IT Solutions Blog

Is your IT Strategy "True Blue" or "Bloody Red?"

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A few weeks ago, I had the pleasure of reading "Blue Ocean Strategy" by W. Chan Kim and Renée Mauborgne.  One quote from the book really hit home with me - “There is no such thing as a permanently great company, nor a permanently great industry.  But there are permanently great strategic moves.”

In today’s current economic environment we see this everyday.  We’ve all witnessed the bankruptcies of 100-year-old financial institutions, established high tech companies, the real estate market, the list goes on…

"Blue Ocean Strategy" does a great job analyzing the market universe and uses the term blue and red oceans to describe global markets, where we all play a role.  

Red oceans are highly competitive, established, and often commodity markets where everyone in that industry is competing and fighting for their fair share of the market demand.  The cut-throat competition in this type of market turns the ocean bloody red.

Blue oceans can be seen when companies adopt “the blue ocean strategy” and leave the past market boundaries behind, as well as the competition.

I think IT executives can also reap rewards from adopting a blue ocean strategy as well.  Because we all know “There is no such thing as a permanently great company (or IT department), nor a permanently great industry (or technology).  But there are permanently great strategic moves”.

When I read the definition of “Value Innovation” I realized that successful IT departments consistently provide this value innovation to their customers or the line of business they support.

Blue Ocean Strategy defines value innovation as follows:

Value Innovation is the strategic logic underpinning blue ocean strategy. Value innovation is the simultaneous pursuit of differentiation and low cost. Value innovation focuses on making the competition irrelevant by creating a leap of value for buyers and for the company, thereby opening up new and uncontested market space. Because value to buyers comes from the offering's utility minus its price, and because value to the company is generated from the offering's price minus its cost, value innovation is achieved only when the whole system of utility, price and cost is aligned.

In the Blue Ocean Strategy methodology, the Four Actions Framework and ERRC grid assist managers in breaking the value-cost trade-off by answering the following questions:

1) What factors can be eliminated that the industry has taken for granted?

2) What factors can be reduced well below the industry's standard?

3) What factors can be raised well above the industry's standard?

4) What factors can be created that the industry has never offered?

I’m interested in hearing from IT Executives who have considered these questions as it relates to their IT infrastructure and the line of business they support.