It took a long time—decades—for many of us to realize that there was more than one way to run a fast food restaurant. In fact, the words “fast food” had only one definition for nearly thirty years. Or was it forty years? It’s hard to say.
How long did we live with nothing but the standard commoditized prepackaged heat lamp barnacles we called fast food hamburgers? How many decades did we abide with those thin, flat, ultra-cheap things that were made in thin, flat, ultra-cheap buildings after being shipped from warehouses and processed from places of dubious origin? Was it really forty years of living with nothing but the standard YUM! brands, Burger King, Wendy’s, and McDonalds?
Did we Americans really go through forty years of eating hamburgers from a restaurant that actually identified itself more as a real estate company?
Did it really require Eric Schlosser to write the brilliant Fast Food Nation for us to understand the impacts?
I think so. Or so it seems. And in all that time, we had no idea what we were missing.
Some still don’t.
Until one has exposure to the likes of Shake Shack, Five Guys, Burgerville, and the classic In-N-Out, you might not realize that fast food can actually mean food cooked to order. Really. Made with fresh ingredients by people who are treated like people. Really. It can mean food served with some measure of dignity so that you don’t feel like it you just ordered a “product.” Oh, and it can taste really good, too.
Such places can also charge $13 for a meal and leave you feeling like it was a bargain. Such places can have lines so long that people gladly wait for forty-five minutes and think it’s worth it.
It starts with heresy.
The better fast food restaurants (to say nothing of those ever-growing fast-casual varietals) have done deliberate work to upend the old false idols and industry truths. When McDonald’s set a standard for efficiency and fast turnaround times, putting the “fast” in fast food, other places made you wait. And while McDonald’s and its followers staked their survival on the drive-thru lane, some other franchises avoided it altogether. Then there’s the free peanuts. How does that make any sense?
It’s incredible to think that the more-dominant players in fast food (McDonald’s and its ilk) had the chance to thrive for so long by just copying one another in the red ocean of a crowded industry.
These new challengers, having risen over the past ten years, are gaining ground and delivering something better.
Actually, not “better.” Just different. In a way that better suits us.
Southwest is a commercial airline. Just like all the others.
[yellowtail] is a wine. Just like all the others.
Cirque du Soleil is a circus. Just like all the others.
None of that is true, of course. These are very different businesses for a reason. And in the book Blue Ocean Strategy, they are each featured as living proof of how effective the eponymous strategy is. By seeking new opportunities that deliberately upend the industry’s standard models, each venture achieved the sort of true differentiation that Seth Godin highlighted in his book This Is Marketing (book review here).
It wasn’t by accident. Each of these examples were born of deliberate choices. Strategy, in other words. And even though we’re tempted to call these businesses the stuff of some clairvoyant genius, the truth is that blue oceans can be formed by anyone. At any time. Especially in those “red oceans” of crowded competition.
It starts with a simple understanding of the primary factors within the industry and how the primary competitors treat those factors today. As an example, let’s start with the fast food industry. Here are some factors that drive the classic industry model:
Speed of service
Quality of service
Quality of food
Range of menu options
McDonald’s, Wendy’s and Burger King all tend to operate on the same wavelength here. They value these things in the same way with McDonald’s leading the trend. Speed of service is typically high, as in highly-prioritized and thus quick. Quality of food, however, tends to be of lower quality in that classic fast-cheap-or-good tradeoff. Dining spaces are modular and, despite some executive’s very insightful efforts, of lower quality experience.
In a simple graph, the industry standard can be depicted as follows:
This is what the authors of Blue Ocean Strategy call a strategy canvas. It’s a fantastic device for conceptualizing the red oceans of today’s competition. It makes the rest of the work so very obvious. Want to avoid the competition and stake a new claim? Offer something on a curve.
To illustrate, here’s what I perceive as the Five Guys strategy canvas. Compare it to the dominant industry players and you see true differentiation immediately. It helps that Five Guys is a nationwide presence to demonstrate what’s possible on that scale.
What matters here is that, fifteen years ago, this would have been seen as a surefire recipe for disaster. The classic fast food strategy canvas showed fealty to the sacred truths of the industry. Back then, you never let your service be slower. Or prices be higher. To dare otherwise, and make a big bet on such derring-do, was heresy.
Nowadays, we can’t imagine a burger place that didn’t offer a more fast-casual, higher quality experience. The blue ocean has been accepted and we, the market, have gladly moved forward.
New Self-Evident Truths
Let’s go a step further. There are instances, like above, where we can easily develop a blue ocean on the basis of existing industry factors. Or, as shown by our authors, we can create new factors. I think this is where the classic blue oceans unveil themselves.
Consider smartphones. What are the factors that drive that industry? Well, let’s start with factors that we, the customers, value when choosing a smartphone. A wee bit of internet research leads me to the following list. I’m no expert but I think this is a good, comprehensive inventory.
Factors include …
We can now take the two major categories, High-End Android vs iOS, and sketch out a simple perceived approach.
Is this perfectly accurate? No. But, as you can see, there is not a lot of differentiation here. Annual iterations over a twelve year period has led us to a red ocean where everyone converges on most of the same practices. Commoditization emerges and this graph explains why.
Assume you and I are budding tech entrepreneurs. This graph explains why we are probably better served avoiding this whole scene. I don’t know of any startups looking to build smartphones but, if they exist, they can’t take this standardized approach.
What’s left, then? You could operate on higher or lower positions relative to this dominant curve but that feels like a crowded space, too. So in such a mature market, the real blue oceans are probably found by creating a new set of features. Such as the following:
These new factors, when combined just right, can create a blue ocean. So if we extend the curve to include these fields, we find that high-end smartphones are low in three of the four categories. And in those three categories, we find synergy to create something for a whole new market: kids.
If you mix the power of today’s connected age with the budding interest in “free range kids” and hands-free parenting, you can develop a new device outside the maddening crowd of competitors. Something that is portable, durable, kid-friendly, lower-priced, reliable, and capable of keeping parents in-touch with their children.
This strategy curve is viable. I should know. There are a lot of parents who struggle with the question of what device to get their children. And when. All in the name of keeping them connected and keeping them, the parents, aware. It explains why many parents give their kids their old phones. Which, admittedly, is nice but probably suboptimal. A duct tape solution of sorts.
It explains the rise in the very unique devices offered by Doki and Relay. These companies are forging ahead with a very distinct product in an otherwise mature, red ocean industry.
You could say it’s a whole other segment of the industry. You could say that these things offered by Doki and Relay aren’t smartphones. They aren’t even phones.
And I suppose you’d be right. In the same way that people are probably right when they say Five Guys isn’t fast food.
But both get the job done. Specifically, “the jobs to be done” that solve a market’s needs. In fact, they do it so well that these solutions might be deemed heretical. Some will reject the notion that they belong in the smartphone ocean.
This is precisely the point.
This strategy canvas is a really fantastic, wildly simplistic tool. I think it’s the bedrock of blue ocean strategy. But the real power comes not from the tool itself but rather than way it empowers us to think differently.
There is something weirdly dumb about rote, rational business strategy. It’s what leads to the sort of flat, thin, empty “product” of a 1990’s fast food industry. Because that’s what we think people wanted. A industry culture formed around those truths they held as self-evident. Want to win in the fast food game? Make mediocre food and serve it really, really fast.
What other sacred truths can we mistreat? What else can we overvalue or undervalue against the conventional wisdom? What heresy can we use as the core of a new business identity?
The answers lie in a firm understanding of today’s factors affecting the industry’s success. Whatever those are, you should mistreat them. Over-invest. Under-invest. Or ignore them entirely while establishing entirely new factors a’la Doki and Relay.
Scratch it out on a sheet of paper. It’s easier than you may think. No precision required. Just some new thinking outside the box. Or rather, outside the curve.