Blue Ocean Strategy

Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.

I’ve heard about the blue ocean strategy from many people, and at multiple times. And the above description is about as much as I knew about it. Get away from the competition, and make your own (new) market. That sounds very positive, but how is it done?

This is my overview of the schemas from Blue Ocean Strategy by Renée Mauborgne and Chan Kim.

The BLUE Ocean

Where most companies compete is also where most companies are. They are competing against each other for the same attention of the same customers. If this market is a pond, it’s one that is very full. And it’s competitive if companies are fishes, some might even get hurt. The red ocean is the current (know) market.

Where the bulk of the profits are made, is where the least amount of companies are. This is in markets that don’t even exist today, they are unknown. Imagine yourself on an expedition around the world and you find a body of water that no person has ever been on. You’ve found yourself a blue ocean. Here there a no boundaries, rules, or competition.

You can get yourself into a blue market by making a strategic move. There is no ‘blue ocean’ company, but there are products that companies launched (via a strategic move) that swam in a blue ocean for a very long time. There are very few companies that have been able to apply the blue ocean strategy multiple times.

How can you be one of these companies? How can you make a strategic move that leads to a blue ocean?

VALUE Innovation

Value innovation is a dedicated focus on making the competition irrelevant by offering exceptional value to your customers, whilst keeping your own costs down. If you create value without innovation you are probably only providing a little more value for your customers (e.g. the new iPhone). If you create innovation without a direct value for customers you don’t have a market (e.g. Virtual Reality in the ‘80s/now?). If you combine both, you create something people want (e.g. the original iPhone, Tesla Model S, Cirque du Soleil).

Value innovation is the combination of improving your cost structure and providing customer value. You decrease your costs by not doing and minimizing the things that most of your competitors focus on. And you improve the value by doing and raising something your competitors don’t focus on.

Blue Ocean TOOLKIT

To innovate where others are competing you have to know how to identify what is a value innovation. For this purpose, you can use the following tools: The Strategy Canvas, The Four Actions Framework, Six Paths Framework, The Buyer Utility Map, and The Price Corridor of the Mass. Yes, these are quite some tools, so get ready for a short explanation of each one. The tools are sequential and normally the next one builds on the insights of the previous tool.

The Strategy Canvas

Use the strategy canvas to identify where you do things different from your competition. To do this you should identify all the competing factors on which you operate. Some examples are; price, marketing, location, star performers, service. Here is an example of the strategy canvas. Note that you can best use this framework at the beginning (where your line might look like that of the competition) and at the end (when it should look very different).

The Four Actions Framework

Use the Four Actions Framework to identify which things you should eliminate, reduce, raise, and create. You need to know what your unique buying reason (UBR) should be for your customers, in what way are you different from the competition. And what things are the competitors doing that makes no sense (e.g. explaining wine in fancy terms to people who just want to drink something tasty).

The Four Actions Framework helps you to increase your focus, diverge your value curve and define your tagline. You pick one place on which you focus your efforts. You add value to your customers on something that others are not. And you summarize this in your tagline, preferably something that’s catchy.

The Six Paths Framework

Use the Six Paths Framework to redefine where your product is competing. On six dimensions you can ask yourself a new question. Instead of looking at the competition within an industry, ask yourself what you can do with your product in another industry. Instead of looking at a trend and adapting to it, why not create a new trend yourself?

The Buyer Utility Map

Use the Buyer Utility Map to identify blocks to providing utility to your customers. In each step of the use of a product (from purchase to disposal) a customer is assessing it on various dimensions. This ranges from their own productivity to the environmental impact of the product. The more places you can check off, the better.

The Price Corridor of the Mass

Use the Price Corridor of the Mass to define at what level you can price your product. In this tool, you can define at what level your competitors (within your market, but also similar markets) price their products. You can then price your product 1) higher, 2) in the middle, or 3) lower. This all depends on how unique your product is. If it’s new but easily copied, maybe price it low to keep competition away. If it’s very difficult to replicate, price it high.

Your price should mainly be defined by ‘target costing’. This means that you use the strategic price (found via the price corridor) and deduct the desired profit margin. What is left is the target cost. By going in the opposite direction from normal pricing, you will be more likely to find novel ways of keeping your costs down (e.g. innovation in price model, partnering, operational innovations, etc).

SUSTAINABLE Blue Oceans

Creating blue oceans is not a static achievement, it’s a strategic process that needs to constantly be updated. The toolkit as presented here is only a start and using it is the only way to create new blue oceans.

In your pursuit of value innovation, there will always be imitators. Their strength and duration before they arrive are highly dependent on how easily they can copy your formula. And when the competition gets near, update your value curve, eliminate, create and stay relevant. There are no permanently excellent companies, but there is a blue ocean strategy that you can follow!

Four Hour Body

Here are some observations I’ve taken from The 4-Hour Body by Tim Ferriss.

Before anything else. This is the subtitle; An Uncommon Guide to Rapid Fat-Loss, Incredible Sex, and Becoming Superhuman. That is quite the promise. And this activates two thoughts in my head. The first is, he’s tested most things on himself and really knows how to promote something, maybe even too much. The second is, we (people) usually don’t follow through on advice, we normally try it for a day, and then go on doing what we did before. Inertia is very strong, are there things from this book that can break through mine?

Weight loss, the first promise

What Tim is looking for in his life is small things that have a big impact. It’s the same what the authors of Blue Ocean Strategy say, focus on the few that influence the many. And because he focusses on the small things, he believes these are also the ones that are most likely to stick and have an impact.

When you want to lose weight, there are three things you can play with; 1) diet, 2) drugs, 3) exercise. Tim chooses a 60% diet, 10% drugs (i.e. caffeine), and 30% exercise approach.

Measurement is also very important, so let’s start with mine:

Weight*: Now 93kg – Goal 88kg (ish)

Bodyfat*: 16% – 12%

Muscles*: 39kg (stays the same, hopefully)

*Based on a household scale that sends a small electrical signal through your legs, not too accurate, but good enough for my purpose.

• Make it a game.
• Make yourself accountable (e.g. by placing a bet with a friend, or posting it publicly on a blog)
• Track or you will fail.

Let’s talk about food

3,500 calories are equal to about a pound (0,45kg) of fat. If you consume 1,150 calories too few (food – (exercise + BMR)) per day, you would lose about 1 kg of fat per week. That means if I stick to this and don’t get any more crazy with tips and tricks from the book, I will have to diet for four weeks. Are there any other things I can do?

Slow carb rules

1. Avoid ‘white’ carbs – bread, rice, cereal, potatoes, pasta, tortillas
2. Eat the same few meals over and over again – protip: you’re probably already doing this
3. Don’t drink calories – no milk, soft drinks, fruit juice – also limit diet soft drinks
4. Don’t eat fruit – it’s mostly sugar, eat a vitamin pill if unsure
5. Take one day off per week – and that will be Saturdays – to keep your metabolic rate high

More tips

1. Eat a breakfast – don’t skip it – really!
2. Eat enough protein – 60+ grams per day (did you know that Queal is high in protein?!)
3. Drink water – the normal advice is 2 litres – I keep a bottle at my desk, I average about 3 litres per day
4. Batch that cooking – you won’t be in the kitchen every day
5. Watch out for very dense foods – nuts and alike

Yo-yo can be good, “Forget balance and embrace cycling.” It can be beneficial to eat more on one day and less on another, versus moderately on both.

List of recommended foods (that I liked most)

• Egg whites with 1-2 whole eggs for flavour
• Lentils
• Black beans
• Spinach
• Mixed vegetables
• Sauerkraut
• Legumes
• Garlic

What to do on binge day?

• Have a high protein meal (and not too large) as your first
• Eat a bit of fructose (e.g. grapefruit juice) before meal two to flat-line blood glucose
• Use supplements to increase insulin sensitivity: AGG and PAGG?
• Consume citric juices – lime juice in water
• Consume caffeine (pill), theobromine (dark chocolate) and theophylline (green tea) to let everything pass through your body faster
• Do small exercises during the day – to bring glucose transporter type 4 to the surface of muscle cells (so they can absorb the food instead of your fat cells) (e.g. 10 squats before you eat)

Observations from the book

• Correlation isn’t causation, if you train for a marathon you won’t immediately look like a professional marathoner
• Your predisposition is only that, something that will happen if you don’t challenge the status quo.
• Measure with the same devices each time, the change/progress is what matters

Supplements?

• Cissus quadrangularis (CQ) – possible fat-loss effects and anabolic effect
• Ephedrine hydrochloride: 20 mg
• Caffeine: 200 mg
• Aspirin: 85 mg

High on caffeine, dependency, difficult to wake, so below is an alternative

• Policosanol: 20–25 mg
• Alpha-lipoic acid: 100–300 mg
• Green tea flavanols (decaffeinated with at least 325 mg EGCG): 325 mg
• Garlic extract: 200 mg

I’ve decided that I will use caffeine (not so sensitive to it) and green tea. The others are difficult to get in The Netherlands and it’s all extra costs for that 10% extra.

Things to do with your body

• Swim! – cold exposure can lead to extra burning of calories
  • Tim does ice baths for about 20 minutes, don’t have a bath and it sounds (and is) painful
• So I will place an icepack on the back of neck in the evening
• Drink cold water in the morning, 500 ml
• Cold showers (end with cold water on shoulders/back)

“Short-term cold exposure (30 minutes) in humans leads to fatty acid release to provide fuel for heat production through shivering. This same shivering could be sufficient to recruit GLUT-4 to the surface of muscle cells, contributing to increased lean muscle gain.”

For exercises, Tim has a few different pieces of advice. Most include exercises that recruit multiple muscles in the body and focus on the big muscles (legs, chest, back). I’m very familiar with Stronglifts 5×5 and I will use this as my basis (doing 3 big exercises each time, A/B schedule).

To conclude

In all honesty, the 4-Hour Body is not the most organized book ever. There are many stories and then some research to back it up. But when you want to act on it, it’s difficult to piece together the advice into a workable program (of diet, exercise and supplements).

The things mentioned above are the things that I’m doing, for you it may differ and I wish you the best of luck with your goals. In the near future (or in the past if you’re reading this later) I will post an update with my observations from the other side.

Four Hour Work Week

The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich by Timothy Ferriss digs deep into the mechanics of working less. It is a guided plan for cutting back on work, creating a steady cash-flow and liberation from the 9-5. Although praised by many, the book does not have to be the next one on your list, because there is something wrong with the premise.

Work should be a place where you can build on your strengths and challenge yourself every day. It’s preferably work that will leave you with enough time to enjoy other things too, like vacations and weekends. It should however not be a place that inhibits you from progress and that you need a vacation to restore from the work you have done. If the latter is the case, The 4-Hour Work Week should maybe be the book you should pick up right now. But when you are confident about having a great job already, then do consider the book for it offers many tips and tricks that make life easier.

The first chapter is about setting goals, defining what you really want to do with your life. In a simple format, Ferriss encourages the reader to really think about what you would find important in life. A second part of the equation is the amount that this will cost you, this is almost always lower than you expect. In the chapter Ferriss also explains how to get over some fears that may hold you back, and how to reset your system (be unreasonable and unambiguous).

The book consists of four steps. The first, as just discussed, is Definition. The others are; Elimination, Automation and Liberation. Elimination is concerned with cutting away all things non-essential. Saying no and treating email as something you really ought to be doing only a few times a week are but two examples. In accordance with the 80/20 rule (you get 80% of the results in 20% of your time spent), Ferriss proposes to cut away at the 80%. In Automation and Liberation, the book covers topics like virtual assistants and generating cash flow through online businesses. It even includes tips on how to stay on your job, but at the same time disappear into week-long vacations.

All taken together, it is a brilliantly written book. It features techniques that could save you thousands of dollars/euros and/or hours. Yet at the same time misses the point that work can be fun and exciting. Timothy Ferriss is the living proof that the things he advocates in his books work. He has lived in a variety of countries, learned many new languages and sports. It seems he is really enjoying his life. And I urge the readers to do so too, be it with The 4-Hour Work Week or otherwise!

The Book: The 4-Hour Work Week: Escape the 9-5, Live Anywhere and Join the New Rich – Timothy Ferris – ISBN-10: 9780307465351| ISBN-13: 978-0307465351

More on The 4-Hour Work Week:

http://www.fourhourworkweek.com/ – The Blog, The Book, and more

http://blogs.hbr.org/2012/10/the-truth-behind-the-4-hour-fa/ – A critical perspective on the 4-hour premise

http://www.forbes.com/sites/joshsteimle/2013/05/31/a-love-letter-to-tim-ferriss-the-4-hour-workweek/ – One of the positive impacts the book has had

Total Recall

Total Recall: My Unbelievably True Life Story by Arnold Schwarzenegger is a story about the American Dream. In the up close and personal book, the whole life story of Arnold Schwarzenegger. From young Austrian boy to a American Senator. Whether you like like or dislike the man, his story is ever so inspirational. But is it the whole story…

Schwarzenegger begins with his younger years. First as a kid who begged for money (supposedly for a bus ticket) to visit the cinemas. Then about how his father was not the best father to have around. But also stating that his father has learned him a lot about discipline and rigour. At the age of 16 he joined the army and also started working out. In credit for his drive for body-building, he left the army base one morning to travel to a contest. For this he received quite the punishment, but states that it was worth all the trouble.

After making it big in Germany and Eastern Europe, Schwarzenegger made the giant leap to America. Here he managed to both develop himself in body-building and as an entrepreneur. He and a buddy of his started a company in laying bricks, and through nifty advertisement made quite the fortune. Money from this and other businesses he invested in real-estate that would later give great returns.

In quite some detail, the book is about 650 pages long, he describes his film career. From the initial smaller movies to Terminator and Predator. Schwarzenegger emphasises the role he has played in the movies and how the success is thanks to him. Here is a flaw of Schwarzenegger in not giving enough credit to other people and taking responsibility for the failures that have also crossed his path.

Also in his personal life he has made some questionable mistakes. First there is an affair whilst filming in Europe and then a baby boy with the house maid. The first is described in some detail, but the second is only credited with two sentences. Being a role model should not only entail the good side, but (certainly for an autobiography) also the bad side.

In the end the reader is presented with the success story of Arnold Schwarzenegger. One in which buying a Boeing 747 and getting out of the Planet Hollywood investment on time are key. At the same time a certain level of determination, strength in persistence and drive is clearly showcased. Though leaving out the lessons from which people can most benefit (learning from another person’s mistakes) could have given the book a much better rating.

The book:

Total Recall: My Incredible Life Story – Arnold Schwarzenegger – ISBN-10: 1451662432| ISBN-13: 978-1451662436

More on Total Recall:

http://blogcritics.org/book-review-total-recall-by-arnold/ – Review by Blogcritics

http://www.theguardian.com/film/lostinshowbiz/2012/oct/04/arnold-schwarzenegger-autobiography-total-recall – Review by The Guardian

http://www.youtube.com/watch?v=pDxn0Xfqkgw – 160 Greatest Arnold Schwarzenegger Quotes

http://www.youtube.com/watch?v=32ERLr9dclw – Small Documentary on Arnold Schwarzenegger

Benjamin Franklin

An investment in knowledge pays the best interest – Benjamin Franklin

The Autobiography of Benjamin Franklin by Benjamin Franklin is justly coined the first “How to Succeed” book. Written as an extended letter to his son, his autobiography is packed with eternal pearls of wisdom. His unique writing style finds a perfect match in describing his extraordinary life. Coming up from a poor family, Benjamin Franklin finds his way all the way to the governor of Pennsylvania. This is not through manipulation and coercion but through sheer virtue and morality. Reading this autobiography is as relevant today as it was more than 200 years ago.

Each one of the chapters is devoted to a certain life event (or period). In his younger years, you are left with the image of a frugal individual that has been granted opportunities well before the normal age people are expected to perform them. He starts his career as a printer and works very hard to be better than the other printers and papers that are out there. During his early years, he also starts working on becoming a moral person. From his daily study (one hour in the morning) he finds the time to define and execute 13 moral principles.

After that, Benjamin Franklin starts to travel the world. His conscientious work-style soon leads him to financial success. He later manages multiple printing houses and is able to let them run individually and independently. His attention is soon turned toward public service. In his lifetime he founded a library, a society for improving thought, and a university (among others). In his public service, he then proceeds to politics. With his humble conviction, he is able to convert even his most distinct opposition.

By now he has done more in a lifetime than the combination of any 10 ordinary men. But Benjamin Franklin also has an interest in science and conducts multiple electrical experiments. From his experiments, he gains international fame. Not much money follows, his Franklin Stove (used up to this day) is released without patent and is promptly given to the general public. In his life, Benjamin Franklin has now been a leading author, printer, political theorist, politician, postmaster, scientist, inventor, civic activist, statesman, and diplomat. Through all these different roles he has stayed the same man. He does not speak much about his family but has been a devoted husband and respectable father to his children. Nowhere is there pride to be spotted among the lines, he just states the facts as they are. It is impressive to see what significance a book of so long ago can have.

The Book:

The Autobiography of Benjamin Franklin – Benjamin Franklin – ISBN-10: 0486290735| ISBN-13: 978-0486290737

More on Benjamin Franklin:

https://librivox.org/the-autobigraphy-of-benjamin-franklin-ed-by-frank-woodworth-pine/ – Audiobook

http://xroads.virginia.edu/~HYPER/Franklin/toc.html – Online Book

http://www.gutenberg.org/author/Benjamin+Franklin – More Works by Benjamin Franklin

Creativity Inc

“If you give a good idea to a mediocre team, they will screw it up. If you give a mediocre idea to a brilliant team, they will either fix it or throw it away and come up with something better.”  – Ed Catmull

Lessons learnt: Fail fast, fail cheap. Change requires risk and the courage to take on risk. People are more important than ideas.

Writing your memoir can quickly get you lost in details, glance over struggles or put yourself in a too glorious position. Ed Catmull does none of these things. In a story that chronologically follows his journey through the development of animation is one of great humility and many lessons learnt. When Ed was young he had a dream: making an animated feature film, his dream came through – and then some!

This book is highly recommended for anyone interested in leadership, but why? It is because Ed has some lessons that other ‘management gurus’ have yet to mention. Among those lessons is the following: “It’s not the manager’s  job to prevent risks. It’s the manager’s job to make it safe for others to take risks.” Instead of shielding yourself (or your company) from risks, it is your people who should not have to worry about it. Why? Because there always is a risk, without it progress would not happen. But the feeling of risk, the negative associations should not be afflicting your team. Your team should feel safe to take risks and know that you have their back.

Another lesson about communication comes from the growth of Pixar. During the growth of Pixar, they used to have weekly meetings in a boardroom. It was at an oval table which seated everyone perfectly, there was no hierarchy. But due to growth two things started to happen, 1) the table became too small, people sat in one or two rings outside the big table to join, and 2) name-cards were placed to reserve places for the big-time executives. Ed recognized that he had failed to keep communication open and without hierarchy. After this realization, he ordered a larger table and after another struggle in abolishing the name-cards, he successfully eliminated the hierarchy.

About halfway through the book, I was thinking to myself “What was the name of the author again?” It completely slipped my mind, in all its length the book rarely mentions Ed’s name. He instead opts to name many others for their great accomplishments. For criticism, however, he mostly ascribes the blame to either himself or organisational flaws, never to another individual. Between the lines, he demonstrates that leadership sometimes is not about doing the right things, but also about not doing some things (i.e. assigning blame).

“Failure isn’t a necessary evil. In fact, it isn’t evil at all. It is a necessary consequence of doing something new.” – Ed Catmull

Creativity Inc. is an entertaining, never dull, and pleasant read. I have listened to it in the gym and on my way to work and it has the perfect amount of knowledge-density for an audiobook. Through personal stories, Ed will take you on a leadership journey in creativity.

The Book:

Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration – Ed Catmull – ISBN-10: 0593070100 – ISBN-13: 978-0593070109

More on Creativity Inc.

https://ryanbattles.com/static/pdf/creativity-inc.pdf – Quotes from Creativity Inc.

https://www.youtube.com/watch?v=k2h2lvhzMDc – Keep Your Crises Small – Talk by Ed Catmull

http://www.goodreads.com/book/show/18077903-creativity-inc – More reviews of Creativity Inc.

ReWork

Rework by Jason Fried

What if your business didn’t need to be big to succeed? What if you could focus on what’s most important? What if you didn’t even need a business plan?

These are some of the questions that are pondered by Jason Fried. In Rework, he answers them in surprising ways. He goes against the conventions of ‘bigger is better’ and ‘build and exit’. The book argues that you can stay small, be very profitable and enjoy your work.

Fix your own Problem

Do you really need to listen to your clients? That’s the question that Fried proposes in the chapter called ‘GO’. Why not solve your own problem.

That’s what he did at his own company (37signals). They build a project management tool called Basecamp. They looked at what they were missing from existing software and what a small team like theirs would value most. No research, no case studies, no interviews. They just build it and put it out there. Today more than 3 million companies use it.

Because they did no research they had no excuses to not put their product out there. The feedback also was much faster (i.e. talk to the person next to you). And now when people request new features, they don’t even write it down. They wait for something to be requested many times, check if it’s really something that fits with their own requests (e.g. if it’s really something a small business needs) and only then built it.

De-commoditize your Product

Queal is different from its competitors because we offer more variation, better service and the best quality ingredients. But these ‘facts’ are not what customers care about. If someone is really out for the price, they may find a competitor who offers a similar product for a lower price. And that’s why you need to de-commoditize your product.

You can do this by putting yourself into the product. The competition can copy many things, but never the you in your product. It’s the feeling that people get from your product that matters as much as the rational considerations.

At Queal, we started doing stories which showcase how people use our shakes. And we will show more from ourselves and why we ourselves love to drink Queal. And whenever customers interact with us, they will get a personal response, because we truly care for them.

If you like what you’re reading, you may also enjoy The Four Hour Work Week and The Seven Habits of Highly Effective People.