Assessing value the Blue Ocean way

January 8, 2013 / Steve Johnson

At the start of each year, I read a book to spark my strategic thinking. I usually find that re-reading a classic reveals that my point of view has changed since the initial read and I pick up much more the second time around. This year, I re-read  Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. 

As I read it again, I wondered if it’s possible to predict a successful strategy. It’s certainly easier to work backward from success and use value innovation as a tool to explain the success. As a predictive tool, the authors argue that you can identify which de facto standards for the industry are out of sync with the buyer’s value. Is the authors' “value curve” idea a predictive tool or an evaluation tool?

I don’t think this is from the book but I’ve always been impressed at the virtual overnight success of Marriott Courtyard. In the late 70s/early 80s, Marriott noticed a surge in female guests--women traveling alone. At that time, many women were moving into sales jobs and customer implementation jobs; they were traveling for work. So Marriott interviewed these women to see how their traveling requirements were different from women who traveled with family or men who traveled for work.

Think about it for a second. What do you think those requirements were?

The number one issue with women, as you probably guessed, was security. So Marriott designed around safety... in particular, offering limited access to the sleeping rooms and (I read somewhere) the name “Courtyard” was chosen because of its safety connotations.

What other requirements come to mind?

And what can you eliminate? If travelers have a rental car and mostly work at the client site, you can eliminate the concierge, meeting rooms, catering, and a fancy restaurant--all de facto standards that a hotel "must have" according to industry leaders. Take a look at the value of various hotel amenities for traveling business people and compare these values to what’s delivered by full-service hotels versus low-end motels. It might look like this:

For this buyer persona, it's clear that hotels are over-performing in areas that are not valued and low-cost motels are under-performing in areas that are valued. Courtyard focuses on those areas that are valued and dramatically reduced or eliminated in areas that aren't valued.

So my question is this: can this type of assessment be a predictive tool for your products? Of course to make it a relevant exercise, you’ll really have to know your customers and what they value. Give it a try.