Elephants and Blue Oceans!

'Does innovation come from existing market players or from new market players?'
'Do institutional structures of existing market players make them less able to innovate?'

Or are these the right questions to ask?

What matters more 'Innovation in its original sense' (the first form of a product/service) or 'the first form of a product/service highly valued by customers'?

What is wrong in not being the creator of a product/service if you can be the player to create the first form of the product/service highly valued by customers and scale up fast enough to create a critical customer base for your offering? This is a form of imitation but the imitator has done much better than others(including the originator of the idea).

W. Chan Kim and Renee Mauborgne in their article 'The Blue Ocean Strategy' (printed in the October 2004 edition of HBR) provide some answers.

They, in their research, have found that blue oceans (unchartered market space) are created not necessarily through technological innovations but by the first player who links an innovation(tecnological or other) to customer need/s and scales up its offerings fast enough to gather a critical customer base. The authors term this behaviour as 'value innovation' as compared to 'technological innovation'.

The authors have also found in their research that blue oceans are usually created by existing market players from within their core businesses. It is not a line extension but an alteration of the current boundaries of the red oceans to create blue oceans.

The authors quote examples from 3 different industries over the last 100 years to drive home their point:
>Automobiles-Ford's Model T, GM's car for every purpose and purse, Japanese fuel efficient cars, Chrysler's minivan.
>Computers/PC- CTR's tabulating machine, IBM's 650 electronic computer, Apple's Personal Computers, Compaq's PC servers,Dell's built to order computers.
>Movie Theatres- Nickelodeon, Palace Theatres,AMC Mutiplex, AMC Megaplex.

Innovation is not the key. The ability to create a form of product/service (innovation) highly valued by customers and scale up fast enough to create a critical customer base is the key.

This can be done by both new entrants and existing players, and by technology innovators and technology adaptors(value innovators/creators).

There is hope for the so called behemoths in any industry.

An elephant can be agile and flexible!
It can create blue oceans!

-
Sourav
Sent on my BlackBerry® from Vodafone