Blessed are the strong, for meek shall never inherit the earth.
In the books, The Blue Ocean Strategy and The Blue Ocean Shift, both by W. Chan Kim and Renee Mauborgne, there are many examples of corporations that have successfully executed the Blue Ocean Strategy (BOS). It inspired me to do some more research on my own. And so I went out looking for BOEs (Blue Ocean Entities). Unfortunately, I did not find a single one. However, I was amazed to find that the business world is full of GOEs (Grey Ocean Entities). So, here’s the lowdown on the grey ocean strategy.
Between the blue and the red ocean there lies a hidden grey ocean with its many shades and hues to choose from. In this vast grey ocean, there is very little competition and the risk of failure is also very low. The grey ocean strategy (GOS) is neither about competition nor about non-customers.
To draw an analogy, it is like perceiving life beyond the five senses. There actually exist myriad ways of doing business beyond the ordinary; however, it’s quite difficult to fathom their existence without using your sixth sense. To implement it in life and business, one needs to have a grey ocean mindset.
The blue ocean strategy is needed only when the supply exceeds demand but the grey ocean strategy can be applied even when demand outstrips supply.
Here are the basic principles of Grey Ocean Strategy (GOS):
The Gospel Truth
The foremost requirement is to understand the hardcore truth that life and business are about the survival of the fittest. The only thing that matters is who conquers.
'For might is right when empires sink, In storms of steel and flame, And it is right when weakling breeds, Are hunted down like game.' ….. It’s the logic of the ancient world And the gospel of today. —Ragnar Redbeard
The belief system
Our belief system determines how we do business. According to the 3B framework of Dr. Devdutt Patnaik, the great Indian mythologist, as is a belief, so is behavior and so is business. This is called the business sutra. For following the grey ocean strategy, one needs to have some deeply ingrained beliefs including the following:
- Might is right.
- The sole purpose of business is to make money. Everything else is secondary.
- Belief in Gordon Gekko’s philosophy that ‘Greed, for the lack of a better word, is good’.
- Small is ugly and big is beautiful.
- Business is not like a war; it is a war. In mythological language, business is a ran-bhoomi (Battleground) and not a rang-bhoomi (Playground).
- The brand is a good substitute for quality.
- Short-term orientation creates long term value.
The religion of business
Business is about polytheism (belief in many gods) and not monotheism (belief in one God). Simply stated, not just customers, but every stakeholder is a God. Why restrict yourself to just milking the customers when there are many ways to leverage the various business stakeholders and use them to your advantage?
Instead of creating blue oceans by crafting a new value curve through the four action framework (Raise, Reduce, Eliminate, Create), it is much easier to leverage the business ecosystem of suppliers, bureaucrats, regulators, investors, etc. For example, for an organization importing, say, marble, it just needs to leverage its network and lobby for import policy which ensures that other importers don’t fulfill the eligibility criteria for import.
Business is also about designing problems around a solution
Business exists to address a customer pain point and offer a remedy; i.e., to cater to a specific customer need. Put simply, business is about providing solutions to real-life problems; if there is no problem there’s no business. And as long as humans are there on this planet, there will be always problems to solve because it is a natural human tendency to first create a problem and then start looking for solutions.
However, providing solutions is not difficult; the more troublesome is to find real problems to solve. So, what if you can’t find one? Simple, just design a compelling problem around the solution. Here, lateral thinking will not help because it revolves around solution generation for a known problem and not vice-versa. Design thinking might help in first discovering a solution and then generating a problem.
And if that is also not possible, even creating a perception of the problem will do. Here, marketing will come to your rescue because it is all about creating needs and perceived desires that something is missing in life. The advertisement industry is built around convincing people to buy products they do not really need. For instance, by creating a perception that people can’t get all the nutrients from eating normal foods, you can sell a chemical pill or a nutrition supplement powder as a meal replacement. Take another example, skin color has nothing to do with beauty but skin whitening creams is a multi-million dollar business. How? Multinational giants such as Unilever, Johnson & Johnson, Procter & Gamble and L’Oreal target darker-skinned consumers with the help of big marketing budgets. They have made people obsessed with fair skin by creating a notion of beauty and superiority linked to lighter skin. This makes dark-skinned people think they are ugly and inferior.
Here’s a list of few corporates which have successfully implemented the Grey Ocean Strategy (GOS):
- The Amazon Way: Big fish eat small fish. This is the rule of the oceans. So, be shameless when it comes to stealing the sales of your business partners.
- The Walmart way: The value-cost trade-off can be easily broken by changing the focus from customers to suppliers. So, instead of customers, just squeeze the suppliers who in turn will squeeze the workers.
- The Wells Fargo Way: Oceans are actually meant for fishing and not swimming. There are plenty of fishes to catch if you know the art of deep-sea fishing, which is about fishing in the dark. So Just do it; if caught, you can always blame it on a few bad fishes.
- The Volkswagen way: Instead of thinking about customers, in accordance with the theory of constraints, the focus should shift to exploit and eliminate the key business constraint. In the case of the automobile sector, it is the regulator. So, use tech for the RRM (Regulator Relationship Management) instead of the CRM (Customer Relationship Management).
- The Patanjali Way: In the FMCG sector, brand creation is much easier than value creation. So, why break the value-cost tradeoff? Just doing a little better trade-off between value and cost is more than enough to beat the competitors at their own game.
- The Ranbaxy Way: Follow the Volkswagen Rule and have a plan B. Anyhow, you can always sell lemons to Japanese investors.
- The Jio Way: First create an uneven field and then ruthlessly kill the competition. Catch it off guard and overwhelm resistance with speed and suddenness. After all, business is like a war and everything is fair in love and war. The charm is not so much in winning the game but in destroying the opponents. Indeed, the history of destruction is as old as humanity and as charming as creation.
- The Paytm way: Keep on pampering the customers because the new valuation mantra is a loss-to-revenue ratio.
- The Facebook Way: To remain a big fish in a big pond, don’t let other fish grow in size. Either buy out the competition or just copy it. After all, everything is fair in business war.
- The IL&FS Way: Maintain an aura of invincibility and never have any skin in the game.
- The Amrapali (Indian real-estate giant) Way: The sole purpose of doing business is to make money. Isn’t it? And there are hundreds of ways to make money without selling any goods or services to customers. For example, you can just siphon off customer advances and if that is not enough just don’t repay the bank loans.
- The Karvy (the stock-broking firm) Way: Why look for non-customers when customers are ever willing to sign their Will in your favour; you just need to ask for it?
- The Sahara Way: Just add a touch of glamour.
- The Yes Bank Way: Fake it ‘til you make it.
There was a time in India when there existed a vast grey ocean and a small red once, the blue one was almost non-existent. In fact, there was hardly any need for it. To survive in the era of ‘license Raj’ of the 1970s and 1980s, it was important to look beyond customers and offer prayers to many other gods of the Indian business ecosystem including regulators, policy-making bureaucrats, and politicians. The value-cost curve hardly existed, the business success was all about leveraging the network. For example, Dhirubhai Ambani laid the foundation of RIL during this period only. The era was about survival of the fittest and Mr. Ambani proved it and became the emperor of Indian business.
In the current era, the size and visibility of the grey ocean are reduced considerably, but still, it is big enough. Now the ritual of offering prayers is done by industry associations—acting as priests—instead of the individual companies. For example, how at the behest of the plastic manufacturers association, the Modi-government back-tracked at the last moment while implementing the plastic ban. Then there is the Pharma industry which is using its clout to pressurize the Indian government to delay the implementation of a mandatory code on ethical marketing of pharmaceuticals even though the voluntary code is not working.
Unlike a fixed framework (the four action framework) of blue ocean strategy, under grey ocean strategy, there is an infinite number of permutations and combinations of leveraging the business ecosystem. The only limitation is your imagination.
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