CorporateConnections™ organized a workshop on Blue Ocean Strategy that infused hope in a group of entrepreneurs, some of them facing huge hurdles in their current business. To some, it was a beacon showing the path to higher revenues.
I have read the book long back and while I was going through it I realized that my first company was truly an outcome of a blue ocean strategy. We had created a new market without competition and had enjoyed the monopoly for many years that strengthened our foundation.
The workshop was a refresher imploring me to run a workshop with my own team and apply the principles of the ERRC Grid and also the six approaches to finding non-customers. The exercise resulted in making improvements and lowering our operational cost. I am pleased to share here a simple overview of the ERRC matrix for your consumption. I will follow up this, soon, with another article on the approaches to finding non-customers.
Eliminate — Reduce — Raise — Create (ERRC) is an effective tool that will help in bringing down costs and enhancing value. A customer pays you a price that is equivalent to the perceived value of the product or services you deliver. The market forces decide the price and hence you have no option but to reduce your cost to stay competitive. Similarly, the competition raises the bar for perceived value and hence you have to continuously innovate to keep raising the value.
Eliminate — examine your product/service and look at the factors that you can totally eliminate as they are no longer relevant and are not providing any value. These are things that customers no longer value and are additional frills.
Reduce — look at factors that can be reduced well below the industry standards and still have no impact on the perceived value. These could be costing you money without giving you the value.
Raise — certain factors can be raised much above the industry standards thus giving you a definite edge and consequent value.
Create — introduce factors that are not being offered by anyone as yet. This gives you a lead and attracts new customers while stopping the churn.
In one of our businesses, we had a leadership position that started getting increasingly challenged. We used the Blue Ocean framework to regain our leadership which we hope will last for some quarters. The key is continuous evaluation of the business with an innovation mindset and breaking the value-cost trade-off.
Learning & Development is a core value of CorporateConnections™ and it is in our mandate to organize regular opportunities to arm members with tools and techniques for personal and professional growth.
Watch this space for the follow-up article on how we used two of the six approaches for finding non-customers.