Before I get started on this article, I just want to mention that I just graduated from my MBA. It’s been quite an interesting journey. Now I can take a step back and fully embark on my next project. Also I would like to apologize for not posting a new article in a month; needless to say that I was a tad exhausted in the last few weeks. But now I’m back and will continue to write articles on my blog.
My last MBA class was Business Strategy. It was interesting but lacked, in my opinion, substance and creative thought. What’s exciting about business strategy is that it encompasses every business discipline. To be an exceptional strategist you need to be strong in all aspects and have a holistic vision of the company. With my strong generalist profile, forward thinking, and integrative mindset I believe there holds a good future for me in business strategy. At the end of the course we touched on the Red and Blue Ocean strategies. Here’s a description of these concepts from WikiPedia:
Red Oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the ocean bloody. Hence, the term red oceans.
Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue Ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.
Creating a Blue Ocean is extremely difficult and requires uniquely creative and innovative thinking. In addition, any business embarking in this journey will be taking huge risk since there is no industry benchmark, no guidelines, and no points of reference; You’re creating the market. Not everyone is willing to take this risk.
If the Red Ocean represents all the industries in existence today and a Blue Ocean is the new market space yet to be defined, then what is a Brown Swamp? I don’t know for you, but as a kid I was a huge fan of Slush Puppie!! I would drink one every day in the summer. What I liked the most is to mix EVERY flavor – we called it the Swamp because of the brown color it had. Well similar to a Slush Puppie that mixes every flavor, I see the Brown Swamp business strategy as a disorganized mashup of strategies and functional tactics that, taken individually, make a lot sense. So what happens when you take a bunch of good strategies and put them all together without proper ordering? I believe you end up with a disordered and inefficient long-term business strategy – a Brown Swamp.
With that being said, I believe that Order of Execution is critical in successfully running a business. You may have many good strategies, but if they’re not executed in the proper order it will be difficult to succeed. To illustrate this point I’ll take one of my past pet projects which I briefly introduced in my article entitled 6 things NOT to do when starting a business – Part 1. The project was a multi-media mashup application. The long term functional plan for this project included among other objectives:
- Develop the core platform, focused on the mashup tool (scrapbooking)
- Develop complimentary multimedia applications, including: a) Online Photo Editor a la Photoshop, b) Online Video Editor
- Offer an Online Storage service to backup your multimedia files
Based on this sequence, the entire project relied on the success of the “scrapbooking” platform. The whole strategy assumed a successful launch of this application and thereafter allowing the introduction of other value-added tools and services. As you now know, this scrapbooking application wasn’t a success (in a short timeframe) for numerous reasons that I won’t cover here today. From this, we see the importance of short-term objectives and tasks that makeup the long-term strategy. How would it have panned out if I had chosen to use the online Photo Editor as the core platform? Hypothetically, the project could have been acquired by Google , assuming I had started development sooner. To prove my point, Google just recently acquired Picnik, an online Photo Editing application.
My point here is that strategy is important, but without proper execution, your $1bn strategy may have little value.
Will you be the next big business acquisition?