My sitewatch posts, usually comprising a top level summary of the features, benefits, perceived flaws and strengths, etc of new players in the recruitment, sourcing, hr space; elicit a healthy doses of ancillary comments. Recent threads from readers got me thinking as to the evolution of a business idea into a more formal plan and the model that will support it.
I may have a post-grad qualification but I am hardly your “let’s run the business idea through Dr. Pete’s 15-force revenue matrix as we learned it in the business strategy course” kind of guy. Having said that, during the summer holiday I had the chance to read blue ocean strategy, by W. Chan Kim and Renee Mauborgne.
I found the book appealing. It may have had to do that I loved picking up a book for grown-ups after so many Dr Seuss stories (yes, they also have a message for adults), but it definitely had its own merits too. I am also running a project that consists of the conception of a new business, and the book’s core premises were easy to integrate into the stated business vision, as opposed to the other way around.
As i was jogging my memory to remember the book’s ideas, I jotted down some of them, and thought I’d share them around in case it helped you. I also added a few things in brackets as if this was going to be used for an idea in the HR, recruitment vertical for illustration purposes. Here is it:
The idea behind ‘Blue Ocean’ is to develop and nurture a new market space, which is currently uncontested. Blue Ocean is the opposite of ‘bloody/red seas’ strategies that send companies to compete in highly contested markets, riddled with cutthroat pricing and low differentiation
Blue Ocean produces ‘value innovation’ which consists on not being superior to your competitors but making your competition irrelevant via the creation of leap value for your buyers; this is not only the result of the application of new technologies but the also of ‘market pioneering’ and extreme cost reductions compared to other players
The 4 actions framework
Reduce – what service components should be reduced well below the industry standard because they are of little value to the client?
Eliminate – what service components should be eliminated given that they are of no value?
Create – what service elements have never been offered by the industry?
Increase – what service elements need to be increased because they are of high value?
Addressing these questions creates focus (what we do and who we serve) divergence (we are different to everyone else because of this) and compelling tagline.
Reconstructing Market Boundaries (helps you in conceiving new market spaces)
You need to stretch the market in terms of audience, delivery, offering, competition, substitutes, etc. How do you go about stretching the market?
- Look across alternative industries (e.g. cinemas and restaurants aiming to fulfill a need for ‘a night out’)
- Look across strategic groups within industries (e.g. online assessment providers vs. high-touch premium personalized services)
- Look across the chain of buyers and influencers (e.g. candidates, companies buying on behalf of professionals, influencers/bloggers/specialist journalists)
- Look across complementary offerings (franchises to drive self-employment)
- Look across functional or emotional appeal to buyers (do you need to add or remove rational/feeling components of your delivery, e.g. do you need to use glasses instead of paper cups on the interview room?)
- Look across time and aim to identify trends which are decisive to the business, that are irreversible, and have a clear trajectory (e.g. candidate shortages, work-life balances, population ageing)
Creating New Demand from non-customers by value-innovating
Non customers Tier 1: people who reluctantly buy from your industry (e.g. candidates who hate agencies but will deal with them because they have the jobs
Non customers Tier 2: people who outright refuse to deal with you (e.g. applicants that go for jobs directly to employers)
Non customers Tier 3: Unexplored non customers that the industry has not thought of them as customers (e.g. high-school students, self employed professionals)
Testing for a Blue Ocean Idea
There you go.