Blue Ocean is about using value innovation to reach new and untapped market. It sounds exciting, especially in today’s highly competitive environment and many companies are trying to pursue their Blue Ocean. However, not many are successful in creating Blue Ocean. Even for those who successful create their own Blue Oceans, they soon turn red. Companies usually cannot sustain what they create. Why?
The most common and observable explanation is: innovations are copied. The uncommon and hidden truth is something you may have never thought of: companies improve pain.
Build Up Your Competitive Advantage by Identifying Good Pain and Branded Pleasure
In the left diagram, you create your Blue Ocean by generating a significant pleasure peak for customers.
In this stage, particularly for the start-ups, you focus your energies and limited resources on what makes you succeed and stand out – your competitive advantage, and you disregard imperfections and defects you might generate. In other words, you build up your competitive advantage by identifying your Good Pain and Branded Pleasure.
The “Pain has to be Improved” Phenomenon
After creating their Blue Oceans, most companies move towards “Destructive Improvement.” When they go in this direction, their Blue Oceans are destroyed by the “pain has to be improved” phenomenon. This phenomenon is driven by the sacred belief of Continuous Improvement and Customer Centricity.
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Continuous Improvement is the philosophy behind Kaizen, which preaches relentless continuous improvement, and the key systems dedicated to pursuing excellence, such as Six Sigma and Total Quality Management (TQM). Imperfections, pain and defects are the ‘devil’ and must be eliminated. Pain has to be improved.
Customer Centricity dominates in our modern commercial world. Customers’ voices ought to be heard, customers’ complaints must be addressed, and making customers suffer is an unforgivable sin. Pain has to be improved.
If you were the founder of a start-up who just opened a new Blue Ocean, or if you were a senior executive who successfully created a new distinctive competitive advantage in your industry, you would want to move forward, to build a stronger and bigger company. You might buy business books, attend conferences, or employ consulting companies. I’m sure two messages would come across from these field gurus, academics, technology vendors and management consultants. Always focus on Continuous Improvement and Customer Centricity. Pain has to be improved.
Destroy Your Blue Ocean by Improving Pain – Destructive Improvement
On one hand, you are being brainwashed by the “pain has to be improved” phenomenon, while on the other hand, no surprise here; your big innovation is attracting imitators.
Very few Blue Oceans are immune to copying; it is usually just a matter of time and effort. Internet and new technologies have sped up this process and made it easier. When your rivals imitate your offering, it lowers the pleasure peak perceived by customers.
The opportunity cost of improving pain is missing the golden time-window to further enhancing your Branded Pleasures by diluting your limited resource.
Using your resources more effectively than your competitors is a key to business success. Spend even a tiny amount improving something that does not give you the desired result and you are taking a step away from achieving a higher pleasure peak and a step closer to weakening your competitive advantage.
Even if you improve those things that are either important or painful to your customers, if they are not linked to your Branded Pleasures, it is destructive because it would eat up the resources of your Branded Pleasures, further lower the pleasure peaks for customers, make it look more like its competitors and be easier to copy. You waste your first-mover advantage.
Continuous Improvement turns into Destructive Improvement. The Blue Ocean becomes a Red Ocean.
Obama: “That’s some good sushi right there.”
Sukiyabashi Jiro, a sushi restaurant located in Ginza, Tokyo has earned three Michelin stars for years (note 1). His restaurant is remote and difficult to find; it is in a basement, in a far-off district.
The seating area is tiny; it can hold a maximum of ten customers at a time. Jiro doesn’t accept walk-in customers and reservations have to be made more than a month in advance. The prices are steep; each customer pays more than 30,000 yen. His menu is fixed and with only a limited number of choices.
This sushi restaurant pushes pains to the extreme: tiny space, long wait for reservations, expensive, and almost no choice. But Jiro does make great sushi. He never diverges from this mission. Jiro focuses all his resources, attention and energies to make sushi. He does not expend resources improving anything we see as a pain. In fact, customer boast about waiting for a reservation and getting lost on the way to the restaurant; they even proudly tout the expense of the meal.
By aggravating those pains, the sushi restaurant is creating the highest possible pleasure peak for their customers – the best sushi in the world.
Yet Jiro has the highest Michelin ranking and his restaurant is always full. The place is so famous that U.S. President Barack Obama asked to dine there during his visit to Japan in 2014 (note 2).
Expand Your Blue Ocean by Aggravating Pain – Creative Aggravation
In sports, and really in any competition, we recall the champions, the ones who win the gold medals. It is the same in customers’ minds in business competition. To be the winner, you have to generate highest pleasure to customers.
To generate the highest possible pleasure peaks, you have to move towards Creative Aggravation. Not only not improve pain, you aggravate pain; imagine the tremendous resource that you could save by reallocating resource from Good Pains to Branded Pleasures.
You generate the most severe pain peaks – as far as they are not falling into the unacceptable levels of your customers – so you can heighten your pleasure peaks to unprecedented levels.
You make your company extremely difficult to imitate. You capitalize fully your first-mover advantage. You put your limited resources to their best use.
Creative Aggravation expands your Blue Ocean, reinforces your competitive advantage and transforms it into a sustainable strength by aggravating pain.
Great Brands have a Large Pleasure-Pain Gap
Great brands have two things in common: they generate an unprecedented level of pleasure to their customers to beat their rivals and eliminate imitators; they have a large Pleasure-Pain Gap (PPG) to maximize their resource productivity.
* Based on empirical data collected globally from 8,500 customers (note 3), Starbucks, IKEA and Louis Vuitton each has a large Pleasure Pain Gap (PPG).
* Based on 4,500 valid survey responses (note 4), China Merchants Bank (CMB) outperformed all 15 credit card issuing banks on all metrics, yet had the largest PPG among all major rivals.
* Based on the feedbacks of 757 IT managers (note 5), IBM has the most favorable B2B purchase experience as well as the largest PPG among 14 IT solution vendors.
* IKEA aggravates pain with DIY services to generate unmatched pleasure on good value for the money.
* Starbucks aggravates pain with premium pricing to create extraordinary pleasure with their “new coffee experience” and the Third Place.
* Louis Vuitton aggravates pain with the different service levels to deliver unprecedented pleasure with exclusivity.
* Southwest Airlines aggravated pain with no meals, entertainment, upgrades or reserved seats to offer knockout pleasure with cheap airfares.
* Jiro’s sushi restaurant aggravates pain on most aspects of the dining experience to render the utmost pleasure with the best sushi in the world.
All these industry leaders understand Creative Aggravation. They create the highest pleasure peaks to their customers by enlarging the Pleasure-Pain Gap.
Make a Paradigm Shift from “Improve Pain” to “Aggravate Pain”
The secret to eliminating imitators and expanding your Blue Ocean is to make a paradigm shift from “Improve Pain” to “Aggravate Pain.”
Strategy is about resource allocation. The effectiveness of a strategy is judged largely by the effectiveness in resource allocation. “Aggravate Pain” is undoubtedly a far more superior strategy because it uses resource more effectively than “Improve Pain.” There is no more better way to transform your competitive advantages into sustainable strengths without deploying extra resources: “Increase your PPG.”
Visually, when you narrow your Pleasure-Pain Gap (PPG), you destroy your Blue Ocean. When you increase your PPG, you expand your Blue Ocean. The height of a building is in proportion to the depth of its foundation. It is common sense, isn’t it?
Not many companies are successful in creating Blue Ocean, as it takes a unique combination of innovative thinking, wisdom and courage to invest resources differently.
However, making a paradigm shift from “Improve Pain” to “Aggravate Pain,” may require even more innovative thinking, wisdom and courage than creating your Blue Ocean in the first place. Only the most outstanding people understand this and are able to put it into practice.
1. See Oldest Michelin Three Star Chef – Guinness World Records, retrieved 27 April 2014, from http://www.guinnessworldrecords.com/world-records/oldest-Michelin-three-star-chef.
2. See David Jackson, Obama: ‘That’s some good sushi right there.’ (USA Today, 23 April 2014).
3. Global Starbucks In-store Customer Experience Research, Global CEM and CustomerThink (U.S.), September-October 2007; Global IKEA In-store Customer Experience Research, Global CEM, CustomerThink (U.S.) and TOTE-M (Netherlands), December 2008-February 2009; Global Louis Vuitton In-store Customer Experience Research, Global CEM and CustomerThink (U.S.), October 2008.
4. Mainland China Credit Card Customer Experience Research, Global CEM, May-June 2008 and May-July 2009.
5. Mainland China B2B Purchase Experience (IT Solution) Research, Global CEM and CustomerCentric Selling (U.S.), July-August 2007.