You already have the skills you need—you just have to know where to look.
In this book Guillebeau explains that running a solo-business is not a new idea, it’s been done forever. However, the rate of increase in such type of business is increasing rapidly over the years. These days the process isn’t only faster, but also cheaper, and Guillebeau believes it can be done for $100.
For that he explains the most important lessons: Convergence Guillebeau explains that convergence is the point of overlap between something that you really enjoy doing, your passion (something that you’re hopefully good at) and something that other people also have an interest in (the usefulness). This point of overlap is where you should be aiming to establish your business because this is where success can cultivate and your business freedom can blossom. Skill Transformation The second lesson Guillebeau explains is skill transformation. He explains that in order to succeed, you have to identify what skills you already have and determine whether or not they could be useful to other people. Try to combine your skills so as to add more value to them.
The Magic Formula The last stage of 3 lessons is bringing all together with the following magic formula. ”Passion or skill + usefulness = success” If you can start with a basic product or service, you then need to find your audience, people who will pay for your product or service. And finally, you need to establish a payment method, how you are going to receive the money for your product/service.
Anything you can pack and sell as a product or service can be considered valuable. And he stresses that ideas sometimes come out of nowhere, there’s no rule to finding your ‘million-dollar-idea’, it’s going to come when it comes. However, it’s important to keep your eye out for inspiration and opportunities as they are everywhere; you just have to start looking!
Here are a few ideas for areas to look at for inspiration: -Any kind of inefficiency in any market. Something that could be done better or isn’t performing as well as it could. -New technologies, these are constantly popping up. -A changing space or platform.
Value When considering starting your own business, if you start with focusing on helping people, the Guillebeau believes you are well on your way. If you make this the centre-point of your business, you’re destined for success. Getting started immediately in 6 steps require: 1. Commit to a product or service. 2. Build a simple website 3. Come up with an offer 4. Establish a payment method 5. Let the world know what your offering (advertising, start on social media and go from there) 6. Repeat 1-5 over and over until you find success.
Guillebeau explains that you can establish yourself as a consultant if you follow a few simple rules. First, make sure you go for a specific specialty. Explain exactly what part of business you help with. Make sure your customers know what they are getting with you. Secondly, Guillebeau emphasizes the importance of pricing yourself and your service. Charging $15/hour may feel like a good idea to get a few clients under your belt, but the reality is that people won’t value someone who charges so little, they’ll question the quality of work you can provide. Consider charging $100/hour as a minimum, or something similar if you are going for fixed rates. Make sure your prices reflect your work.
The internet has led to a new emergence of what Guillebeau calls ‘roaming entrepreneurs’. The idea that you can work from anywhere, there’s no need to be stuck in a high-rise in the centre of a busy city if you can do the same work from a beach side paradise. However, Guillebeau warns that just like passions, sometimes picking the lifestyle of a roaming entrepreneur isn’t ideal for your circumstances.
Customers Generally, there are two different strategies Guillebeau suggests when it comes to figuring out what to sell. The first involves finding a popular hobby or craze, something that’s just getting started and tapping into that market. The second strategy involves simply figuring out what people are already buying and doing that. There may be plenty of opportunities you could potentially tap into and you may get overwhelmed. To try and avoid overwhelm of ideas, Guillebeau recommends writing down all of your ideas and coming up with a way to test ideas against each other.
Taking it to the streets
Test your market 1. You need to care about the problem you are going to solve, and there has to be a sizable number of other people who also care. 2. Make sure the market is big enough. Test the size by checking the number and relevancy of Google keywords—the same keywords you would use if you were trying to find your product. 3.The product should be capable to solve the existing market problem. 4. You should be able to reflect how your product would reduce the pain and satisfy the consumers. 5. Always ensure that your solution is different and better. 6. Ask ideas from your potential target market. 7. Create a framework for the subgroup of your community for feedback and confidentiality.
Mission Statements Let’s break down the planning process into a very simple exercise: defining the mission statement for your business in 140 characters or less. It may help to think of the first two characteristics of any business: a product or service and the group of people who pay for it. Put the two together and you’ve got a mission statement
An Offer You Can’t Refuse A guide for creating a good offer: 1. Understand that what we want and what we say we want is not always the same thing. Look for what people are really willing to pay for. 2. Propose compelling offers rather than pressurizing customers. 3. Provide a nudge.
Launch! Launch your product not just to increase your influence but to preserve your relationship with other prospects per se.
Hustling: The Gentle Art of Self-Promotion
To actively and effectively recruit new prospects follow this time oriented guide. -DAILY: Maintain a regular and meaningful presence on Social Networking Sites without being sidetracked. -WEEKLY: Try to maintain regular communication with colleagues and customers. -AT LEAST MONTHLY: Prepare yourself for an upcoming event, or product launch. Also, connect with existing customers to strengthen their faith.
Make Money The primary goal is to make money. Businesses are improving their probability of success by opting various ventures to make money. You can do this with a variety of methods.
Leverage and next steps
Moving On Up Various ways to improve income involves small changes that create a big impact. 1. Get more Traffic 2. Increase Conversion 3. Increase Average Sale Prices 4. Sell More to Existing Customers 5. Institute a New Up sell 6. Encourage Referrals 7. Hold a Contest 8. Introduce a Powerful Guarantee
How to Franchise Yourself There are several ways to grow a business through the use of leverage. Franchising yourself isn’t just doing more; it’s about taking your skills, activities, and passions to a higher level to create better returns. The difference between franchising yourself and just doing more is that you take the time to be strategic. One path to franchising yourself is to team up with a trusted partner but not at the cost of completely merging your business with that person.
Going Long Finding a way to build systematization into the business, and deciding what role the business will play in the rest of their lives is the biggest challenge. There’s more than one road to freedom, and some people find it through a combination of different working arrangements. Focus more on your business by devoting time each single day. Check up on the others monthly or bimonthly. A business that is scalable is both teachable and valuable.
The book describes seven fascination advantages, overarching personality traits people can use to help improve their performance and fascinate others.
Fascinate with your highest distinct value
In a crowded, competitive environment, the most fascinating option always wins. Unrecognized greatness achieves nothing. Greatness can win only by being noticed and remembered. And in a competitive and overcrowded world, the same is true for you. You are fascinating. Our research proves it.
Perhaps you’ve heard this story: a priceless painting is sitting up in some forgotten attic, collecting dust for decades. Then, one day, someone stumbles upon it and sets off a million-dollar bidding war. Do you ever feel like that painting, waiting for someone to recognize your potential? The problem is, you have to be in the right environment for people to notice your unique talents and the great things you have to offer. You need to stay on the lookout for the kind of environment that will maximize your unique contributions. Finding the right environment is crucial to success.
The fascination advantage system
Every single time you communicate with someone, you are either adding value (and reinforcing why they should prioritize you) or taking up space (and reinforcing that your messages are irrelevant spam)
There are three things you must be aware of: First, you have to overcome the distractions that can keep people from connecting with your ideas. It’s difficult to get someone to pay attention to your ideas if they don’t listen or bother to look at the portfolio you sent them. So, to get your message out there, you have to grab their attention right off the bat. Second, avoid the competition by creating your own niche. There are plenty of competitive entrepreneurs out there today, each fighting to be the best in their field. But no matter how hard they try, there will always be someone better. You should aim for success by being different and creating a niche that plays to your own unique set of skills.
Finally, avoid being perceived as a commodity. Commodities are replaceable and thus, if you’re perceived as one, you’ll end up losing clients to competitors. To find long-term success, you need a loyal customer base; otherwise, you’ll always be searching for new ones, which is a costly and time-consuming process. You can do this by connecting with your customers and showing them that you care. Reply thoughtfully and start building a loyal fan base.
Fascination improves the performance
Fascination allows you to enter a state of flow, a psychological state in which you can focus on something completely. The stronger your fascination, the more likely you are to enter into this state. Being in a state of flow allows your brain to perform more efficiently, which improves your performance. If a simple job already taxes your brainpower, as it did with these novices, more demanding tasks can overwhelm you, leading you to make mistakes or crumble under the pressure. But someone who is fascinated with what they do will enter a state of flow and will still have enough spare brainpower to meet a challenge. Of course, the activities that are most likely to fascinate you are those that suit your unique personality traits.
There are seven fascination advantages and each of them has a unique way of helping you perform better. Many people struggle to become someone they’re not – to try and get a job or fit into a role that doesn’t suit them. To prevent this from happening to you, recognize one or two of your personal fascination advantages to discover the work that fascinates you and matches your personality. We’re much more likely to excel at a job that fascinates us. In addition, being aware of other people’s fascination advantages and personal traits can help you set up productive teams. This way, you will know how each of your employees can contribute specific skills and strengths to a team.
People with this advantage are very confident and excel at convincing others of their opinion. They are willing to take calculated risks and won’t shy away from making difficult decisions. While the power advantage is helpful in many situations, it’s crucial to a role like that of a CEO, where difficult decisions and convincing others is part of the daily routine. Be careful, though: having too many people with a power advantage in one team can be disastrous, with every group discussion becoming a fight for control.
People with the passion advantage are friendly, emotionally open and can connect quickly with other people. Since they tend have high levels of energy, they’re often enthusiastic about ideas or projects, and their enthusiasm can be contagious. People who are high in passion are usually very good at giving presentations and forming relationships with customers.
At the other end of the spectrum, people with the mystique advantage are level-headed observers who listen before they speak. Mystique personalities are often quiet intellectuals who like to think things through before they act. In contrast to passionate personalities, mystique individuals aren’t open with their emotions and you shouldn’t be surprised if they reject your idea of joining in a karaoke duet at an office party. These people have great time-managements skills and are very analytical. Mystique personalities make great experts, and if you’re looking for someone to fill a scientific role, join the IT department or become a business analyst, look no further. So, passion is about people and mystique is about data. Next, we’ll investigate the main traits of perfectionists and project managers.
It is all about striving for excellence and the desire for self-optimization. The most important motivation for people with this fascination advantage is to exceed expectations. When someone with a prestige advantage gives a presentation, it will usually involve the following: First, they will study a previous successful presentation, such as Steve Jobs’ presentation of the iPhone. Then, they will stand in front of a mirror and do a few training performances. Finally, after the presentation, they will conduct a self-evaluation; determine what went wrong and how they can improve.
But when it comes to attention to detail, no one beats the people who have the alert advantage. The alert advantage make these people perfect project managers to stay on time, within the budget and have an eye for details that might otherwise fall through the cracks. As you might sense, this trait comes in handy for anyone involved in quality management. If someone you’re about to meet sends you a text to say that they’ll be five minutes late it’s a sign that they have the alert advantage. This is the kind of advantage you might also look for in a doctor, so they won’t miss any ominous signs during your next check-up.
In Mesopotamia, somewhere around 3500 BC, someone came up with the brilliant idea of the very first wheel. While we don’t know anything about the inventor, it’s a safe bet that this person’s fascination advantage was the innovation advantage. The innovation advantage characterizes people who are always coming up with new ideas. These people are full of creativity and hold little regard for the status quo.
Just about any great scientific and technological breakthrough can be traced back to people with this advantage, be it that unknown Mesopotamian, Nikola Tesla or Steve Jobs. While other people are busy trying to improve an existing product, innovators will work on developing a new one from scratch. In leadership positions, these individuals tend to look at the big picture and excel at creating a vision for their team to fill with details. In this environment, they pair well with alert people, who would never miss a single detail that the innovator is after.
But if you are looking for consistency and dependability, look to those with the trust advantage. It’s always nice if someone in your team has the trust advantage because they work hard and will commit to getting things done. If they are asked to perform a task, you can be certain that they will do it well. So don’t hold back any longer! Find your environment, discover your fascination advantage and be extraordinary.
The 12 Week Year provides a framework that enables you to focus on your most important objectives and strategies while still providing room for iteration. The 12 Week Year concept/system is build on 8 success ingredients—3 principles and 5 disciplines—that are crucial for success in any area.
The 3 Core Principles are: 1. Accountability (the willingness to take full ownership for your actions and results regardless of your circumstances), 2. Commitment (doing whatever it takes to keep the promises you’ve made to yourself and to others) and 3. Greatness in the moment (making the countless decisions to do what’s needed even if you don’t feel like it, and immersing yourself fully in the present).
According to the author there are eight elements that are fundamental to high performance in any endeavor: 1. Vision: A compelling vision creates a clear picture of the future. 2. Planning: An effective plan prioritizes actions needed to achieve the goal. 3. Process control: A set of tools that are required to align your daily actions with the critical ones. 4. Measurement: Lead and lag indicators that provide comprehensive feedback necessary for informed decision-making. 5. Time use: Using your time with clear intention is a must.
6. Accountability: Accountability is ultimately ownership. 7. Commitment: Keeping your promises to others build strong relationships, and keeping promises to yourself builds character, esteem, and success. 8. Greatness in the moment
Create a compelling vision
The secret to living your life to its potential is to value the important stuff above your own comfort.
Your vision will motivate you to push through the inevitable discomfort that arises while trying to achieve meaningful goals. The authors encourage readers to write two visions: aspiration and three-year. Your aspiration vision describes how you want to live your life and what you ultimately want to achieve. This could include achieving financial independence, starting a healthy family, or living to the age of 125. This could also include growing your business to $5 million in revenue, getting promoted to partner, or winning a weightlifting competition.
You have the ability to strengthen and develop your brain by thinking about a compelling future for yourself, by regularly and repeatedly thinking about an inspiring vision where you emotionally connect with the life you desire. Print out your vision. Review it at the beginning and end of each day, during your weekly review and planning sessions, and anytime you need a boost of motivation.
Set 12-week goals
12-week goals are not based on stacks of assumptions or dependent on predicting an unpredictable future. 12-week plans also give you a better picture of what you should do on a day-to-day basis. After 12 weeks, ask yourself how your situation is changed and what new opportunities have presented themselves, and create new 12-week goals.
Here are some examples of 12-week goals: -Grow your email list to 5,000 subscribers -Dead lift 225 pounds -Grow your business to $5,000 per month in revenue -Write 6 articles When writing your goals, ask yourself “How will your life be different if you accomplish those goals?” This will keep you motivated when times get tough.
Break your goals into action plans
12-week goals are the bridge between your vision and your action plan. Your action plans prioritize your work on a daily and weekly basis. Weekly and daily plans have the added benefit of helping you determine what not to spend time on.
If you want to know what your future holds, look at your actions; they are the best predictor of your future. There will always be more opportunities than you can effectively pursue.
Write down the critical few actions that you need to complete to achieve your goals. Assign due dates. This pre-emptive plan will make it easier for you to overcome obstacles as they arise.
Schedule regular reviews
Planning and review sessions can help you stay focused on what really matters. The following trick can be used for your weekly reviews: 1. Quantify the results you’ve achieved so far towards your 12-week goals 2. Measure your execution so far done. 3. Set intentions for the coming week 4. Reconnect with your vision
The four keys to successful commitments
1. Strong desire: A compelling vision and reason for execution can help with this. 2. Keystone actions: Make it easier to get started. 3. Count the costs: “Identifying the costs before you commit allows you to consciously choose whether you are willing to pay the price of your commitment.” 4. Act on commitments, not feelings: Make a commitment to yourself and be willing to tolerate the discomfort that comes from following through on it.
Carve out time for strategic work
Once you’ve created a vision, 12-week goals, and an action plan, it should be pretty clear what actions are most important for you to achieve results. Perhaps more importantly, you will be able to identify all the actions that you could do that won’t actually contribute to achieving results.
Here are some examples of actions that may be high leverage for you, depending on your business and goals: -Writing -Sales calls -Hiring -Customer interviews or product experiments Plan by setting a 12-week goals which will prove to be the most significant strategic activities. Take note of your most productive time of day– and dedicate it to important work. No meetings, phone calls, emails, or social media!
Action Steps from the 12 Week Year
1. Create a compelling vision for your life. 2. Set 12-week goals. 3. Break your 12-week goals into weekly and daily action plans. 4. Schedule weekly review and planning sessions to measure results and stay focused on achieving your vision.
The key takeaway from Good to Great is discipline. Jim Collins and his team studied 28 companies over 5 years and identified the key determinants of success and failure. The books describe 6 different levels mentioned as follows:
1. Level 5 Leadership
The first is Level 5 Leadership. Every great company Collin studied had the same type of leader – Level 5 Leaders. The organizational hierarchy’s lowest level of leadership includes the Highly Capable Individual who contributes using their skills, know-how and good work habits. The next is Contributing Team Members who are able to use their skills and knowledge to help their team succeed. The next level is Competent Manager who are capable of organizing their team to efficiently reach pre-determined objectives. Level 4 is Effective Leaders where the majority of leaders can be found and are able to create the commitment from their team to vigorously pursue a clear and compelling vision. Finally the Level 5 Leadership level consists of great leaders. They have the abilities of the other four levels plus a unique combination of willpower and humility.
Entrepreneurs should try to develop the following traits if they want to become a Level 5 Leader. Paradox, Driven, Share praise, Take blame, Normal people, and Come from within the organization.
To encourage and find Level 5 Leaders in your organization you can: -Look for great results without an individual claiming the credit. -Practice the Good to Great concepts. -Hire from within. Avoid the temptation to recruit external talent. – Invest in personal development, coaching and mentoring for your team.
2. First Who, Then What
This is the second concept of disciplined people. It means that you don’t decide what you want to do and then get the people you need to do it. Instead, you start by getting the right people into the organization and the wrong people out. Getting the right people takes precedence over strategy, vision and over almost everything. First who, then what means shifting your mindset to realize that people are not your most valuable asset, the right people are. The benefits of putting “who” before “what” include: -It’s easier to change direction because people are present because of who they get to work with rather than what they are working on. -A person doesn’t have to waste time and energy motivating and managing his team. -Putting who before what gives the organization the potential to become great.
As part of first who, then what, Collins gives three principles to follow. These are: Principle 1: When in doubt, don’t hire – keep looking. Great companies are prepared to grow only at the rate they can hire the right people. Principle 2: Act the right way when there is a need to make a personal change. You must let go of the wrong people because it isn’t fair on them and it’s not fair on the organization to keep them around. Principle 3: Put your best people at the required place.
The best people will be debating what the “what” should be. This gives you a better chance of making the right “what” decision.
3. Confront the brutal facts
Great results can only be achieved when you are making lots of good decisions and then execute well. To make good decisions you need to confront the facts, even if those facts are brutal and uncomfortable. To avoid distorting the facts you need an atmosphere where the truth is welcomed. There are four practices to help you create this atmosphere: 1. Lead with questions not with answers. The leaders of Good to Great companies start by assuming they don’t know what is required. They ask questions until a picture of reality and its implications emerges. This is the opposite of superstar leaders who assume they have all the answers are likely to make bad decisions because they don’t have a true understanding of the facts.
2. Engage in dialog and debate, not coercion. Engage in a debate, have heated discussions, even agree to disagree, but great leaders never coerce people. 3. Conduct autopsies without blame and use them to learn. Even great companies make mistakes. Great companies don’t try to hide these mistakes. Rather, they try to learn from them. Trying to blame someone for the mistake doesn’t even enter into the conscious thoughts of Good to Great leaders. 4. Build red flag mechanisms Great companies pay attention to what’s really important. They build red flag mechanisms. Further, these turn raw data into information that cannot be ignored.
The Stockdale Paradox
In this part of the book the author explains a concept called The Stockdale Paradox. A US Navy Vice-Admiral named James Stockdale, was a prisoner of war for over seven years during which time he was tortured many times. He never doubted that he would survive and that’s how he handled this situation. When asked which kind of people didn’t survive, Stockdale said it was the optimists. The ones who, for example, believed they’d be out by Christmas. Christmas then came and went. And so did the following Christmas. And eventually, they gave up and died demoralized and of a broken heart.
So, Stockdale Paradox is a philosophy of duality which involves having the discipline to confront the brutal facts regarding your circumstances. But at the same time, it involves never losing faith that you will prevail in the end. It all depends how we handle these difficulties that will have the biggest impact on the course of our lives and our business.
4. The Hedgehog Concept
The next in going Good to Great is the Hedgehog Concept. To explain this concept the author quotes an example of the difference between a fox and a hedgehog. A fox is a very clever creature because it sees the world in all its complexity and can pursue many goals at once. Whereas, a hedgehog is a much more simple creature because it doesn’t get bogged down by all the complexity. Hedgehogs are not capable of seeing complexity. They see is a single goal and accordingly execute it. Good to Great companies behave in a similar way to a hedgehog. They stick to doing what they’re best at and avoid getting distracted.
So you can find your inner hedgehog at the intersection of these three questions: 1. What do you feel most passionate about? 2. What can you be best in the world at? 3. What drives your economic engine?
Great companies set their goals on Hedgehog concept. This is very different from setting your goals from the desire to grow, for example.It takes time to develop your Hedgehog Concept. It’s not going to happen overnight, in a flash of brilliant inspiration. A business council is primarily established to achieve great results. The members are tasked with finding the Hedgehog Concept. To be effective the council needs the right people on board. You can get align with other concepts only if you have developed a hedgehog concept.
5. Culture of Discipline
Having discipline of people eliminates the need for hierarchy. Having discipline of thought keeps everyone on track. Now we move to the discipline of action which eliminates the need for bureaucracy. Most companies fail not because of the lack of opportunity but because there is too much opportunity, and they spread themselves too thinly.
To support a culture of discipline you’ll need to do five things: 1. Within a defined framework build a culture of freedom and responsibility. You will free up your time if you put in place boundaries but let people decide themselves how to act within those boundaries. All you’ll have to do is manage the system itself. The best way to explain this is by using the example of an airline pilot. The pilot is guided by air-traffic control but with an ultimate responsibility for the safety of the its passengers, and crew. 2. Get the right people on board those that have the will to achieve their responsibilities. You need the right people, confronting the brutal facts, following the Hedgehog Concept and then having the discipline to do what needs to be done to reach their objectives.
3. Build a strong culture, not a dictatorship. It’s about creating a culture where the team wants to achieve. 4. Exercise extreme focus in adhering to your Hedgehog Concept If you want to be average, start by trying to be great at lots of things. But Good to Great companies give supreme attention to their hedgehog concept. 5. Create a Stop-Doing list Create a list of not to do things to retain more focus on goals. Focus on which projects support your Hedgehog Concept. Those who doesn’t support the Hedgehog Concept get less funding or are scrapped.
6. Technology Accelerator
Good to Great companies invest in new technology only if it serves their Hedgehog Concept. Good to Great companies behavior around technology include the following traits: 1. They view technology if it serves the purpose of their Hedgehog Concept. They invest in new technology only if it it fits with their Hedgehog Concept. 2. They use technology in unique ways. 3. They maintain a balanced view of technology. This means that they view how technology is used as being far more important than adopting the latest technology.
The Flywheel and Doom Loop Imagine a very large flywheel which is thousands of kilograms or pounds in weight. Now to get it to spin you need to start pushing it. As you begin to push you might make one single step of progress. Then another step and then another. A single push has no impact on the wheel. As you first start to push it seems almost impossible to turn. Pushing it, and pushing it, and pushing it. Then ultimately with all the efforts it takes on a life of its own and its spinning really fast and doesn’t need as much effort to spin.
In fact, now it’s really difficult to stop! We have achieved a Good to Great Flywheel Effect. This, in turn, energizes people and momentum is easy to sustain without much effort. The media is obsessed with moments of breakthrough and inspiration. But, if someone came to you and inquired as to what was the one big push that made your flywheel spin so fast what would you say? You wouldn’t be able to answer! It’s about consistency over a long period of time. A key concept here is to realize that no single push makes a difference. So you have to be thinking about cumulative effects, not looking for the dramatic singular win.
The Doom Loop This concept states that big companies start with a great idea or a flash of brilliance. But then they work on it intermittently, giving only intermittent big pushes. These huge efforts are exhausting. Over time, their intermittent nature leads to poor results.This, in turn, causes the firm to switch to a new idea because the previous one didn’t work out the way they’d hoped. Each time they switch idea momentum is lost. These companies completely stop trying to create momentum. Instead, they are focus on having one breakthrough. This breakthrough never comes. The absolute prime thing to grasp in this flywheel analogy is that each push on the flywheel builds on all the previous thousands of pushes and bridge the gap between good to great.
Thus the book focuses entirely upon creating a disciplined life, thoughts and actions aligned with hedgehog concept to become Good to Great.
This book contains numerous examples of successful blue ocean strategies, and it teaches how to discover and execute them.
Blue Ocean Strategy
Creating Blue Oceans According to the authors value innovation is a consistent pattern leading to successful blue ocean strategies. Blue ocean strategy creates new market spaces, creates new demand, and thus leads to profitable growth. Therefore to succeed, blue ocean strategy requires doing things in a new way that delivers a leap in value to customers.
The properties of Blue Ocean are as follows: • Blue oceans are being continuously created • These lead to more profitable growth • It doesn’t seek to trade off value • There is no eternal successful executor of blue ocean strategy • Technology innovation is not necessary for blue ocean strategy
One of the major reasons imitative competition is so popular is that it provides a straightforward blueprint for what to do.
The Strategy Canvas
The strategy canvas represents how a blue ocean strategy differs and what is the current state of the industry. It plots two axes: On the horizontal axis it list the values the customer it cares about, and current dimensions of competition. On the other hand, the vertical axis Segment buyers into distinct groups. Finally for each group, show how much buyers receive in each of the horizontal factors by plotting a value curve.
Thus it requires a four Actions Framework to create a distinct curve. 1. Which factors the industry takes for granted should be eliminated? 2. Factors that are well below industry standards should be reduced. 3. Which factors need improvement well above industry standards? 4. Those factors should be created that the industry has never offered? Therefore, the three Characteristics of a Good Blue Ocean Strategy are: 1. Focuses on a few factors, instead of spreading itself thin across many. 2. Diverges from competition, instead of imitating it. 3. Can articulate its strategy with a clear tagline.
Formulating Blue Ocean Strategy
In this section the author teaches the ways to discover blue oceans. Reconstruct Market Boundaries The author offers 6 paths to find new blue ocean opportunities: Path 1: Look across -Alternative Industries Path 2: Strategic Groups within Industries Path 3: The Chain of Buyers Path 4: Complementary Product and Service Offerings Path 5: Functional or Emotional Appeal to Buyers Path 6: Look across Time Focus on the Big Picture, Not the Numbers A strategy canvas accomplishes the following: • It identifies the important factors of competition in the industry. • Strategic canvas shows the strategic profile of current competitors. • Shows unique value curve critical to customers at the expense of less-important factors.
The Blue Ocean Strategy’s method to generate strategy canvases:
1. Visual awakening -Goal: Agree on the current state of play and overcome denial about your company’s current position. -Create separate teams to highlight different opinions on competitive factors -See where your strategy needs to change and notice where your organization has lost focus, is the spread thin, or resembles the exact strategy of competitors and take note of where your competitor’s strategy differs.
2. Visual exploration -Goal: See customer problems in person. -Go directly to customers, non-customers, lost customers, and competitors’ customers to evaluate the 6 paths to creating blue oceans -Talk to people and watch them in action. – Then find which factors they care a lot about and which factors they couldn’t care. At least a few of your assumptions are probably wrong. So try alternatives to your product to find new factors your product doesn’t have – Finally, draw a range of new strategy canvases and decide which factors you will eliminate, reduce, raise, or create -Force people to create multiple canvases to push thinking and consider creating one canvas for each of the six paths.
3. Visual strategy fair -Present canvases to stakeholders, including not just management but also employees, customers, non customers -Limit presentations to 10 minutes -Judges award stickers to their favorites. They explain their picks and also their non-picks -Find commonalities between strategy curves. -End by synthesizing a value curve for the new strategy 4. Visual communication -Distribute your strategic profile to team members. -Support only those projects that bridge the gap between outcome and new strategy.
Reach Beyond Existing Demand
Blue Ocean Strategy requires that you must reach beyond existing demand. In addition, you must build on commonalities between customer groups to find unmet pain points.
The book argues there are three tiers of non customers: -First tier: Soon-to-be non customers are begrudging customers in your market, waiting to jump to better alternatives. -Second tier: Refusing non customers have considered your industry’s options but have decided not to consume them. -Third tier: Unexplored non customers have never thought of your industry’s products as an option.
Get the Strategic Sequence Right
Blue Ocean Strategy proposes the following strategic sequence: -Buyer utility: Regarding exceptional utility in your idea. -Price: Regarding accessibility to the target mass of buyers. -Cost: Regarding attainment of your cost target to profit at your price. -Adoption: Regarding hurdles that impede your idea.
Executing Blue Ocean Strategy
This section covers the common hurdles faced in executing your blue ocean idea.
Overcome Key Organizational Hurdles Organizations undergoing a strategic shift face these four hurdles: 1.Cognitive – recognizing the need for change 2. Limited resources 3. Motivation – inspiring real action 4. Politics
Build Execution into Strategy
The point of this chapter is that you shouldn’t develop and implement the blue ocean strategy in a silo, ignoring people and Blue Ocean Strategy highlights the importance of procedural justice i.e people care as much about the fairness of the process as they do about the ultimate outcome. There are three elements of fair process: 1. Engagement Involve people by asking for their input and discuss their ideas. 2. Explanation Make clear that you have considered people’s opinions and decided for the overall interest of the company. 3. Clear expectations Make clear how employees will be evaluated and specify successful goals. As a result, workers can focus on execution rather than angst.
Align Value, Profit, and People Propositions When all 3 propositions (value, profit, and people) are aligned they work beautifully in harmony, reinforcing each other and making the strategy more defensible. The three propositions reinforce each other. An organization’s activities are mutually reinforcing and lead to a strong competitive advantage. Any activities that do not reinforce the other activities are discarded.
Renew Blue Oceans When you create a blue ocean will definitely attract imitators turning it into a red ocean. This raises two challenges: 1. How do you prolong the sustainability of your blue ocean to maximize profits? 2. How do you perpetuate your organization as your former blue oceans turn red?
Maximizing a Blue Ocean Business To prolong sustainability of your blue ocean broaden your defensive moat to ward off competitors and renew the blue ocean with constant innovation. Renewing the Organization When the blue ocean turns red and it’s difficult to value innovate further, and then the company needs to look for more blue oceans to enter. Therefore the company maintains a portfolio of businesses at different stages of their life cycle.
Avoid Red Ocean Traps
Blue Ocean Strategy ends with ten cognitive traps that can deter you from creating blue oceans or it can jeopardize your execution. 1. Myth: Blue ocean strategy is a customer-led strategy. Reality: Blue oceans are about exploring non customers and creating new demand. 2. Myth: To create blue oceans, you must venture beyond your core business. Reality: It doesn’t have to be this risky or scary. Discover 3. Myth: Blue ocean strategy requires new technologies. Reality: Customers care about values in their lives instead of new technology. 4. Myth: You must be first to market with a blue ocean strategy. Reality: It’s more important to be the company that makes a huge leap in customer value
5. Myth: Blue ocean strategy is the same as differentiation strategy Reality: Rather than trying to maximize all factors, blue oceans focuses on the critical value factors and eliminates unnecessary factors.
6. Myth: Blue ocean strategies are low-cost strategies that price low. Reality: Blue ocean strategies try to change the basis of competition, with lower cost. 7. Myth: Blue ocean strategy is purely about marketing. Reality: A successful strategy requires great propositions of value, cost, and people. Marketing is important, but focusing on this at the expense of other components will cripple the sustainability of the strategy.
8. Myth: Blue ocean strategy is about finding and dominating niches. Reality: Blue ocean strategy tries to de-segment buyers by focusing on commonalities across customers and non customers, and creating a new value proposition. This creates a larger market than further segmentation.
9. Myth: Blue ocean strategy sees competition as always bad, when it can actually be good. Reality: Competition is bad at a certain point, when supply exceeds demand, and cutthroat competition leads to fall in margins. 10. Myth: Blue ocean strategy is synonymous with creative destruction or disruption. Reality: Blue oceans don’t necessitate displacement, because they redefine industry boundaries and reach non customers, thus expanding the industry. This is nondestructive creation.