Rethinking markets
The most radical innovation is that which is to create markets that did not exist previously, marketing new products or services and setting for this new value chains. One of the most popular books on innovation in recent years, "Blue Ocean Strategy" by INSEAD professors Renée Mauborgne and Chan Kim, urges us to abandon the crowded and dangerous waters of "red oceans" (known markets, peppered competitors) and find "blue oceans" in the form of new markets. Leaving aside these marine metaphors, which the authors postulate that the current business strategy is characterized by competitiveness (competitive strategy, competitive advantage, defeating competitors ...) and this leads us to think only inside the box of our current markets and focus on winning customers to our competitors in a defined battlefield and unbreakable. The result of this approach are becoming increasingly crowded market and less profitable.
The blue ocean strategy, by contrast, is based on creating new markets or redefine the boundaries of current, so the competition becomes irrelevant, and create new demand and serve the consumers yet. As we shall see later, a much more easy to implement it. Kim and Mauborgne justify the need and impact of seeking new markets with some data from his study on launching business: while only 14% of launches create new markets (compared to the remaining 86%, representing line extensions). These markets accounted for a comparatively large amount of revenue (38% of the total) and much greater benefit (61%). Thus, new markets are the key to growth and profitability.
These data are in line with those described Clayton Christensen in The Innovator's Dilemma ": the long-term income of the companies entering new markets are on average 30 times higher than those for which they do in established markets and even their chances of success are six times greater. This last figure is quite counterintuitive (one always hopes to enter new markets is more risky than doing so in established markets) and Christensen warrants, arguing that the new entrants in the market accept a bear market risk (in that market did not finally development) rather than a competing risk (to enter an established market with well entrenched competitors) and finally wins with this change.
Although we agree on the desirability of finding new markets, giving few tips to get it. Kim and Mauborgne themselves recognize that the ocean blue to discover is far more usual to redefine the boundaries of an existing industry to create an entirely new. Both in the book "Blue Ocean Strategy" as previously in "Creating New Market Space" the authors describe how an innovation based on the value of looking beyond the conventionally defined boundaries of today's markets. And this search is to identify significant areas where the company can add value through the following areas related to the current market:
- Among the various sectors and industries alternatives.
- Among the different groups of competitors within the industry, pursuing a similar strategy (strategic groups).
- Among the various sections and members of the client company involved in the buying process.
- Some products and services.
- Among the functional or emotional appeal of products.
- Between now and the future, identifying trends and anticipating how relevant will affect the market.
Thus, creating and recreating markets, companies can escape the increasingly oppressive level of competitive markets.
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