“So in war, the way is to avoid what is strong, and strike at what is weak. ― Sun Tzu, The Art of War
Going head-to-head with competitors can be brutal. You find yourself constantly having to react to what your competition is doing, which is not only exhausting but can stifle innovation.
There’s got to be a better way, right?
Many think so. In fact, many of my clients are big fans of the Blue Ocean Strategy, which encourages companies to seek non-competitive markets where they can maximize their opportunity and minimize their risk.
(It’s not surprising that fans of Vennli are also fans of Blue Ocean Strategy, but more on that in a minute.)
For example, Cirque du Soleil pursued a Blue Ocean strategy by refusing to compete directly with an already crowded market full of Barnum & Bailey and other local circuses. They left out the animals and multiple tent acts common to circus acts. Instead, they provided customers with a more sophisticated and artistic experience. By creating an offering with very different strengths, one that did not even try to deliver what a standard circus attempts to, they carved out a new wide-open space in the market – a blue ocean. Now a billion dollar business, their success is due to their strategy of ongoing differentiation.
The Blue Ocean Strategy Canvas is a tool that helps businesses visualize their market opportunities. Most importantly, it provides a structure to think about competitive differentiation during the strategic planning process.
The Strategy Canvas maps competitor performance across different factors. Managers can use it to decide which factors to raise, reduce, eliminate, and create.
“Raise and “create decisions are centered on building competitive advantage, while “reduce and “eliminate decisions are focused on reducing cost. The goal is to “create completely new factors with little to no competition, “raise factors that other firms are weak in, and scale back or eliminate focus on features that other firms are strong in.
To create the canvas, the factors that differentiate competitors are listed on the bottom. Price (or affordability) is always the first factor listed. After that comes the factor that the firm is weakest in, then second weakest in, and so on. Competitive advantage is found on the far right of the graph – where the firm has the highest scores in areas where the competition is weak or nonexistent.
A process to drive focused decision-making
Blue Ocean Strategy does a great job getting managers to think critically about their competitive differentiation and how to improve their competitive advantage. It provides a structure for strategic planning that drives towards really important questions like “where is our best opportunity to grow?
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On the flip side, when companies are not thinking this way, they find themselves in reactive stances, spending their energy fighting directly with competition feature-by-feature and slowly losing their uniqueness.
Blue Ocean Strategy breaks down the unique value a firm offers into specific factors, which focuses the discussion at an actionable, meaningful level. So, instead of “our competition is beating us when it comes to service, you have something more useful like “Acme Company provides 24-hour customer service and faster issue resolution while Zoom Company provides better mobile options.
And this is one reason why fans of Blue Ocean Strategy find their way to Vennli. This process is actually very similar to how Vennli breaks down the aspects of customer choice into what we call “choice factors – attributes that customers use to decide between competing offerings. The activity of determining this list and thinking critically about a company’s unique value can be very powerful all on its own. But it’s missing something…
The market doesn’t care what we think
Like Blue Ocean Strategy, at Vennli, we’re also all about finding your unique value. Our co-founder Joe Urbany has distilled competitive strategy down into 9 words: Be different from competitors in ways important to customers.
Those last two words sum up what is missing about the focus of Blue Ocean Strategy: “to customers.
Because, ultimately, all of our financial outcomes are a result of a customer choosing us. It doesn’t matter what we think.
Unfortunately, we’re not very good at thinking like customers. There’s a big body of research on how the perceptions of management can often be skewed and very different than customer perceptions.
In fact, that’s why we have our clients’ management teams take the customer survey, too. Then we’re able to visualize this perception gap. They never match. We find that, on average, there’s only 67% alignment, which means that without real-time customer data, businesses are basing strategic decisions on incorrect assumptions… even if they are using an awesome tool like Blue Ocean Strategy Canvas.
Not everything is equal
The Canvas also contains a deadly assumption: that all features are desired by customers. If Cirque du Soleil also offered customers the chance to get punched in the face by a clown, it’d certainly be unique (wide-open Blue Ocean!)…but would it win in the market?
It’s not just about uniqueness, as Blue Ocean Strategy stresses. It’s also about importance.
Vennli’s survey starts by asking customers how important each choice factor is to their choice, and then it asks customers to rate each offering on those factors. This is important because some factors are more important to customers than others, and you don’t want to build your competitive advantage around something that customers don’t care about. This will prevent you from pursuing open-but-barren waters.
Visualizing market opportunities differently
Blue Ocean Strategy provides a way to visualize market opportunities intuitively. By plotting features along one axis and drawing lines representing each competitors’ performance, information is clearly communicated.
Similarly, Vennli is also focused on data visualization to increase speed to insight and ease internal communication. We visualize the competitive landscape from the customers’ point-of-view on the vLens. The reporting gives visibility into the drivers of customer choice so that strategic planning can prioritize what matters most (and potentially divest from factors that do not matter as much).
Choice factors are plotted in the appropriate colored zone, and each area of the vLens reveals opportunities to grow competitive advantage by acting quickly to capitalize on opportunities before the competition does.
Back to Joe’s nine-word edict, it’s all about knowing how to grow the unique value you provide to customers: Be different from competitors in ways important to customers.
Not all customers think the same way
Perhaps the biggest “ah ha! moment that my clients who love Blue Ocean Strategy have when working through the Vennli process is that “Joe Customer doesn’t exist.
Customer populations are made up of unique segments that have different priorities and perceptions. What’s important for customer segment A is not the same for B, and customer segment C may rate the competitors differently from everyone else.
Effective strategic planning requires knowing which important factors differentiate you from your competition, and how you can focus your strategy on the most meaningful groups of customers in order to maximize your ROI.
In addition to slicing and dicing the data to view different cuts on the vLens, we also look at customer segments side-by-side in the Heat Map. Take a look at this example for segments of smartphone buyers:
Without this level of detail, Apple may have decided to hinge their entire competitive strategy on battery life, because that’s the most important factor for their aggregate customer population (#1) and current a yellow zone item (unmet customer needs = blue ocean!). However, it turns out that if they want to steal current Android loyalists, their best bet is to improve perceptions of their product durability.
Focusing strategic planning on the drivers of customer choice
At its heart, Blue Ocean Strategy has several themes in common with Vennli: focus on specific product attributes, competitive intelligence, data visualization. And while the authors suggest going into the field to test assumptions, its primary focus is mostly on competition. Vennli comes at this from a different stance: the customer. By using customer choice data to uncover competitive advantage and market opportunities, you further minimize the risk in your strategy.
