From red to blue ocean (1/2): Only value innovators can escape the sharks

Nowadays we can observe rapid growth of companies like Amazon, Apple and Netflix. Both market valuations and media coverage of these large firms are rising. How to escape the red ocean full of sharks and grow in the large, empty blue oceans of new markets?

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Partly thanks to this development, many people believe that technology innovation is the answer to everything. However, this may not be the solution for companies wanting to create new markets and boost growth. Work by INSEAD business school professors and authors of the bestseller Blue Ocean Shift reveals that technology innovations are not an automatic guarantee of success.

When the authors raised the question at conferences as to who invented the personal computer, people usually guessed Apple or IBM. However, the correct answer is Micro Instrumentation and Telemetry Systems (MITS). This reminder comes from an article on the website of the INSEAD business school.

Technology innovation or value innovation?

Technology innovators often start something big but ultimately there are other companies that translate it into commercial success. Although MITS invented the first personal computer, it was left to Apple, IBM and others to dominate the new mass market for PCs. This has been true for more innovations in technology. To turn a technology innovation into value innovation, you need to produce a sharp increase in the value for buyers.

Apple did indeed capitalise on its own iTunes, iPhone, iPad and App Store but often it is not the original innovator who reaps all the benefits; on the contrary, value innovation is carried out by a different player. That may be the reason why a majority of people don’t even recognise the names of those who were the actual technology innovators.

For the creation of new markets, shifting from existing crowded markets (which are like red oceans – full of competitive sharks) to explosively growing new markets (clean, blue oceans), technology innovation per se is not enough.

Book

KIM, W. Chan, MAUBORGNE, Renée: BLUE OCEAN SHIFT – Beyond Competing: Proven Steps to Inspire Confidence and Seize New Growth. Hachette Books (September 2017), 336 pp.

-jk-

Article source INSEAD Knowledge - INSEAD Business School knowledge portal
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From red to blue ocean (1/2): Only value innovators can escape the sharks

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