Lower costs and add more value by using blue ocean strategy.
There are ways to lower costs by using blue ocean strategy. Start by using Blue Ocean Strategy questions. There has never been a more important time to add the right strategic partners.
Basically, there is no business in existence on the entire globe that is not in some way attempting to lower costs in some specific area.
I’m betting your company is right there with the rest of the world’s enterprises in wanting to lower costs.
A Reminder on how to add value and lower costs by using blue ocean strategy
I like to remind business owners and decision makers of some of the right questions to ask when it comes to this topic.
The premise is of course, that you don’t want to jeopardize your blue ocean offering or some other great value proposition you’ve developed over the course of the life of your business.
After all, the key to blue ocean success is breaking the value cost tradeoff. Lowering cost while increasing value at the same time.
When you resist the common desire to lower quality or the value of your offering as you lower costs, you’re simply competing in bloody red oceans.
So what questions might you start with when it comes to lower costs by using blue ocean strategy
Who can we partner with?
How might we streamline and innovate operations?
How might we multiply people’s contributions?
And in our Covid-19 world specifically; how might we be radically generous?
Partnering with someone or another company is a possible way to vastly lower costs. I would contend that today’s business landscape is ripe for partnering opportunities.
Who can we partner with?
There are companies and really smart people who are planning ahead by building relationships that will pay off big once the economy recovers.
I’m familiar with the one company taking on products into its new home shopping channel. They have an audience exceeding 10 million with a budget to market to them but don’t have any products to fill the pipeline.
They are focused on loading the on-air hosts and hostess’ with products made in the USA starting in late June.
The company I’m referencing landed their product’s spot on the broadcast simply by sending a sample to the CEO. The simple act of reaching out landed a potentially lucrative contract.
Wine industry innovation
In similar fashion, a new wine supplier I’m familiar with needed three different wines to deliver to restaurants.
They did some research and found a vineyard, family owned, with product ready. All of their key supply chain and buyer contacts had disappeared with the downturn.
The new supplier communicated, held a call, shared his concept, and now the two are partnered on terms that wouldn’t have been offered in another market environment.
A packaged opportunity
Another company was having something packaged in the way of a supplement.
The packager had made a significant investment in time and money on an unrelated product run and had a warehouse full of items ready for sale. The original buyer had died with no instructions, family, corporate entity or anything in place to take care of the product or billing.
The packager went to the company mentioned and asked for sales assistance and now the two are partners on the sale of the product. At NO COST to the company who will sell the products.
Bottom line, seek out partnerships to lower costs. Who may benefit by being in relationship with you? Who might benefit you if they were your partner?
How might we innovate and streamline operations?
Now may be a great time to assess the efficiency of certain employees, methods, and cost centers. Work from home scenarios are starting to shed light on superstars in companies. We are starting to see the efficiencies of work from home positions that heretofore were never granted.
Implementation tips: Decide what you’re measuring in the way of an efficiency.
If you can’t measure it, you can’t improve it. So lay out your operations by task and time.
Measure how the work is done and then build reports that draw correlations between time work takes, the way it is done, and who is doing it.
How can we multiply people’s positive energy and contributions?
This should be taught as a concept in every business school but it’s not. Companies that succeed here are the ones that empower employees. They allow consumer facing employees and staff to solve problems and make policy better if not change it all together.
One national mortgage operation became an ESOP. An effective ownership culture, the research shows, is one that generates lots of ideas from a well informed and highly involved workforce.
Companies that have these high-involvement, idea-generating cultures, generate an incremental 6% to 11% added growth per year over what their prior performance relative to their industries would have predicted.
When you integrate the human element into your company, you end up with a culture that will begin to treat the company as though it is theirs.
When people begin to view their roles as one that signs the front of the checks and not the backs, magical things begin to happen with the costs. People operate smarter and more efficiently.
Start by slowing down
There are ways to lower costs by using blue ocean strategy without reductions in customer value. Start by slowing down and asking the right questions.
Want to move forward?
You really can lower costs by using blue ocean strategy. If you have questions about this concept or any other Blue Ocean Strategy issue, feel free to set up a complementary one hour chat with me. I’d love to learn more about your business. Schedule that time here.
Sherman G. Mohr is an Insead Blue Ocean Strategy Institute Certified Blue Ocean Strategist residing in Nashville, TN. He is co-founder of a marketing/technology firm and does consulting in numerous industries.