers have “all-in-one” in their behaviors: growth expectation, critical size of market, and innovation advantage on products/services, a “me-only” situation, the whole combination makes high margins expectations, for a period of time. Danger can come from niches innovations, if they have too high costs structure, that could not be tolerated anymore, in losing customers.

It’s, as we could wait from, a useful tool, to manage and care for moves in the portfolio. It can now be monitored, in appreciate the scales for each company, in the two axis, considering at which level red or blue begins, or which size of market/growt expectation, for the horizontal one. It’s important to analyze so, the sector and market, where you traditionaly compete, to know which keys and values, must be measured, and which sensibility it must have to make this matrix relevant and valuable.

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