Disruptive Innovation: How to Find and Flourish in a Blue Ocean

What if everything your business has been doing since its inception was flipped upside down and the complete opposite approach was enforced? This is the concept behind W. Chan Kim and Renée A. Maurborgne’s Blue Ocean Strategy, which was created based off of primary research conducted on over 150 businesses across more than 30 industries spanning over 100 years.

Businesses that undertake a Blue Ocean Strategy approach to strategic planning can discover new, innovative ways of conducting business and uncover markets with little to no competition.

Apple, Uber, and AirBNB all benefitted from this approach to discover unique market opportunities. This article will dive into this renowned method of discovering opportunities for disruptive innovation and how you can try this with your current or prospective business ventures.

Blue Ocean vs. Red Ocean

Most businesses operate in a Red Ocean: a highly competitive, crowded area of the market where businesses compete on small variances in price, service, speed and/or quality with shrinking profit margins.Blue Oceans are the complete opposite, as they are underserviced, high-growth markets that have a very high potential for healthy profit margins. Blue Oceans can be created by all types of businesses in any industry. Finding a Blue Ocean is all about driving high value for your customers while striving to reduce costs for businesses.

Leverage Your Blue Ocean: Disruptive technologies may receive Canadian government research grants through the IRAP ARP and IRAP Mid-Size Projects stream. Use these R&D funding opportunities to reduce the costs of internal and third-party researchers.

How Disruptive Businesses Found Blue Oceans

Most disruptive technologies are discovered by exploring what the opposite of a Red Ocean would look like, often integrating modern trends such as customer personalization, mobile technologies, the Internet, or artificial intelligence. Some of the most prevalent examples of Blue Ocean discoveries can be seen in Apple’s iPod, Uber, and AirBNB.

Apple’s iPod and iTunes Digital Music Disruption

While Apple sported their “Think Different” slogan, the business was able to create a revolution in the music industry with the development of the iPod and iTunes. By deviating from physical based media, the iPod created a new market for digital portable media players and mobile applications such as iPod games, while tight integration with Apple’s iTunes desktop music player and music storefront gave users a comprehensive solution for the music needs.

The creation of this Blue Ocean did lead to competition, however Apple continued their dominant position in the industry by leveraging their music industry clout as a pioneer in digital music and brand loyalty, which set an excellent foundation for future successes, such as the iPhone, iPad, Apple Watch, and Apple Music.

Uber’s Taxi Revolution

Uber found disruptive innovation in a longstanding transportation industry: taxi services. Before Uber, innovation in the taxi services had, for the most part, stayed relatively stagnant. Uber saw a massive opportunity in putting the power of taxi services in the hands of everyone, fueled by mobile technologies.

They built their platform to lower the barrier to entry for drivers, while providing a more intuitive, informative, and affordable platform for passengers. And while Uber has seen its fair share of controversy and legal disputes, it is a system that now operates in 400 cities across 70 countries with over 8 million users.

AirBNB’s Hotel for Everyone

Another example of a business that revolutionized a long-standing industry is AirBNB. Their business model analyzed the hospitality industry, which was dominated by large multi-national corporations, and opened up this model to be inclusive of anyone that wanted to offer a room for rent.

AirBNB created an excellent marketplace and marketing strategy for hosts to post and promote their private room, apartment, or building to interested tenants, creating revenue opportunities for hosts and flexible, affordable options for guests. AirBNB now has 60 million users and 640,000 hosts offering room and board across the globe.

Finding your Blue Ocean

Take a look at your business and evaluate all of the aspects that define your company, including your product/service offerings, customer support, sales, marketing, warranty protocol, supply chain, branding, locations, promotions, and pricing. Now, one by one, think of the opposite approach to what your business is doing.

• Do you sell your products exclusively through distributors? What if you created an e-commerce portal and sold directly to the end users?
• Does your business charge a one-time flat fee for your products? Recurring financing or leasing options may be another approach.
• Is your product made out of metal? Investigate if there are viable composite or synthetic material solutions.

Even if you don’t discover a clear Blue Ocean, improvements are often found by using this approach. It’s valuable to step back and look at the business’ components from a new perspective.

If you discover a Blue Ocean idea and need the cash to help make it a reality, Canadian businesses can tap into several research grants to help you materialize your disruptive innovation. Two great examples are the IRAP Accelerate Review Process and IRAP Mid-Size Project Canadian government grants that help cover internal research labour costs, as well as related third party consulting costs throughout your product’s development.

Feel free to explore Canadian government funding in more depth with the free Business Funding Guide download below.