From the Bookshelf This is a fortnightly review of bestsellers for business executives Head for clear blue water by Nicole Wong A creative approach to business strategy can conquer uncharted territory Some businesses manage to achieve remarkable success by taking something which is well established and giving it a completely new twist. Just consider how many coffee lovers there already were around the world before Starbucks came on the scene; or think about the number of music fans downloading their favourite songs free before iTunes became an integral part of the digital music industry. What, though, set these companies apart and made it possible for them to make such a spectacular impact in markets where others could see no potential? In their international bestseller Blue Ocean Strategy, W Chan Kim and Renee Mauborgne say the key is to tap into unexplored markets and create new customer demand. Covering everything from fundamental principles for a winning plan to the techniques for changing employee mindsets, the authors provide practical tips for realising potential and maximising business opportunities. They use the example of Montreal-based Cirque du Soleil, which has reinvented the circus as a form of popular entertainment. By eliminating certain conventional acts and reducing the costs for star performers, Cirque set new industry standards with a unique combination of artistic dance, music and intellectual interest. Despite a rapid decline elsewhere in the industry, Cirque's revenue grew more than 22 times over the last decade, largely because of "value innovation". Adding value The authors' central thesis is that a company which exploits the "blue ocean" of uncontested market space can make the competition irrelevant and offer unprecedented value for customers. Using these general principles, the Australian wine industry broke away from the image of old-world elitism to attract a broad cross-section of new consumers with good wines sold at reasonable prices. Breaking down market boundaries depends on first spotting potential consumer demand. Therefore, Kim and Mauborgne advise managers to look at other industries, different buyer groups, and complementary products and services in order to find inspiration. They mention Novo Nordisk, the Danish insulin provider, which found success with its Novo Pen and Novo Let products by shifting the industry's focus from doctors to the needs of users. Exploring new markets has an in-built appeal but requires a sound business strategy. This must begin with a careful costing exercise which examines every aspect of operations and distribution. Managers should ask themselves if different or cheaper raw materials can be used, as Swatch did when using plastics; whether, like Ikea, strategic partnerships with overeas manufacturers can cut production costs; and whether certain processes can be streamlined or computerised. Different perspectives The book features many examples from the commercial world plus interesting stories about the public sector, which give a different perspective on successful leadership. One such tells of New York police commissioner Bill Braton, who transformed the city and made it one of the safest in the US during the mid-1990s. He made city police ride the notorious subway system to see the dangers that other citizens had to face every day. With the greater awareness this gave them, officers came up with new ideas to reduce crime, which were all evaluated during meetings with Braton. Blue Ocean Strategy is definitely an entertaining read, covering over 30 industries and including business ideas and data from the last 100 years or more. Though it primarliy explains important strategic moves made by big-name corporations, the concepts will also provide food for thought for many smaller business owners. The idea of value innovation should motivate them to develop a more comprehensive overview of their industries and to keep looking out for new markets. Content highlights: A creative business strategy should establish uncontested market space and new customer demand. A company can innovate by reducing or eliminating unnecessary elements, raising a product above industry standards, and creating distinctive new selling points. Breaking market boundaries can begin with looking at other industries, different buyer groups and complementary services. Sound business strategy is based on correct costing and staff engagement. About the authors W Chan Kim is a professor at INSEAD in France, a fellow of the World Economic Forum and an adviser for the European Union. He has served as a board member and adviser for multinationals in Europe, the US and Asia. Renee Mauborgne is a professor of strategy and management at INSEAD and a fellow of the World Economic Forum. The authors have co-written numerous articles on strategy and management for academic journals and have both won the Eldridge Haynes Prize, awarded for the best original paper in the field of international business. They co-founded the Value Innovation Network (VIN), a global community of academics, consultants, executives and government officials. Published in 30 languages, Blue Ocean Strategy is an international bestseller and was selected as a Top Ten Business Book of 2005 by Amazon.com. "Kim and Mauborgne present a compelling case for pursuing strategy with a creative, not combative approach. Their emphasis on value innovation and stakeholder engagement alone make this book a must-read" – Carlos Ghosn, President and CEO, Nissan Motor Co Ltd. Taken from Career Times 20 January 2006 Your comments are welcome at [email protected]