Breaking News

Companies should stop fighting for market shares, Gavin Fraser

By Franklin Alli

In this interview, Mr. Gavin Fraser, a Senior global expert on blue ocean strategy (bos) who was in Nigeria recently to  facilitate Trithel International Consulting Conference on Blue Ocean Strategy, says companies should stop fighting for market shares because price competition kills industries.

What’s your take on Nigeria economy?
My task here is not to come and have an opinion on Nigerian economy.  Am here to bring message about Blue Ocean Strategy which we are taking to many countries globally.

So, if I was working in Nigeria, like we’re working for foreign governments like Malaysian, and Singaporean government, where we’ve been studying the country, then I would be able to offer my comment but since am not, I think that  I won’t do Nigeria any justice by giving my opinion about the country if I have not been here awhile.

What is blue ocean strategy?
Blue ocean refers to the approach of targeting untapped markets _ the undisturbed, blue areas of ocean, as opposed to the red zones, turned bloody by fierce competition.

The blue ocean strategy was popularised by W. Chan Kim and Renée Mauborgne, distinguished professors at INSEAD in France. They formulated this concept after studying 150 strategic initiatives, spanning over 100 years and 30+ industries.

Simply stated, their hypothesis is that most businesses are located in a red ocean. The red ocean is log jammed with competitors, all offering similar products and services. As these companies fight for market share in a zero_sum game, they stain the waters red with blood, shed through skirmishing at close quarters. Profits shrink and market share declines in red oceans, simply because they’re overcrowded and often dangerous.

Blue oceans are quite the opposite. They are spawned by innovative start_ups or existing organisations that apply fresh thinking to stay away from red oceans. Their strategy usually involves designing new products or services and linking them to what buyers really want, even if they don’t realise they want it as yet.

The blue ocean strategy is a way for both large enterprises and small to mid_sized business to leave their competition behind and enter markets that are uncontested.  So, blue ocean is management strategy about how companies can grow profits and satisfying their workers, their customers and shareholders.

How can a company transit from red ocean to blue ocean?
Well, it will only take a team of people in an organisation with a strategy coach who shows the team where to go, and what to do, and using blue ocean strategy, they would probably generate 100 different strategies and ten big ideas, they will then take these ten big ideas and present them to management where every one would vote, and the executives would decide which one to go forward, maybe two or three ideas would be implemented.

At the same time, you need to look at how you reconstruct your industry, maybe 20 percent red ocean, 80 percent blue ocean.  Sometimes, blue oceans turn red, for instance, when the first iPhone came out, it was successful and everyone started creating similar iPhone products, then Apple left the competition and created the Nanno brand and redefine the benchmarks for their kind of products.

The iPhone unwittingly cannibalised its unborn competitors as it created a blue ocean for touch screen phones that didn’t exist until then. Then, it broke ground with the iPad, another blue ocean debutante.

Apple’s “think different” slogan is a tribute to blue ocean. Apple created a market need and filled it. Over and over again. Its blue ocean strategy has helped it achieve rapid growth and dramatically increase profits without worrying too much about competitive forces.

Where has blue ocean strategy work successfully?
A lot of organisations that we have worked for are reluctant to share their success stories.
However, Malaysia, and Singapore have actually recorded fantastic success stories as Asian Tiger economies in the new millennium because they are blue ocean economies.  Today, these countries are competing against Dubai, Shanghai and other economies.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.