blue-sea-strategy

The Blue Sea Strategy In A Nutshell

In the business world, a Blue Sea is a space/market easier to navigate as it’s not crowded like the classic red ocean. However, while the Blue Ocean focuses on creating uncontested markets. The Blue Sea strategy looks at zooming as much as possible within existing markets to find your minimum viable audience.

Blue Sea vs. Blue Ocean

The core premise of a Blue Ocean Strategy is to break down the trade off between value and cost, by creating uncontested markets.

This is all very interesting, and we all would like to create those incredible uncontested markets where we can redefine the whole business playbook.

However, in a few cases, companies manage to transition toward uncontested markets. And even when that happens, followers come quickly, to steal as much market share as possible.

Thus a blue ocean is often times, more the result of a bloody war, rather than a space exploration. A Blue Sea strategy instead tries to redefine value, not for a whole market, but only for a small group of people, craving for that value to be provided.

Let’s see what really makes up a Blue Sea.

Zooming in to find your MVA

Where Blue Oceans create an uncontested markets by looking beyond the boundaries of existing ones (it zooms way out to understand how a whole market might look different a decade from now).

The Blue Sea Strategy instead looks at existing markets and it zooms in as much as possible to find a minimum viable audience. 

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Redefine value by going from “a product for everyone” to a “product made for a few”

In a Blue Ocean Strategy competition is made irrelevant by changing the business playground. As a whole new market is created the Blue Ocean player will be able to capture most of that market opportunity.

In a Blue Sea Strategy competition is made irrelevant by redefining value for the minimum viable audience, that is not satisfied in full by existing products available on the market.

You go where existing players, can’t, won’t or are not able to go.

In a Blue Sea there is space for all

In a Blue Ocean Strategy new demand is captured by being the first-mover or among the first movers in a new market.

In a Blue Sea Strategy you can be very late and still build a valuable business. That’s because the Blue Sea player will redefine value by going where the existing, established players can’t, perhaps because it would be too expensive for them, or not scalable at all.

An audience so small that is not threatening for existing players, and yet interesting to get the business off the ground.

In a Blue Sea, price sensitivity is flipped upside-down

Where the Blue Ocean Strategy breaks the cost-value trade-off (offer more at a lower cost). In a Blue Sea Scenario, your smallest viable audience will be so keen to support your business, to be happy to pay you a premium price for your product, as soon as you keep it tailored to them. 

Look at the present and change it fora few

A Blue Ocean Strategy looks at the future, it envisions it and it builds it. A Blue Sea Strategy instead, looks at the past and it redefines it for the smallest audience that didn’t like how that future turned out to be. 

Is the Blue Sea strategy only for niche players?

Not really. A Blue Sea strategy does start from a minimum viable audience, but it creates options to scale. Those options can be exercised by time to time.

However, when a company scales up it might bring to the end of value for its minimum viable audience.

Therefore, as in a classic Crossing The Chasm scenario, the Blue Sea player will need to think through this option.

The FourWeekMBA Business Strategy Toolbox

Tech Business Model Framework

business-model-template
A tech business model is made of four main components: value model (value propositions, missionvision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Blockchain Business Model Framework

vbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Business Competition

business-competition
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

technological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

transitional-business-models
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

business-scaling
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion

market-expansion
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.

Speed-Reversibility

decision-making-matrix

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams

revenue-streams-model-matrix
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Model

revenue-model-patterns
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

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