For many entrepreneurs, the clear goal is to start with something entirely new, our very own blue ocean which we claim all to ourselves. For others, we create new solutions to present to the marketplace, solutions that are superior to what currently exists, and are differentiated to what else is offered in the marketplace. In other words, we create value for our customers!
In a previous blog, Trees don’t grow to the Skies, I illustrated that every business would have difficult times during their lifetime. Even the fastest growing privately held companies that make the Inc. 5000 list, struggle.
In a study conducted by The Kauffman Foundation and Inc. Magazine, they found that five to eight years after making this illustrious list, about two-thirds of the companies had either:
There are many reasons for this, but industry changes and competitors’ chess moves are clearly going to be a factor. Moreover, failing to make the proper and proactive adjustments in your business as it grows, could be catastrophic. In the case of the crowded red ocean, the competition is swarming in the very same waters in which you are barely treading water. The mistake many new businesses make is to enter a red ocean purposely or inadvertently, or being late to recognize where they are swimming until it is too late.
Key Take-away: Most businesses run the risk of being commoditized at some point. It might be one of the divisions you run, or one of your better selling products. Price pressure will arrive; especially, from competition who run operationally excellent businesses with a lower cost structure. It may also come from desperate competitors willing to buy the business. Unless you dominate your industry with high-market share, price pressure always arrives – particularly in today’s internet age where we can price shop for almost everything, instantaneously.
Entrepreneurs do what we do for many different reasons, among them are our:
In order to do any of the three, we must be able to thrive in the long-term, and that means having the ability to continue to reinvent our companies and ourselves as entrepreneurs and leaders. It means we need to swim toward open blue waters in our businesses to thrive. It means we need to continue to innovate and avoid being disrupted.
So, what does this mean? To you?
Number One. Understand fully the waters you are considering heading towards in 2022 and beyond. Are you really alone, and is there truly significant opportunity in the blue ocean you created? Or are you attempting to outmaneuver the crowded field, which is fighting for the same target, with your competitors willing to do whatever is necessary to ensure their survival at your expense?
Number Two. Market testing is critical. Listen to your customers. Entrepreneurs come up with thousands of great products, solutions and services. However, if customers won’t buy them or won’t pay the price you want to sell them for, then sooner than later the red ocean will come calling for you. Find the open blue waters where customer needs are met, and you are the best product, service or solution!
Number Three. Change is a given. 2020 and 2021 have been a constant sea of change for many businesses. Once you find your own blue ocean, it is just a matter of time before competition shows up and attempts to turn it red. Don’t let them. Become a leader and lead the industry with innovation! Live and lead in blue oceans!