Blue Ocean Strategies
A decade before the World Bank developed its Blue Economies (which others subsequently morphed into various “Blue”-variants to fit the fancy of the day), Paris-based INSEAD promoted the idea of Blue Ocean strategies. Its main idea was that, instead of competing in the unkind waters where the “sharks” of highly competitive firms vie for every available market scrap, entrepreneurs should seek the blue waters of uncontested, new market spaces. Never mind the inappropriate metaphor. To attract customers, entrepreneurs should reconstruct market boundaries through value innovation -mainly by devising focused, diverging strategies under a compelling taglines.
Digital innovation and the new paradigm
Digitalization provides the opportunity to do just that and has radically changed the business world in recent years. Look who is powerful: Uber owns no vehicle; AirBnB doesn’t own a single hotel or rental property; Alibaba no product inventory; and Facebook creates no content. Ten years ago, Google barely existed and Apple was a has-been; social media were virtually non-existent. Today, the smartphone and the App-store are the accelerant of business growth. Technology grows faster and cheaper by the minute, empowering consumers and entrepreneurs alike, while disrupting old-school business models competing on the basis of high expenditures in asset-ownership and operations.
The new paradigm is more “clicks-for-bricks”, by rendering services that harness the power of the internet to encourage users in new ways to collaborate, create resources and share information, rather than purchase and own physical products or production assets. This is done in several ways, through:
- social media, by creating and sharing content;
- peer production, by collaborating to provide content, services or products;
- the sharing economy, where participants share access to content, services or products, rather than having an ownership interest in them; and
- crowdsourcing and –funding, where new markets, products and services are predicted or funds are attracted, by capitalizing on the wisdom of crowds.
Blue ocean Island entrepreneurs
All this plays directly into the hands of the small-Island entrepreneur! Many of the factors that reduce the ease of doing business and increase its costs, are related to finding and unlocking new markets and financing, owning and operating business assets. This becomes much easier and far less costly by using the wisdom of crowds and social media to tap into new markets; by using peer production and collaborative consumption to render content, services or products; and by using crowd-funding to attract the residual necessary financial means. What is, for instance, to stop the local small-Island entrepreneur from using these devices to find new geographical markets for cultural items and having them paid, manufactured and shipped abroad, without owning a single asset? Rather than manufacturing them and carting them to the local arts & crafts market daily, just to wait and see who will show up as a ready-and-willing buyer?
Here are a few hints to aid the savvy small-Island entrepreneur in maximizing on his or her new digital blue ocean strategy.
The first is privacy and data-protection. Through understanding the customers’ needs, identities, likes and dislikes, characteristics and behaviors, it is possible to create more personalized, targeted communications. This understandably raises concerns with customers and, thus, privacy is a key ethical issue to customers. Many markets have put associated legislation on their statute books.
Second are laws related to marketing e-commerce businesses. General advertising laws may in specific cases also govern internet marketing and specific laws may apply to reduce the volume of spam. When marketing on the internet, where few entry barriers exist, protecting intellectual property rights, domain-name registrations, brand – and trademarks should be high on the entrepreneur’s agenda.
Third are issues regarding electronic contracts, mainly “country-of-origin” and distance-selling: do the laws of the country of the seller, or the laws of the country of the buyer, apply to the transaction, and what do the applicable laws say on protection of distance-buyers? Many jurisdictions require transparency on the identity of the seller and the terms of the transaction before an order is placed, and provide a “right to cancel” after the transaction is closed.
Authentication, making and accepting payment, as a last issue, can be factually difficult in some jurisdictions, but also creates a different set of rules (often under a different legislation) between seller, credit-card issuer and buyer.
So: determine your geographical markets, see what body-of-law applies, check the rules on privacy and data-protection, (internet-) advertising, distance sales and consumer protection, protect your brand, and, last-but-not-least: get paid!