Red to Blue to Red
If I ask 10 businesspeople to define the term "business model," I get 10 different answers—ranging from vague descriptions about the product's proprietary process to generalized descriptions, including how the product is marketed, sold, distributed, and supported.
I marvel at how many senior business executives still describe their business model using the classic marketing metaphor, "We do it, faster, better, cheaper," as if today's market is dumb enough to believe product differentiators can be faster, better, cheaper. So my follow-up is, "Tell me how it is faster, better, cheaper."
Business modeling and business models seem to remain a mystery. When things are good, businesses have a superior business model (whatever that means); when things are bad, their business model is OK, but the market is bad. Although both positions are true to some extent, the concept of "business model" is unclear.
To shed some light on the business-model mystery and hopefully prove its importance to success and sustained growth, I have chosen to introduce the use of the business-model concept as the foundation for a relatively new business strategy called Blue Ocean.
Beat-the-Competition Thinking Is Dead
When the book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne was released in 2005, the market, rightfully so, was abuzz with the simple revelations the book put forth.
The "Red Ocean" metaphor, used to describe a cutthroat, backstabbing, cluttered bloody marketplace, struck a chord with most businesspeople. The book challenged businesses to "Stop trying to beat the competition and [instead] make the competition irrelevant by breaking the value cost trade-off paradigm."