{"id":7821,"date":"2020-03-20T21:04:35","date_gmt":"2020-03-21T01:04:35","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=7821"},"modified":"2022-04-12T22:50:19","modified_gmt":"2022-04-13T02:50:19","slug":"red-ocean-traps","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/red-ocean-traps\/","title":{"rendered":"10 Red Ocean Traps You Must Avoid"},"content":{"rendered":"\n<p>Blue Ocean Strategy ends with ten Red Ocean Traps that can deter you from creating blue oceans or that jeopardize your execution. These will be phrased as myths that are then debunked:&nbsp;<br><\/p>\n\n\n\n<!--more-->\n\n\n\n<p><strong>Red Ocean Trap #1<\/strong>: Blue ocean strategy is a customer-led strategy focusing on existing customers.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Blue oceans are about exploring <strong>noncustomers <\/strong>and creating <strong>new demand<\/strong>. Focusing on how to make your existing customers happier leads to red ocean thinking.<\/li><li>Still, though, you need to figure out your potential customers\u2019 pain points and why they refuse to participate in an industry.<\/li><\/ul>\n\n\n\n<p> <br><strong>Red Ocean Trap #2<\/strong>: To create blue oceans, you must leave your core business.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: It doesn\u2019t have to be this risky or scary. <strong>Use your core competencies to discover new blue oceans, where you have a natural advantage.<\/strong> Redefine your industry\u2019s boundaries instead of leaping to a new industry where you have no expertise.<\/li><li>Casella wines created [yellow tail], Chrysler created the minivan, Apple created the iMac. All leveraged existing capabilities in new product areas.<\/li><\/ul>\n\n\n\n<p> <br><strong>Red Ocean Trap #3<\/strong>: Blue ocean strategy requires new technologies.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Customers don\u2019t care about new technology as much as they do about new value to their lives \u2013 in terms of productivity, simplicity, ease of use, convenience, and fun. Don\u2019t obsess over new technology for its own sake, or worry that your strategy can\u2019t survive without brand new tech.<\/li><li>Starbucks, Comic Relief, and advertising company JCDecaux didn\u2019t use new technology <em>per se<\/em> \u2013 they created a new method of solving a problem.<\/li><li>And new technologies like the Segway, Philips CD-I, and the Motorola Iridium satellite phone were all technological innovations, but failed to create substantial customer value.<\/li><\/ul>\n\n\n\n<p> <br><strong>Red Ocean Trap #4<\/strong>:  You must be first to market to have a successful blue ocean strategy.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: It\u2019s more important to be the <strong>first company that makes a huge leap in customer value<\/strong>. Speed alone won\u2019t create a blue ocean, and many first-to-market companies have failed.&nbsp;<\/li><li>Apple\u2019s iMac wasn\u2019t the first PC, and the iPod wasn\u2019t the first MP3 player. Facebook wasn\u2019t the first social network. Instead, they introduced a new value innovation, then continuously leveraged their strengths to grow to immense sizes.<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #5<\/strong>: Blue ocean strategy is the same as differentiation strategy. (Traditionally, differentiation is defined as providing premium value at higher cost to the company and higher prices to the customer \u2013 think Mercedes-Benz.)<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Blue ocean strategy is about <strong>defining a new value curve that creates more customer value at lower cost<\/strong>. Rather than trying to maximize all factors, blue oceans focus on the critical value factors and eliminates unnecessary factors.&nbsp;<\/li><li>Don\u2019t just thinking about dialing up factors across the board \u2013 consider what you can eliminate as well.<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #6<\/strong>: Blue ocean strategy are low-cost strategies that price low.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Rather than doing the same thing and pricing lower, blue ocean strategies try to <strong>change the basis of competition, with lower cost as a pleasant consequence<\/strong>. Don\u2019t focus purely on offering rock-bottom prices \u2013 also raise other competitive factors.<\/li><li>Also, strategic pricing is set to capture the largest profits, not deliberately set lower than competition. For instance, Apple\u2019s pricing places it far above competitors, but at a level its customers are willing to entertain.<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #7<\/strong>: Blue ocean strategy is purely about marketing.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality:&nbsp; A successful strategy requires great propositions of value, cost, and people. Marketing is important, but focusing on this at the expense of other components will cripple the sustainability of the strategy.&nbsp;<\/li><li>(Shortform example: Recall Segway, which had tremendous marketing but ultimately lacked value and cost propositions.)<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #8:<\/strong> Blue ocean strategy is about finding and dominating niches.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Blue ocean strategy tries to <strong>de-segment<\/strong> buyers by <strong>focusing on commonalities<\/strong> across customers and noncustomers, and creating a new <a href=\"https:\/\/www.shortform.com\/blog\/unique-value-understanding-michael-porter\/\">value proposition<\/a>. This creates a larger market than further segmentation.&nbsp;<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #9<\/strong>: Blue ocean strategy sees competition as always bad, when it can actually be good.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reality: Economically, competition does spur companies to up their game, and this can be good for both the company and society overall. But competition is bad at a certain point: when supply exceeds demand, margins fall, and cutthroat competition begins to seize a share of a declining pie.<\/li><li>Blue oceans are about creating new pockets of demand that are not currently competitive, to benefit both the firm and the customers.<\/li><\/ul>\n\n\n\n<p><strong>Red Ocean Trap #10<\/strong>: Blue ocean strategy is synonymous with creative destruction or disruption.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Creative destruction happens when an innovation displaces an earlier product and captures its users. For instance, digital photography destroyed the market for photographic film.<\/li><li>Reality: Blue oceans don\u2019t necessitate displacement, because they redefine industry boundaries and reach noncustomers, thus expanding the industry. This is nondestructive creation. Blue oceans don\u2019t focus on finding a better solution to the existing problem.<\/li><li>(Shortform note: given limited resources of time and money, eventually blue oceans do inevitably displace other industries. Netflix streaming is displacing movie theaters and broadcast TV, for instance.)<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Blue Ocean Strategy ends with ten Red Ocean Traps that can deter you from creating blue oceans or that jeopardize your execution. These will be phrased as myths that are then debunked:&nbsp;<\/p>\n","protected":false},"author":2,"featured_media":7816,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,14],"tags":[77],"class_list":["post-7821","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-management","tag-blue-ocean-strategy","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>10 Red Ocean Traps You Must Avoid - Shortform Books<\/title>\n<meta name=\"description\" content=\"To use the Blue Ocean Strategy correctly, avoid these red ocean traps. 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