September 2, 2009

Book Short: Go Where They Ain’t

Book Short:  Go Where They Ain’t

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, by W. Chan Kim and Renée Mauborgne isn’t bad, but it could literally be summed up by the title of this post.  I think it’s probably a better book for people who aren’t already entrepreneurs.

That said, there are two chapters that I found pretty valuable.  One is called “Reconstruct Market Boundaries,” which is a great way of thinking about either starting a new business or innovating an existing one.  It’s a strategy that we’ve employed a few times over the years at both Return Path and Authentic Response.  It’s hard to do, but it expands the available territory you have to cover.  The classic Jack Welch/GE “we don’t just sell jet engines, we sell AND SERVICE jet engines” which expanded their addressable market 9x.

The other useful chapter was “Get the Strategic Sequence Right.”  The sequence of questions to answer, according to the authors, is:

  • Will buyers get enough utility out of it?
  • What’s the right price?
  • Can you cost it low enough to make good margin?
  • Are you dealing with adoption hurdles?

The reason I found this sequence so interesting is that I think many entrepreneurs mix the order up once they get past the first one.  It’s easy to start with market need and then quickly jump to adoption hurdles, cost things out, and go with a cost-plus pricing strategy.  The book documents nicely why this order is more productive.  In particular, pricing first, then costing second, is both more market-focused (what will people pay?) and more innovative (how can I think creatively to work within the constraint of that price point?).

The common theme that’s most interesting out of the book is that new frameworks for thought produce killer innovation.  That’s clearly something most entrepreneurs and innovators can hang their hat on.

3 responses to “Book Short: Go Where They Ain’t”

  1. Matt is right about the simplicity of the Blue Ocean concept. However, this is one of those topics where the simplicity of the concept – and really thinking through its application in MY business/ YOUR business – can create some great insights.

    The book/ authors use a variety of entertaining and informative stories about the innovative business development of Yellow Tail (the Australian wine) via a Blue Ocean strategy. (NOTE: recent stories have suggested that Yellow Tail's success – and "me, too" pursuit by competitors – has driven down prices – and increased competition in the "value wine" space.

    I also really like the "Strategic Sequence" ideas. For more info akin to this type of thinking, see Ian MacMillan & Rita McGrath's "Discovery Driven Growth" work

  2. Evan, thanks for the comment and suggestion – will take a look at that.

  3. Nikhil says:

    thanks for the post we will implement on this suggestion.We are Australian Promotional Products supply company. Our growing reputation is centered around our belief in supplying the best value products in Australia.