September 14, 2020
by Michael Callier.
Nintendo Wii, Apple iTunes, Cirque de Soleil. Each product or company demolished the competition because they created new markets where there was no competition. That is the essence of the Blue Ocean Strategy model. Are there blue ocean opportunities in the legal industry?
The Big Picture
Most strategic models focus on competitive advantage through either differentiation or low cost. In Legal, that can show up through, among other things, ivy league degrees, accumulated subject matter expertise, lower fees and, recently, legal innovation. In fact, intense competition tends to weaken even the strongest competitors by intensifying their struggle for resources and market-share (i.e., a “red ocean”). A Blue Ocean Strategy does not focus on competitors but instead makes them irrelevant by creating an uncontested marketplace to meet new consumer demands (i.e., a “blue ocean”). So, while the typical red ocean strategy makes the value/cost trade-off, Blue Ocean Strategy attempts to beat the value-cost trade-off and simultaneously pursue both differentiation and low cost.
How to Use It
To create blue oceans, company management should consider: 1) factors that its industry takes for granted but that could be eliminated; 2) factors that should be reduced well below the industry standard; 3) factors that should be raised above the industry standard; and 4) factors that should be created that the industry has never offered. Importantly, the entire analysis should be based on the consumer’s perspective and not on the industry or even the status quo for current offerings. This analysis could result in two outcomes – a completely new industry or new opportunities within the existing industry that expand the industry’s strategic boundaries.
Further, while most organizations “join” an industry, adopting the accepted standards for industry know-how, typical buyers and accepted offerings, Blue Ocean Strategy looks across all markets, industries and associated know-how to find an uncontested space.
Examples of Blue Ocean Strategy
– Nintendo Wii: Nintendo eliminated much of the hardware typically found in videogame consoles and reduced the quality of processing and graphics. In doing so, it eliminated or reduced factors that consumers did not need. It then offered consumers a wireless motion control device that allowed for all new, never-experienced features. This opened up the videogame market to non-gamers, parents, the elderly and groups.
– Apple iTunes: Apple created a legal music file format for downloading music with higher quality sound, at a reasonable price and with search/navigation features to make music easier to find. As a result, it created an entirely new category of music sales that eliminated illegal music pirating, allowed artists to reach and profit directly from mass music sales and created a greater market for single song sales versus albums.
– Cirque de Soleil: Cirque de Soleil reduced costs by eliminating live animal acts from its shows, introduced live music, integrated a storyline similar to theatre and emphasized physical skill that had never been seen before. Where circus acts like Barnum & Bailey typically catered to children, Cirque de Soleil opened a market for adults and corporate clients.
Conclusion and Takeaway for the Legal Industry
Although Blue Ocean Strategy is not a well-structured and prescriptive plan, in addition to the above, it offers six core principles to guide implementation. One might argue, however, that Legal is not the right place for this approach because it is a highly regulated field with a very strong culture of risk aversion – as would be appropriate for an industry focused on precedent and risk management. Accordingly, a fast-moving strategy, cost leadership, differentiation or focus strategy might be more appropriate for firms offering legal services. But we have seen Blue Ocean Strategy deployed successfully in other highly regulated industries such as pharmaceuticals. When Pfizer introduced Viagra, for example, it moved medicine away from its historical functional orientation and towards lifestyle enhancement. The takeaway is that pushing market boundaries from functional to emotional – even in highly regulated industries like pharmaceuticals – is possible.
So, Legal Industry, where is your next blue ocean?
Additional Resources
Kim, W.C. and Mauborgne, R. (1997) ‘Value innovation: the strategic logic of high growth’. Harvard Business Review (January–February), 103–112.
Kim, W.C. and Mauborgne, R. (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Cambridge MA: Harvard Business School Press.
Porter, M. (1979) ‘How competitive forces shape strategy’. Harvard Business Review 57(2), 137–145.Report this