Wednesday, April 11, 2007

Top Management Thinkers

W. Chan Kim and Renee Mauborgne

“Are two minds really better than one?”

It looks that way. Kim and Mauborgne’s book, Blue Ocean Strategy, was the business bestseller of 2005. The Korean, Kim, and the American, Mauborgne, are professors at the French business school, Insead, and rank 15th in the Times Thinkers 50 in 2005.

Blue ocean? Is it similar to blue-sky thinking?

No. Kim and Mauborgne argue that companies spend too much time battling each other in red oceans. These are existing markets. They believe there is a huge capacity to create new industries and markets, blue oceans.

Such as?

They point to Cirque du Soleil as a good example. It took the best of traditional circuses and combined it with the best of modern theatre to create a completely new market.

If you’re making money in a red ocean why bother jumping into a blue one?

Very few industries in the first decade of the 20th century were still in the picture a century later. New industries are being created far faster than ever before. The successful industries of today were unheard of 30 years ago. The only certainty is that most industries are important at some time, but no industry remains great for ever; the same can be said of companies.

And the point is?

Business is in a constant state of flux: big growth industries of the past 30 years include the computer industry, software, gas-fired electricity plants, mobile phones and the café bar concept. In 1970 not one of those industries existed in a meaningful way.

What can I do?

Don’t fight in contested territory; find a new market — with lower prices and a differentiated product or service — and make competition irrelevant.

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