The idea of “Blue Ocean” and the strategy behind it is
incredibly appropriate for the printing industry. Most printers live in the “Red
Ocean” today, and are greatly suffering (and many continue to disappear)
because of their inability to get out of it.
Blue Ocean is a term coined by the prolific authors, professors
and business theorists W. Chan Kim and Renee Mauborgne in their book "Blue
Ocean Strategy: How to Create Uncontested Market Space and Make Competition
Irrelevant" (2005).
If you are in the printing industry, and are not familiar
with Blue Ocean, I would highly recommended putting in some late summer reading—
it’s a quick read, unlike many business books. A lot of people throw the term
around loosely, but if you study it closely, it really is among the best of many
popular business ideas that have emerged in the last 20 years or so.
The theory goes that in an established industry, companies
compete with each other for every piece of available market share. The
competition is so great that some firms cannot sustain themselves and stop
operating. This is the state of companies living in the Red Ocean (as in blood
red.) At the risk of sounding obvious,
firms in the printing industry are in this Red Ocean. There are many thousands
of companies that are almost indistinguishable from one another.
The book contains several fantastic case studies of firms who
clearly differentiate in core ways. These are firms who, by innovating and
creating great differentiation, find their way into the Blue Ocean, where no
firms operate, allowing the company to expand without competition. Examples in
the book include Cirque du Soleil and Southwest Airlines. In the case of
Southwest, at this point they’ve been copied by dozens of other companies… but they
took many years to emerge, during which the company profited immensely. In the case of Cirque, they arguably have
remained alone in their unique market.
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| From the Cirque du Soleil film, World's Away, photo credit: Mark Fellman, Paramount Pictures |
Some might think it is a stretch to compare printing
to a circus, but there actually are parallels. The circus business, pre-Cirque,
was in long-term decline. Alternative forms of entertainment—sporting events,
TV, and video games—were casting a growing shadow. This is similar to what is happening
to print in the face of digital media. Children preferred video games to circus
acts. Marketers prefer digital media now, due to faster cycle times, lower
costs and measurability.
An industry beset by decreasing audiences and increasing
costs. In printing’s case, even without increasing costs, we are faced with
price competition from weak and desperate direct competitors as well as from the
easier and less costly digital media alternatives.
Interestingly, a new entrant to the printing industry would have
a tough time in face of the existing competition, just like Cirque faced a
challenge competing against the incumbent Ringling Brothers, who for most of
the last century had set the industry standard. Cirque created uncontested market space that made the
competition irrelevant. It pulled in a whole new group of customers who were
traditionally non-customers of the industry—adults and corporate clients who had
turned to theater, opera, or ballet and were, therefore, prepared to pay
several times more than the price of a conventional circus ticket for an unprecedented
entertainment experience.
Southwest Airlines
strategy, as articulated in the book, was not to compete head on for traffic
from existing airline customers, but to go after people who normally could not afford to
fly—to compete for business normally owned by bus and car travel instead.
Both companies created new demand for their products. I can think of only a handful of companies in the printing
industry who have taken this kind of approach.
There are a couple of ubiquitous examples who are "online printing
companies”, or companies who solely do business on the internet, but whose products are tangible, print or print-related. There are also “brick and mortar” printing industry companies who have made the
swim into the beautiful Blue Ocean of profits and growth.
Can you name any of them?
