Blue Ocean Strategy for the Lean Startup

What can Blue Ocean Strategy teach the Lean Startup?

Blue Ocean Strategy is about competing in uncontested market spaces, as opposed to the bloody, red oceans of highly competitive markets. There are many ways to get to a Blue Ocean, such as:

• competing in a market small enough to be ignored by bigger competitors
• introducing your product idea to a market that hasn't seen it before
• creating an entirely new market niche

But most importantly, by...

• offering a product that provides something customers value highly at low cost

What does this mean for Lean Startup entrepreneurs? Ask yourself:

• for a product I can provide, what customers are out there who larger companies ignore?
• instead of fighting over the same market, can I introduce or adapt this product to a new market?
• what have competitors bundled into their products that customers DON'T want?
• can you strip out what customers don't want and give them more of what they DO want?

By giving customers only what they actually want, and more of it, you can eliminate waste and create a product that will earn customer loyalty at the same time :)

The authors of Blue Ocean Strategy seized upon a great example: Cirque de Soleil.

• People have always liked the circus, but...
• it was the same old tired show (clowns and elephants)
• it was smelly 
• it was no longer cheap, so the product competed poorly against similarly priced alternatives

• Cirque got rid of all the labor-intensive, cost-intensive stuff (animal acts, aisle concessions) and kept the low-cost, high-value acrobatics that people liked. They then enhanced the acrobatic elements and added a level of sophistication that justified the higher price point of a live performance. High value to the customer - low operating costs = high margins :)

A more high-tech example might be CD albums >> iTunes singles >> YouTube videos. Each format change stripped away something that customers didn't want (bulkiness,songs they didn't like, cost) and steadily added more of what they did want (portability, larger song collections, video).

Taking apart products and services you use in daily life until you only have the parts that you actually like might be a great way to start thinking of a Minimally Viable Product.

Blue Ocean Strategy - it's an oldie, but a goodie :)