Just Like the real ocean, many SaaS entrepreneurs aspire to capture the blue ocean market.
The reasons are evident: the SaaS market is expanding, and winning in a never-ending competition is becoming increasingly difficult. Founders who envision a Blue Ocean market with no competition frequently believe they should offer cutting-edge technology. Many people give up if they don’t have any novel technological ideas. For them, the Blue Ocean is still a dream.
But what if you were told that you don’t always have to rely on innovative solutions or even be the first to use them to create a Blue Ocean? True visionaries, on the other hand, understand that it is unique ideas that drive change, not technology. And sometimes, to create a Blue Ocean, you must be able to see things from a different perspective and provide a new value.
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W. Chan Kim and Renée Mauborgne introduced the concept of the Blue Ocean in their book Blue Ocean Strategy. The authors believe that the Red Ocean represents a crowded market, whereas the Blue Ocean represents an unknown market with no competitors. While many businesses in the Red Ocean sell similar products and compete primarily through different pricing strategies, companies in the Blue Ocean try to create new demand.
If you choose to aim for the Blue Ocean, your goal is not to out perform your competitors by switching from Red to Blue Ocean. Your goal is to eliminate all competition by establishing a new market niche. And to do so, you must provide users with a unique value.
One of the key traits of the Blue Ocean Strategy is finding innovative solutions to users’ challenges that no one had anticipated, which is required for everyone. This is referred to as value innovation.
In their book, Chan Kim and Mauborgne emphasize the importance of value innovation, providing various tools and frameworks for the Blue Ocean Strategy.
Companies that aim to dominate the Blue market can sometimes fall into this trap. They have terrific latest technology and ideas for incorporating it into a product, but they jump to market and forget to connect their technological innovations
Here are some suggestions or ideas for successfully implementing the Blue Ocean Strategy to avoid becoming one of them.
Let us now discuss how to apply the Blue Ocean Strategy using the iconic ERRC guidelines established in Chan Kim and Mauborgne’s book as an example. It consists of four major steps and some preliminary work.
To identify a new trend or demand, you should first conduct a thorough analysis of the industry. Check to see if customers are completely satisfied with existing services.
As soon as you discover something that isn’t as good as it could be, consider what you can do to alleviate the customer’s pain and make them happier with your offer. Instead of focusing on what your competitors have done wrong, consider how you can make your customers’ lives easier.
Follow the four Blue Ocean Strategy framework actions. The authors of the book Blue Ocean Strategy present us with the following strategy:
What aspects of the industry’s long-standing competition should be eliminated?
Which factors should be elevated above the industry standard
Which factors should be minimized below the industry standard?
What factors should be developed that the industry has never provided?
To fully understand how the blue ocean theory can be applied in practice, consider companies that have successfully completed this task.
Here are some examples of companies that established undisputed markets: