Blue Ocean - Strategy as Innovation

Chan Kim and Renee Mauborgne point out in their best seller Blue Ocean Strategy, that competing head on for results with competitors creates nothing but a bloody "red ocean" of rivals fighting over a shrinking profit pool. While advising a client last night, we discussed this challenge, and I see it every day in my business, as my customers continue to fight the same battle; mainly swimming in their seas of red.

Many businesses engage in such mindless head-to-head competition in search of sustained, profitable growth. They fight for competitive advantage, battled over market share, and struggled for differentiation to no avail. There is a better way.

In today’s overcrowded industries, competing in a “red ocean” of rivals is NOT the answer. Kim and Mauborgne's book challenges everything you thought you knew about the requirements for strategic success. They contend that while most companies compete within such red oceans, this strategy is increasingly unlikely to create profitable growth in the future.

Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth. Such strategic moves—termed “value innovation”—create powerful leaps in value for both the firm and its buyers, rendering rivals obsolete and unleashing new demand.

Blue Ocean Strategy provides a systematic approach to making the competition irrelevant. In this frame-changing book, Kim and Mauborgne present a proven analytical framework and the tools for successfully creating and capturing blue oceans. Examining a wide range of strategic moves across a host of industries, Blue Ocean Strategy highlights the six principles that every company can use to successfully formulate and execute blue ocean strategies. The six principles show how to reconstruct market boundaries, focus on the big picture, reach beyond existing demand, get the strategic sequence right, overcome organizational hurdles, and build execution into strategy.

Upending traditional thinking about strategy, Blue Ocean Strategy charts a bold new path to winning the future. Read the presentation below to learn more and tell me, Bryan O'Rourke, what are you doing to ensure a Blue Ocean Strategy ?

Blue Ocean Strategy - Creating Value Innovations

Mobile Devices Meet Bricks and Mortar

A recent WSJ report Venture Capitalist's New Frontier, Where Cellphones Meet Retailing points to Reid Hoffman, the Silicon Valley entrepreneur who put money early into hot start-ups like Facebook Inc. and online gaming company Zynga Game Network Inc., who now has his eye on the intersection of mobile phones and bricks-and-mortar retailing.

As well he should. The explosion of mobile devices, adoption of social media and new business models that blend online and bricks and mortar components around the customer will contribute to new ways to engage shoppers.While the technology is emerging in traditional retail, I fully expect it to increasingly enter the bricks and mortar fitness and wellness space soon. Members should be able to purchase and interact with facilities using mobile devices wether outside or inside of the four walls. Solutions that bridge the mobile and facility worlds will flourish.

Hoffman's latest bet as a partner at venture capital firm Greylock Partners is on Shopkick Inc., one of a number of young firms hoping to turn cellphones into tools for spurring sales. Mr. Hoffman, who joined Greylock last November, is leading its $15 million investment in the company and taking a seat on its board on behalf of his firm.

Founded in June 2009, Shopkick is building applications for the iPhone and devices powered by Google Inc. software that will offer product information or coupons when users check into a store with their cellphones.

The company plans to launch the application this summer and has signed up a number of partners, including Best Buy Co., Macy's Inc. and Procter & Gamb le Co. Sonny Jandial, brand manager with P&G, said the company is trying to learn how to take advantage of consumers' obsession with their cellphones.

The enhancement "of the retail experience through your mobile phone is guaranteed to be part of the future," Mr. Hoffman said. Watch the interview with ShopKick's CEO.

Major Ad Firms Will Struggle In Social Media

A recent WSJ article titled Social Media Draws a Crowd addressed the surge in social media advertising dollars and how traditional ad agencies are racing to get a piece of the action.

The push to form a more formidable presence in social-media advertising is being fueled by the increasing number of marketers who are eager to figure out how they can use sites such as Facebook Inc., which has almost 500 million users, and Twitter, with more than 120 million registered users, as a marketing weapon.

"Social media is now part of all our clients' plans; we can't not be in this space," says Matt Seiler, chief executive of Universal McCann.

Ad spending on social networks world-wide is expected to rise 14% this year to $2.5 billion, according to research firm eMarketer. Although social media represents only a fraction of the $55 billion online-ad market, it is one of the fastest-growing segments.

Some corporations have taken a hands-on role in crafting their efforts: PepsiCo Inc.'s Gatorade, for example, recently created its "Mission Control Center," which is set up like a broadcast-television control room and is charged with monitoring the sports drink around the clock across social-media networks.

Marketing is changing quickly but large firms will unlikely be very proficient at addressing the opportunity of new media. Its too decentralized and fluid. As I pointed out in a previous post titled, "The Days of Mass Everything Are Over":

In his book, "The Chaos Scenario", Bob Garfield, writer for Advertising Age magazine and co-host of NPR’s On the Media program, forecasts the disintegration of mass media and advertising structures that have dominated commerce for hundreds of years. Garfield astutely warns that all formerly top-down institutions cannot dictate to consumers with advertising through mass media as before, but must retool, restructure and reengineer their business models enbracing new digital tools and forging better relationships with customers—no longer seeing people as eyeballs or votes, but as REAL stakeholders in their enterprise.

Watch the video. Its really good.

The Chaos Scenario from Greg Stielstra on Vimeo.

Michael Bruno Acquires Star Trac

Consolidation in the fitness and wellness equipment business continues as Star Trac, a global leader in the commercial fitness industry, announced today that Michael Bruno and Star Trac signed an agreement whereby Bruno will purchase the controlling interest in Star Trac’s parent company. This will strengthen the company’s ability to provide the product innovation, quality, reliability and customer service that have been the Star Trac brand legacy since 1988. The parties expect to close within two business days. Financial terms of the acquisition have not been disclosed.

Bruno, a highly respected fitness industry veteran for more than 20 years, also has holdings that include Stairmaster based in Vancouver, Washington and Land America, a manufacturing firm in China that builds high-end consumer and commercial fitness equipment. His reorganization plan for Star Trac focuses on company continuity and aggressive streamlining.

“Our activities will create the foundation for the company to experience strong growth and profitability,” Bruno said. “This reorganization provides the resources for a strong balance sheet and positions Star Trac for long-term success.”

Star Trac is already recognized as a technology leader in the fitness industry, offering the very best in high performance cardiovascular and strength training equipment. The stability created by this reorganization allows the company to continue providing customers with market leading innovation and high quality service, directed by a strong management team led by President and COO Mike Leveque, a 17 year Star Trac veteran.

“Becoming a part of Bruno’s growing family of fitness companies is a tremendous opportunity for Star Trac,” Leveque said. “His other companies and Star Trac share a strong belief in serving customer needs, and Bruno is committed to supporting the ongoing product innovation investments that are critical for Star Trac to maintain its global leadership position.”

Star Trac will maintain its deep commitment to innovation and customer service. With the consolidation of U.S. operations to one Southern California location, the company will improve efficiencies and communication that will allow them to better serve their customers as a stronger company emerges.

Social Influence Marketing Trends

More great content from Shiv. 5 simple rules to follow for your social influence marketing efforts:

1. Let customers do more for you

2. Harness influencer dynamics

3. Make your brand more human

4. Create new business out of hidden assets

5. Take your digital experience on the road with location aware applications

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Social Trends - June 2010

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