Blue oceans, red oceans

I continue to march towards my goal of completing every book on my summer reading list. (All these years on the planet and I have never once read everything I set out to read between Memorial Day and Labor Day.)

The business shelves at the library are not very different from the self-help shelves these days. Pick up a random title and the message on the jacket is “take my advice or perish.” Long before embarking on the career as an e-business consultant that led me to b-school, I was totally fascinated by The Innovator’s Dilemma.

Back in 1998 when I first read the book, DV was just making inroads in the video business. It followed Christensen’s road map of disrtuptive technologies to the letter. Nearly a decade later, the big players in professional video production have not been displaced. It’s still Sony, Panasonic, and JVC. DV was evolution, not revolution in acquisition.

The story in post is a little different in post. Isn’t it always? There DV had a profound effect. One little wire replaced all those cables, all that dedicated hardware, all that need for massive storage devices. Apple’s Final Cut Pro was a disruptive technology in the post industry – an industry that hadn’t quite digested the previous disruptor, the NLE.

What took a while for me to get was how the innovator’s dilemma applied to post, but not to acquisition. Same technology. Virtually the same adoption pattern. DV cameras were not of much use to the established, high margin customers when introduced, but eventually DV cameras’ capabilities and broadcasters’ needs converged.

Christensen argued that big, lumbering companies could not address the needs of smaller, emerging lower margin markets. Big companies needed to create smaller, independent organizations to address these needs. Apple did this with its pro applications division. Panasonic, arguably the camera company that’s gained the most from the digital revolution, didn’t do that. I guess it’s a little early to bury Porter’s Five Forces. The industry structure can explain how DV was a sustaining technology in acquisition, but a disruptive technology in post. Well, that and the whole one-wire thing.

But Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne advances the discussion of the innovator’s dilemma, and encourages entrepreneurs to look beyond Porter’s Five Forces.

Blue Oceans is a thick read with lots of frameworks illustrated by circles and boxes and arrows, but the overarching theme is compelling to both large and small businesses. It’s not about competing, but about value innovation. Create new markets. Don’t go toe to toe, feature to feature, dollar for dollar with competitors. It’s an excellent companion to Dealing with Darwin.

K & M encourage going after mass markets with compelling products affordable to the largest possible portion of potential customers. This flies in the face of the much of the common wisdom imparted in b-school lectures. Entrepreneurs can be freed from the inevitability of duking it out on the battlefield of Porter’s Five Forces.

Look at the most exciting new companies of the Web 2.0 world. YouTube, JumpCut, Basecamp, Fluxiom, Flickr, No matter the revenue model… easy and inexpensive rule the day.

So how does this video entrepreneur find advantage?

Look at non-customers and previously less desirable customers. My studio’s client list and service offerings have evolved dramatically in the past two years. Previously providing post and design services to the non-fiction broadcast television market and web services for just about everyone else, we’ve become a lab that provides rapid prototyping for media companies that need to explore new distribution formats. Here’s what your podcast will look like in iTunes, how your video will look on an iPod, and how you can extend the value of your media property utilizing RSS and SMS. Disruptive technologies such as CSS, Xprove, and inexpensive HDV camcorders make this all possible.

We built the lab to meet the needs of smaller media companies that needed to test new media concepts before committing resources to them, but larger companies are taking advantage of the low cost, low risk approach as well.

Change your mantra. Don’t compete. Innovate. Look beyond the services you currently provide. Why don’t non-customers engage you? What other services are used by customers in conjunction with your services?

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