Strategy – The Competitive Edge

February 11th, 2016

Having a strategy is essential to success. It gives you the competitive edge in business, politics, and everyday life. Strategy represents the steps and actions that need to be implemented to fulfill your vision and achieve your mission. Success in strategic planning doesn’t come easily and in many instances fails to contribute to strategic thinking.

How do we develop a strategy that will create a competitive edge? First, utilize an approach called the strategic thinking process outlined in a previous blog post. Thinking strategically and focusing on simple processes to apply concepts like Blue Ocean Strategy will improve you chances for success. Crafting a successful strategy requires an understanding of Blue Ocean Strategy.

Blue Ocean Strategy is focused on providing value propositions to customers in ways that have a positive impact on the company’s cost structure. Finding directions or features your competition hasn’t offered is the key to success. Implementing these new concepts combined with eliminating factors others take for granted is a big piece of the puzzle. This creates cost savings from generating higher sales volume as a result of the superior customer value created from new concepts never before offered.

Blue Ocean Strategy essentially reconstructs market boundaries. This is achieved by going beyond looking at just the numbers and focusing on a bigger picture. Getting past what is being done and developing a new source of customer value is critical to successful strategies. This requires development of the proper sequence or steps to allow a strategy to be successful.

Strategic sequence includes having exceptional customer buy in to the new business idea. Your selling prices need to be easily accessible to the target market of buyers. Once you know what customers want and are willing to pay for, you need to be capable of attaining costs which will allow achievement of targeted profit margins. Finally, you need to be organizationally capable of putting the new strategy in place and making it work. All of these steps may sound simple, but in reality will likely involve considerable effort.

Blue Ocean Strategy success depends on the success of the following three propositions:

  1. Value for customers.
  2. Profit from revenues less the cost to produce and deliver value.
  3. People that are motivated by the incentives created by the strategy and effort needed to support and implement it.

When these three propositions achieve a combination of differentiation and low cost a Blue Ocean scenario is created that builds sustainability and formidable barriers to imitation.

Red Oceans result from failure of the three strategy propositions to create differentiation or low cost. Competing in Red Oceans opens the door for extensive competition and lower profits or losses. Many different factors can allow other companies to imitate your strategy and undermine success. Creating barriers to imitation through proper strategic alignment, effective organizational structure, branding, and effective economic and legal steps is essential to preventing Red Ocean environments.

Blue Ocean Strategies can create a competitive edge, but it takes work. Hopefully, you have a clearer understanding of what is involved in crafting a successful strategy. Thinking strategically to identify and create Blue Oceans is going to take you out of your comfort zone. But isn’t it better to achieve new success in contrast to failure resulting from swimming in Red Oceans?