Of all the different ways to think about a business venture, my personal favorite comes from the instant classic Blue Ocean Strategy. As a framework, it offers the richest set of tools for helping us mix empathy, creativity, and crunchy industry analysis into a viable business venture. Mostly by helping us search for that eponymous “blue ocean” that is free from the bloody, crowded competition of mature “red ocean” realms.
The idea paints a vivid picture. Consider all the red oceans of the current day. In fact, think of the one represented by the device you’re probably holding in your hand this very instant: the smartphone. How many companies are making these phones? How many models are offered at your carrier’s local store? We have these phones everywhere. At just about every price point.
It wasn’t always this way, of course. When Steve Jobs unveiled the iPhone in 2007, he was a modern day Christopher Columbus showing us the New World. I can’t think of a more immediate, tangible moment that a blue ocean was created. No one had anything like it. We didn’t even know it was possible.
Twelve years later, that particular body of water couldn’t be more red. Smartphones are turning into commodities, sales are declining, and products are all converging into the same forms and features. Pricing is shifting with new mass market strategies and the innovation of this current paradigm has been wrung dry.
Why is that? What has happened?
Well, here’s one reason: the vast majority of smartphone manufacturers pay, at most, half of their attention to their customers’ needs. Every time I read their promotions, see their designs, and learn about the features, I find manufacturers delivering the same information and same pitch. It’s as if the competing products are trying their best to only differentiate on the smallest, most granular level. This screen has less of a notch than that other one! It reminds me of a line from the book:
… the more [companies] focus on coping with the competition, and striving to match and beat their advantages, the more they ironically tend to look like the competition.
It’s a self-fulfilling prophecy of any fast-following strategy. In such instances, the business waits for someone else to create the new market. They enter it at a later date, once the rules have been established, and start jockeying for space and “reddening” the waters by playing the game someone else developed.
By the way, when I mention “rules” here, I specifically refer to the rules our culture has established. We, collectively, have decided what makes a “proper” smartphone. These are the expectations of the consumer base. After all, would anyone accept a smartphone that didn’t have a touch screen? Or wifi? Or didn’t fit in either the Android or iOS world? Why is that? Because of government regulation? Of course not. It’s something even more powerful.
When these rules take shape and the industry matures, the main players that remain (all those fast followers) might think they have a steady situation. The ocean may be red here but at least the water is calm. In the case of smartphones, it means that, by 2015, Samsung, Apple, LG, and Motorola had found their place and sailed smoothly.
But the calm never lasts.
Tech is great because disruption comes in faster cycles. And in the smartphone world, these red ocean players have found themselves further disrupted with more entrants. New players have sailed into the red ocean to copy all the well-established practices, streamline the operations to greater efficiency, accept an even lower profit margin, drive prices into the ground, force others to do the same, and thus destroy the fleeting stability that the early entrants had created.
This continues in regular cycles until the veterans start to talk about how smartphones just “aren’t a good business anymore.”
The copycat behavior and fast-follower effects remind me of a classic line I read in some forgotten book:
Don’t look at the wall or you’ll run right into it.
Which retirates the line from Kim and Mauborgne’s book. The longer you stare at your competition, worrying over their actions, the more you’ll do precisely what they do instead of what we (the customers) want. Focus, instead, on the customer, or the missing value that everyone desires, and you’ll be able to pivot to new ideas, new innovations, bluer oceans. But don’t take my word for it. Consider this from Bezos when he explains Amazon’s success.
So again, I don’t think many smartphone manufacturers really pay attention to their customers. They pay as much attention, at least, to their competitors. Hoping to do at least as good as them. It’s a cardinal flaw that gets to the central warning of blue ocean strategy.
Competition should not occupy the center of strategic thinking.
That won’t happen if you continuously measure yourself against the competition.
That won’t happen if you think of competing against the competition instead of for the customer.
This is easier said than done, of course. But there’s a great model that can help.
Don’t Overcomplicate It
The iPhone is a beautiful yet terrible example of a blue ocean. It is beautiful because it perfectly illustrates the basic elements of the strategic concept in ways that everyone can understand. It is terrible because it leads the uninitiated to think that the 2007 iPhone is the sole standard for what it takes to have a blue ocean.
This couldn’t be farther from the truth.
You don’t have to create a groundbreaking digital device that changes humanity in order to claim a blue ocean.
You don’t have to land a moonshot.
You don’t need digital technology or even design a new experience.
You don’t even have to create something that is truly new.
Instead, to find a blue ocean, find the place of simple, low-end, improvised innovation. Observe the people around you, everywhere you go, and find that instance of an inconvenience that is accepted for no good reason other than they (the people) feel they have no choice. Or better yet, look for the instances where someone decides to overcome the inconvenience with workable-yet-imperfect solutions.
In other words, look for the duct tape.
The Duct Tape Law of Innovation
We know that duct tape helps us solve many problems. From patching a pair of jeans to waterproofing, it is the #1 improv prop of every craft. Metaphorically, it is also the ingenious way people combine unlikely components to create something that makes life easier.
Consider the inspiration for wheeled luggage—an idea that was decades in the making. As featured in a NYT article, the story begins when the patent-holding inventor Bernard D. Sadow, spotted a duct-tape solution we can all appreciate. The article describes it as such:
First, the background. Mr. Sadow, now 85, had his eureka moment in 1970 as he lugged two heavy suitcases through an airport while returning from a family vacation in Aruba. Waiting at customs, he said, he observed a worker effortlessly rolling a heavy machine on a wheeled skid.
“I said to my wife, ‘You know, that’s what we need for luggage,’ ” Mr. Sadow recalled. When he got back to work, he took casters off a wardrobe trunk and mounted them on a big travel suitcase. “I put a strap on the front and pulled it, and it worked,” he said.
Thus a blue ocean was born. The only trouble is that Sadow had a hard time convincing others of this ocean’s existence. At the time, air travel was still largely the province of the upper-middle class or business travelers. As evidenced in the story above, these travelers would often pay people to carry their luggage. Or many men would willfully lug their suitcases around as a display of strength. This is true. In fact, the classic customer (male business travelers) balked at some of the early versions of wheeled luggage for this very reason of cultural machismo.
It took time for this opportunity to evolve.
But that isn’t the only absurd cultural baggage (pun intended) that surrounds this story. Mr. Sadow was not a luggage expert. He wasn’t a veteran of that industry. Thus, he could see what the industry professionals couldn’t. He could see the inconvenience of a non-mobile suitcase as a bug where luggage designers saw it as a feature.
Why is that? Why were luggage designers so blind? Because they were staring at the red ocean. Travel was luxury and luxury was other people carrying bags for you. Weight wasn’t a problem for the traveler. Ease of use wasn’t a problem for the traveler. Therefore it wasn’t a problem for the early luggage designers. Other designers entered, copying what predecessors had made, and eventually all that’s left is the tunnel vision of staring at everyone else’s designs instead of watching the poor worker in Aruba who jerry-rigged a solution from spare parts.
The point? Duct tape solutions open up new realms, vast blue oceans, and we often have to remember that the ocean exists because no one in the industry could see it. Because the culture, the “best practice,” has them looking elsewhere.
Popsocket is another fine example of a blue ocean brought about by duct tape solutions.
The creator’s fantastic story of improvisation is briefly cited below. In this case, the duct tape is buttons and glue attached to a device but the idea remains.
In 2010, our founder was looking for a way to stop his earbud cord from getting tangled, and he achieved this by gluing two buttons to the back of his phone and wrapping the earbud cord around the buttons. As ugly as the buttons were, they worked. In the course of improving on the idea, he developed about 60 different prototypes, making the buttons expand and collapse via an accordion mechanism, so that they could function as both a stand and a grip.
Everyday Blue Oceans
Before I read the book, my familiarity with Blue Ocean Strategy was as shallow as my familiarity with innovation. In both cases, I just attributed the concepts to tech, billion-dollar companies, globe-spanning industries, and revolutionary change. Every other ocean was red.
The truth couldn’t be more simple, more obvious. The blue oceans are all around us.
Somewhere this week, you will spot a duct tape solution. Someone will have a strange or clever way of dealing with a common problem. It could be anything. The solution isn’t the primary concern here. Instead, it’s the problem that matters. The solution shows that someone doesn’t want to deal with that particular problem anymore (e.g., wheel-less luggage, tangled earbuds).
This solution is a statement. It’s someone saying I don’t want it to be this way.
Hence the duct tape solution. That gives you a glimpse at new, blue waters. And eventually a better solution, one you can share with everyone, one that says It doesn’t have to be this way.
Low-end improvised solutions are business opportunities in the making. No competition required.