Braving the Wild Blue Yonder

One of these days, I'll be able to post to this blog without apologizing for the time elapsed since the last installment... But not this time.

It certainly has been a hectic start to 2008, due in large part to the hours I've already logged at 30 some-odd thousand feet. What this airborne time has afforded me though is the ability to catch up on some reading, and I recently read from cover-to-cover for the first time Blue Ocean Strategy.

As is the case with most business books I read, I discovered some solid take-aways, as well as a handful of leave-behinds. The reality is that for many product manufacturers, smart services can provide the foundation for a bona fide blue ocean strategy.

For those of you who haven't read the book, a blue ocean strategy is a way for a company to distance itself from the "red oceans" of bloody competition by increasing or decreasing its focus on certain elements of its business in order to more consistently deploy its resources towards the creation of customer value.

To test the applicability of blue ocean thinking to the world of smart services, I tried my hand at creating what the Blue Ocean authors call a "strategy canvas" for a typical product manufacturing company (see inset). This framework lays out the primary drivers of market competition (note x-axis) and plots red ocean and blue ocean strategies against each other according to how much or how little investment is made (note y-axis) in each of the competitive areas. The goal is to visually depict the separation that exists between blue ocean and red ocean practitioners.

As you can see in the inset image (click on it for larger version), smart services-enabled product manufacturers invest much more aggressively in areas like product lifecycle performance, gaining knowledge about customers' businesses, reducing customers' total cost of ownership, and introducing value-added services. Why? Because they can. Without reliable intelligence on the behavior of deployed products, red ocean manufacturers find it very difficult to build the asset knowledge base required to deliver value in these areas. Hence, we have the beginnings of a blue ocean.

Now, it's entirely possible that all this ocean talk is resonating with me because I'll be leaving the Atlantic Ocean I know and love for a new home in the Mid-West in a couple weeks. But I still think manufacturers might stand to gain some clarity around their smart services efforts if they think about them in terms of what creates and sustains value for their customers. Agreed? Or am I all wet? Post a comment and let me know.