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Help Navigate Blue Ocean to New Markets

By Adam Peterson,2014-07-09 13:45
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Help Navigate Blue Ocean to New Markets ...

    Help Navigate ‘Blue Ocean’ to New Markets By J.J. Smith

    BOSTONA business strategy that touts finding new markets for existing products requires that

    HR managers increase their links to company strategists in organizations that adopt the concept,

    the author of a book detailing the strategy told an audience at the Society of Human Resource

    Management’s (SHRM) 2008 Global Conference & Exposition.

    “Blue Ocean Strategy” is about creativity and finding new markets that allow a company not to

    get involved inand bogged down byhyper competition, said W. Chan Kim, co-author of the book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition

    Irrelevant, during his keynote presentation. Mr. Kim is with The Boston Consulting Group and is

    the Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD

    Business School, France

W. Chan Kim is one of the world's leading authorities on business strategy, innovation and managing the

    multinational corporation in the knowledge economy. He was selected for Thinkers 50, the global ranking

    of business thinkers, and was named along with his colleague Renée Mauborgne "the number one gurus

    of the future" by L'Expansion, France's leading business magazine.

    Blue Ocean Strategy is the complete opposite of the business strategy of

    direct competitioncalled Red Ocean Strategyemployed by most

    companies, Kim said. Red Ocean Strategy is about competing in an

    existing marketplace and focusing on beating the competition to exploit

    the existing demand, he said. In Red Ocean Strategy, companies

    develop a plan to knock outor killthe competition, leaving the market stained red with the blood of the defeated competitors, he said.

    Conversely, because existing markets are shrinking, Blue Ocean

    Strategy emphasizes that companies create an industryor product

    and open new markets for that industry or product, Kim said. While

    creativityor innovationis at the core of Blue Ocean Strategy, not

    every company is going to invent something new, but a lot of creative people can reconstruct

    existing ideas, he said.

    Kim said Starbucks’ success is not entirely because of the coffee sold at its locations. That

    company took the idea of a “mom and pop” coffee shop and combined it with the comfort of a

    modern hotel lobby such as a Marriott. While the mom and pop coffee shop might sell good

    coffee, the patrons who go there are mostly truckers who are not interested in having

    conversations, he said. But in the lobby of a modern hotel, it is much easier to start a

    conversation; therefore Starbucks combined good coffee with comfortable, friendly locations to

    sell coffee, he said. While it is true that Starbucks sells coffee, “what they are really selling is

    atmosphere,” he said. By changing the atmosphere in which coffee is sold, Starbucks created an

    uncontested market and made the competition irrelevant, he said. Starbucks “created and

    captured new demand,” he said.

HR’s ‘Blue Ocean’ Role

    The role of human resource managers in firms that implement the Blue Ocean Strategyso called because companies that adopt it are opening up new, uncharted watersis to increase the link between a business’ strategists with the rest of the company in support of the strategy, Kim

    said. Research for the Blue Ocean Strategy took 20 years, and those studies have shown that

    companies’ boards do not regard HR managers as strategists, he said. HR managers are seen as important, but they are not strategists, he said. Therefore, it is up to

    human resource departments to forge a substantial link with those who develop corporate

    strategy, he said. HR has to create bonds so HR managers can be in the role of developing

    corporate strategies, he said. “I can’t show you all of it, but I will stimulate your minds to see

    how the Blue Ocean Strategy will contribute to human resource managers,” he added. J.J. Smith is editor/manager of SHRM Online’s Global News

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