Blue Ocean Strategy Book Report
The book Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne has many interesting points that companies around the world should consider. The primary message is to create blue oceans rather than red oceans for your business. Red oceans are described as industries where business strategies are clearly defined and companies within the industries try to outperform their counterparts to gain a larger market share. On the contrary, blue oceans are defined as untapped markets that when executed correctly yield high profit margins. Although the book contains general strategies, I will be relating the messages to the Sherwin Williams Company. I chose this firm because of their outstanding performance for the past 142 years, as well as their dedication to their culture and people. Another reason Sherwin Williams is an interesting choice is because the company is old and in the maturity stage of business. Considering Blue Ocean Strategy is a novel that stimulates entrepreneurial th inking, Sherwin Williams could benefit from many strategies noted throughout the book. Sherwin Williams does its best to facilitate entrepreneurial thinking by allowing managers in training to eventually run their own million dollar store. After taking an entrepreneurship class in college, I believe that certain practices entrepreneurs focus on can strongly benefit any company, especially one that is in the maturity stage of the business life cycle.
After reading Blue Ocean Strategy, one cannot help but notice the amazing opportunities in business. For example, a movie theatre can have a babysitting service that allows customers to view more movies which increases profits. As a future manager and/or entrepreneur, there are many lessons I can learn from the book and the Sherwin Williams Company. For example, while working for corporate America, often times a boss will ask his/her subordinates what they think about a topic or what the company's course of action should be. Considering the workers will be researching the industry more than other people, managers expect a lot out of their subordinates. As Americans, our concept of specialization has blossomed over the years. With this responsibility comes the discovery of globalization and entrepreneurship. Most companies started small, and this means that entrepreneurship is growing exponentially within the American community. The definition of entrepreneurship is both comp licated and controversial. To me, entrepreneurship means thinking outside the box. Discover the impossible. Go beyond the limits. Obeying by the law and maintaining ethics is an obvious concern; however, companies should not limit themselves by the industry average.
The book notes six strategies to create and maintain blue oceans. These strategies say to reconstruct market boundaries, focus on the big picture and not the numbers, reach beyond the existing demand, get the strategic sequence right, overcome key organizational hurdles, and build execution into strategy. I would like to create entrepreneurial thinking by accepting these strategies while understanding that all ideas should be considered. The research and development process is there for a reason, to research and consider different opportunities. Establishing a six figure model is valuable and will be considered throughout my paper but all ideas should be of worth.
The most difficult aspect about writing this paper is that many great examples are used but most do not directly affect the Sherwin Williams Company. A great example of this is the company known as Curves. "Curves built on the decisive advantages of two strategic groups in the U.S. fitness industry- traditional health clubs and home exercise programs- and eliminated or reduced everything else." I find this company interesting because of my interest in physical training, and because I watched my mother go through the Curves training program while I was growing up. I would have never guessed the Curves system would work and be so profitable, and this is because I did not know the blue ocean existed. I did not understand the demand. As a weightlifter, I enjoy going to the gym and seeing other people. I am there to lift weights but the time can be a social experience. I talk with friends, ask for people to spot me, seek advice for trying to new lifts, etc. My understanding is th e gym experience is not complete without the social experience. Curves maximized this blue ocean. When members enter the store, the machines are arranged in a circle to make the workout a fun and sociable event. Members talk to each other about a recent low-fat product he/she bought at the store or a new regimen he/she is on. Curves created this social, gym-experience for only $30 a month. For today's standards, this price is considered fantastic. A single person seeking an exclusive gym membership can expect to pay $100 or more each month. Women are particularly attracted to Curves because there are no mirrors on the wall, and men are not staring at them. "Curves' tagline could be, for the price of a cup of coffee a day you can obtain the gift of health through proper exercise."
So how can the Curves example relate to the Sherwin Williams Company? Curves showed us how to create a blue-ocean by maximizing people who are on the fence about obtaining a gym membership or keeping with their home video workouts. One could say this is a middle-of-the-road opportunity. This judgment could be why no one else seized the opportunity but now Curves has a billion dollar business. What can Sherwin do that may be considered middle-of-the-road but increase profits tremendously? One thing that Americans will always enjoy is convenience. I felt inconvenienced when I logged onto the Sherwin William's website and could not purchase paint online. I then remembered that transporting and mailing liquids of this nature is illegal. Sherwin delivers paint and coatings supplies to major buyers, so why not do this on the retail level to everyday household consumers. We see this strategy used in restaurants when a person can order a pizza, sandwich, Chinese food, the opportunit ies are endless. Sherwin could hire one high school driver per store and pay him/her a low but acceptable wage. This person could deliver paint supplies to local household customers and help the store in other ways when he/she is not driving. But there is a major problem here. The people must come in to pick out the paint colors. Not necessarily. Sherwin Williams could maximize their website by allowing users to pick out paint colors online, check-out online, and simply wait at the door for the delivery. I think this is an idea that the company should at least consider. I would have never guessed the Curves concept would work but by using middle-of-the road ideas one can create a blue ocean.
NetJets is another great example of creating untapped market space by looking across alternative industries. "NetJets' success has been attributed to its flexibility, shortened travel time, hassle-free travel experience, increased reliability, and strategic pricing." The foundation that makes the company possible is their ability to sell one-sixteenth ownership of an aircraft with a total flight time of fifty hours per year. Fifty hours may not seem like a lot of time; however, the planes the company uses get customers to their location much faster than commercial planes. NetJets found a niche by realizing that some companies cannot afford to buy their own airplane but can afford a part-ownership to arrive at destinations in a quicker, more convenient way. When I read about the amenities the company offers their clients I was amazed. Your jet is available with only four hours notice, security threats and issues are greatly reduced, and your favorite food and beverages are re ady when you board. How can the company offer these services for a reasonable $375, 000 a year? "NetJets' smaller airplanes, the use of smaller regional airports, and limited staff keep costs to a minimum." NetJets created a blue ocean by discovering a market situated between companies who own their own aircrafts and companies who buy commercial airline tickets.
The NetJets example can be related to the Sherwin Williams Company because Sherwin should always be trying to improve their customer service. The main reason companies switch from buying commercial tickets to being a client with NetJets is the desire for better and faster service. Sherwin Williams has the opportunity to instantly increase the value of their customer service. My idea is that the company should always help their guests out of the store after purchases. Paint and coatings supplies can be very heavy, and often their guests include mother or fathers with multiple kids. Considering employees of the Sherwin Williams family are used to lifting and moving paint supplies, their help could be utilized even further. As a shopper at United Market Street, individuals are always asked if the sacker of the groceries can help him/her out to the car. This simple strategy is greatly appreciated by many guests of the store every day. The sacker just considers it part of his job but the guest of the store sees the value of increased customer service. For example, as a shopper at Wal-Mart, one will not be asked if help is needed to your car after making your purchases. In fact, when I have shopped at Wal-Mart I almost always sacked my own groceries and put them in my cart. When it comes to customer service, Sherwin Williams does not want to be related to a company like Wal-Mart. Sherwin Williams needs to start asking every guest that walks in their store if help is needed out to their car because the increase in customer service will make a world of difference over time.
I will now be talking about how I can relate the Curves and NetJets examples to my future work in a company. I will begin my talking about exceptional customer service that was noted in the NetJets example. My work background is centered on customer service. I have worked for Randall's, Jason's Deli, Pappa's Seafood House, Abuelo's Mexican Food Embassy, Student Business Services at Texas Tech, and the TECHniques Center at Texas Tech. All of my positions required me to keep our guests happy at all times. At Pappa's Seafood House and Abuelo's Mexican Food Embassy, the restaurant industry required me to maintain a positive level of customer satisfaction while guests were drinking. This can be difficult for several reasons. First, the waiter normally does not know his/her guests which mean that they do not know how the customer will deal with alcohol consumption. Some people act friendly but others may act more aggressively. At Pappa's, servers and bartenders had to abide by a r ule known as the fourth drink check. This meant that on the fourth drink, the server or bartender was required to get manager approval. The manager would walk by the table and check the awareness of the guest, perhaps even talking to him or her. If the manager felt awareness was in check, he or she would sign the guest ticket for approval. This strategy was important because it maintained a professional work experience where alcohol is available. In this way, I believe Pappa's differentiated itself from the competition by not sacrificing its image for increases in alcohol sales. On the other hand, Abuelo's Mexican Food Embassy did not implement this rule. As an employee, I was told that the server's judgment was what decided if guests could keep drinking. Furthermore, I was told at my Texas Alcohol and Beverage Commission (TABC) certification that servers could be held liable if guests that you served got in a vehicle accident. Upon learning this, I was very careful about se rving drinks and focused my attention on giving excellent customer service. One factor that is often overlooked is how the server asks his guests questions. I have often been frustrated by wait staffs who ask too many or too little questions. If a server asks too many questions I feel annoyed, and if the server does not ask enough questions I feel like the service is poor. This concept can be used throughout my working career. If I am sitting down with a client, he/she does not want to be annoyed by hours of questioning but at the same time he/she wants me to ask appropriate questions so they know I understand the nature of the situation. Just by asking questions as appropriate, I feel that my customer service in the workforce will be superior to most.
The Curves example shows me that in the workplace I need to think outside the box and realize everyone is not like me. I did not know the Curves' blue ocean existed because of my personal experience with lifting weights. People in the workplace come from different countries, cultures, experiences, backgrounds, lifestyles, etc. I appreciated living in Houston throughout my childhood because of how diverse the city is. Because of Houston's diversity, I think it shows how much the city has to offer people. In a similar way, the more varied a company is the more it can offer people. Why would a company only appeal to a certain group of people when it can try to appeal to all people? Looking at how diverse a company is will certainly influence my choice of who to work for. Right now I am currently trying to teach English in South Korea. I believe this career choice will help me become a more understanding person about people who are from different backgrounds. I am also hoping th at the teaching experience will open new doors for me in the workforce. If I pick up on the Korean language, this could enable me to work for valuable companies such as Hyundai or Samsung. Furthermore, I could potentially be a liaison between Asian and American markets. Many things are similar when living abroad but there are several things that are different as well. I think an important part about living in another country is to keep a positive attitude and maintain respect for the company, culture, and people. Teaching English in South Korea could open up new and exciting opportunities, and I am ready to embrace these different challenges.
In conclusion, the book Blue Ocean Strategy notes six strategies which say to reconstruct market boundaries, focus on the big picture and not the numbers, reach beyond the existing demand, get the strategic sequence right, overcome key organizational hurdles, and build execution into strategy. The Curves example showes how Sherwin Williams can find middle-of-the-road opportunities to boost profits, and the NetJets example proves that giving exceptional customer service is necessary for creating blue oceans. The Curves Company makes me understand that I need to think outside the box at the workplace. Certain companies like Google and Apple allow employees to spend a certain percentage of their time just thinking of new ideas. The NetJets Company makes me realize that asking questions as appropriate is very important and giving great customer service will continue to be important to the business world.
Kim, Chan and Mauborgne, Renee. Blue Ocean Strategy. Boston: Harvard Business
School Publishing Corporation, 2005.
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