Blue Ocean Strategy in Small Companies

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Blue Ocean Strategy > Best Practices > Blue Ocean Strategy in Small Companies

Blue Ocean Strategy in Small Companies
Anthony Stephenson, Business Consultant, New Zealand, Member
For most small businesses in the current environment, staying alive is a major issue! Simply paying the bills tends to drive one towards the ROS concepts.
The smaller companies have little spare capacity in people to consider the BOS approach. I have seen it work through internal think tanks involving all groups in the company, only to see the hand of the CEO strike it out as he was very conservative.

The Hand of the CEO
Paul Foster, Entrepreneur, Canada, Member
I am wondering why the effort was initiated by the internal think tanks without getting buy-in from the CEO first?

The Hand of the CEO
Anthony Stephenson, Business Consultant, New Zealand, Member
Hello Paul, largely I think that he was following a trend of trying out "think tanks" because his peers were, as part of some promotion through the chamber of commerce. We facilitated the meetings, staff members had some great ideas and were really using their creative thinking to go away from their core business.
The CEO seemed more pre-occupied with his next car and routinely failed to give good reasons why something would not work; naturally the ideas dried up quickly!
On reflection the CEO had come from a ROS environment. I should say that he did not last much longer in that role. The new CEO is much more proactive.

Differentiate Today while Building for Tomorrow
Wayne Percy, HR Consultant, Canada, Member
There have been some notes about small business and survival not allowing the development of a BOS. Our plan is to take two or three major steps:
- First, clear differentiation in our very red ocean, to allow us to grow and start to expand at a higher price point.
- Second, if our new clients see us as different, we can learn more about their problems as we think of new solutions, moving us further away from red or to a new blue business model that we can afford to support.
At this point our only real cost has been time to think about our client's needs and problems to find better or different ways of solving them.

BOS and Small Companies
Uditha Liyanage, Senior Lecturer, Sri Lanka, Member
Small organisations may be at an advantage in spotting and creating blue oceans because many blue oceans are initially small in size. Hence, they don't get attention from larger organisations.

Risk Averse Senior Management
Anthony Stephenson, Business Consultant, New Zealand, Member
Thank you Paul and Uditha, you could well be right regarding many small companies being under the radar and perhaps able to sieze an advantage. The problem is often risk averse senior management because this is a family business, and we do not risk anything! They do of course risk a great deal but in different ways. There are many companies who happily keep a risk register in which might be found some BOS options; they keep adding to the register but do not seem to know how to deal with the risk(s) and their possible interactions.

Develop BOS Value Prop <=> Implement & Succeed
Doets, Entrepreneur, Netherlands, Member
Smaller organizations today are - in my experience - the ideal environment to work with developing BOS propositions.
Usually their market-empathy - based on day to day contact - is far better than execs in a corporate environment. The challenge for smaller organizations is to free up the resources to actually execute and implement the BOS value proposition.

Blue Ocean Strategy in Small Companies
Bomo Albert-Oguara, Manager, Nigeria, Member
@Doets: The challenge for small organisations is to free up the resources... More so when funding sources are limited. It becomes so critical in an environment of fierce price competition and you want to move away from it through differentiating your offering and market. Raising the required capital for investment into broader market swats now becomes the problem. My company is currently in this situation and we have had to put the firm in SURVIVAL mode till when 'something' comes up. Does it then mean that BOS is suited for only large corporations and multinational enterprises? I daresay.
One is constrained to state that small firms may be good at spotting Blue oceans, however the ability of these firms to access resources constrains them from actualizing their strategies.
Resource constrains therefore becomes a Bugbear (Editor: ~bogeyman) for small companies to transit from their Red ocean into Blue ocean.

Can BOS Be Applied at a Small Regional Business Level?
Andrew Nelson, CEO, Australia, SIG Leader
If you were running a business like a hardware store or supermarket, in a small regional location, how might you apply BOS?
Being the only store of your kind in town, everyone is already a "customer" - the only "non-customers" are those people who make the trip to the nearby bigger town (for a change of scenery and maybe a bigger or different range of products/services), or those people who visit your town occasionally for holidays or business trips.
If I work through the six paths - (1) the town population seems too small to explore new industries. (2 & 3) strategic groups and the chain of buyers are already all existing customers. (4) Offering new complementary products and services steals business off other small businesses in town - and those small businesses and business owners are also your friends and customers so its hard to go there without offending your existing business associates and stakeholders (5) switching the emotional/functional orientation of the industry seems to be not too fertile ground - hardware and supermarket retail is always a mix of both emotional and functional sales and (6) there are some trends over time like demographic/age shifts and technological changes impacting buyer value like social media and online selling, but these seem to point to just more red oceans given there are already many existing online and physical businesses with much greater resources available.
So where do we go next?

Can BOS Be Applied at a Small Regional Business Level?
GHESSASSI, Student (University), Morocco, Member
@Andrew Nelson: I think BOS can be applied at a small regional business by focusing on the QUALITY. This requires from employees to be deeply committed to provide a high quality product, made in the best possible conditions, and resulting from a real innovative idea to let that product have an attractive and sustainable competitive advantage. The next step is to get every time the good client in the good place.

BOS Applies to Any Size Business
Ted Garrison, Management Consultant, United States, Member
The basic concept behind Blue Ocean Strategy is doing something different than your competitors. In some ways a small company has an advantage because it has to only do be different in its own marketplace. There are hundreds of ways a company can provide a unique service or product.

But Where are the Non-customers?
Andrew Nelson, CEO, Australia, SIG Leader
Ghessassi and Ted, thanks for your contributions.
I think we are missing somethings regarding BOS, so I hope you don't mind me challenging you.
Quality is very broad and there is a danger that continuously lifting quality simply drives up costs and therefore prices. It can upset customers who don't want the extra bells & whistles and the higher prices that are typically associated with a continuous lift in quality. Particularly in small regional towns where generally lower incomes mean a greater focus on lower prices.
Also, isn't the basic concept behind BOS more than doing something different than your competitors? Isn't the basic concept really about creating a new market space where competitors are irrelevant?
In the case I mention, where is the new market space? Where are the non-customers for a regionally based supermarket? Are they online? Do we need to focus on attracting new visitors to the region? If we move into another business line is that just diversification, not BOS?

Special Interest Group Leader
Andrew Nelson

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