This week is the beginning of the real games on Mikes¿ Bikes, which makes me both excited and anxious. What keeps me excited is that we finally can start the true ¿battle¿ between the different groups in the class. Just as Kim & Mauborgne (2004) said, we enjoyed fighting for the market share in the red ocean competition. On the other hand, I feel a little frustrated and worried because we now have to design new strategies for the real rollover. After I finished reading the articles this week, I found the idea of ¿creating a clear strategy picture¿ quite impressive and useful in helping our Mikes Bikes team.
I came to understand that in a market that is constantly changing, members that makes their decision independently from one another may end up with disastrous results. Kim & Mauborgne (2002) focused on one approach to solve this problem---drawing a strategy canvas. Reading the essential factors of the strategy canvas reminds me of the lecture on Monday which emphasized on why companies likes to have similar strategies to successful firms. It is usually because they are driven to follow competitors who are gaining profit in the existing markets, so that they can share the benefits without spending too much on investment and exploration. On the contrary, the author argued that organizations should stand apart from traditional ways and try to pick up different decisions that suits their own strategies. Kim & Mauborgne (2002) also explained the four steps to drawing a strategy canvas (which I feel I have come across before in the past), but revising on it again, has given me a deeper understanding on how to make good decisions as a whole and within a team. What I found to be the most interesting is the aspect of attaining feedbacks from non-customers and competitors customers to realize what can be changed to meet their demands. The theory also taught me the importance of comparing strategies with the competitors on Mikes Bikes and contrasting the past decisions to current decisions of our own organization so that we can attain an overall picture of the market and to make the best decisions possible.
The concept of Red and Blue Ocean is a completely new thing for me (Kim & Mauborgne, 2004), and it has opened my eyes to a new strategy. The red ocean describes a market space that already exists with a large number of firms competing over the same market share. On the contrary, the blue oceans capture the uncontested market space which is free to design features and demands. It is interesting that organizations feel uncomfortable to shift into the new fields of markets and this is usually because they are scared of paying too much for exploration and losing opportunities. However, it is not difficult to get into the blue ocean markets, as ¿it is right next to you in every industries" (Kim & Mauborgne 2004). It means that the blue ocean is within the existing core business and it is not as hard to create new features and ideas, as organization believes. An advantage of the blue ocean strategy is the increase of brand awareness that results from the blue ocean creators earning the customers' loyalty from the very beginning. Another advantage of the blue ocean strategy is that it can design the boundaries and demand of the market by themselves, and they don't need to follow rules and regulations as you do in the red oceans. In my team, we talked about new strategies together and figured out suitable plans for the real game after analyzing some data and information of markets. I also learned something about determination of giving up the stable strategies and trying new fields of markets from my team.
In terms of business models, Magretta (2002), believed that it is a basic structure of the business that is independent of competitors focusing on maximizing revenues and profits. It is different from the business strategy, which emphasizes on identifying and segmenting customers by interacting with competitors. Furthermore, the reading points out the fact that there are internal connections between a business strategy and business model. If a company has established a business model that works for them, then they have provided themselves a basis to successfully implement a business strategy. This is an important point for my group to take on board, as we are focusing on a new strategy we have to make sure that our business model is in place and can support us.
In summary, strategies are an important part of businesses because it helps companies identify their advantages and disadvantages, understand what needs to be changed, and how changes can be made so that they can strive in their chosen market place. As long as we make good strategies we have a good framework to make good decisions. Also, I am glad to see this week¿s result of my team after following the blue ocean strategy instead of red oceans, and we have full confidence for next rollovers.
Kim, W. C. & Mauborgne, R. (2002). Charting your company¿s future. Harvard Business Review, 80(6), 76--83
Kim, W. C. & Mauborgne, R. (2004). Blue ocean strategy. Harvard Business Review, 82(10), 75--84
Magretta, J. (2002). Why business models matter. Harvard Business Review, 80(5), 86--92