Dec 2, 2021
Competition is overrated
In 2014, Peter Thiel, the cofounder of PayPal and Palantir, wrote an article for The Wall Street Journal entitled “Competition is for Losers.” There are only two categories of businesses, he writes: non-monopolies and monopolies.
And those businesses that build monopolies will “create and capture lasting value.”
From an early age, we’re taught that being competitive — and winning competitions — is a good thing. Whether you’re running in a schoolyard race, applying for a job, or starting a business — we’re always competing. It’s ingrained in our minds.
But wanting to compete isn’t always the right thing to do. So what if we stop playing the game and start our own?
Like Thiel, the 2004 book “Blue Ocean Strategy” also challenges the traditional view of competitive-based strategy. The blue ocean theory instead claims that, with the right approach, you can out-do other players by tapping into unaddressed demand (non-customers), thus creating and exploiting new markets — or “blue oceans.”
Discovering a blue ocean is extremely valuable, if only because you will secure a spot as that market’s “default” product or service, with everything else seemingly a cheap or lesser imitation.
Blue Oceans are the result of product discovery and UX research
In his article, Thiel also argues that teams often focus on competing, while losing sight of what’s important — identifying and rushing for the path of least resistance. Product teams, Thiel says, shouldn’t focus on beating other products, they should instead attempt to monopolize an untapped market.
Enter the “blue ocean” strategy templates on NEXT.
In NEXT, product teams in corporations, government organizations, nonprofits, scale-ups, start-ups — it doesn’t matter — wanting to grow exponentially in untapped markets can now use blue ocean thinking during their discovery work to:
Engage with customer and non-customers
Gather evidence of their needs and wants
Inform product decisions that customers will love
A blue ocean strategy is deeply rooted in upfront and ongoing discovery. This discovery-focused approach lets product teams actively engage with users and the market to identify customer needs and wants that push them beyond incremental improvements, toward transformational innovations in the product. The framework is similar to human-centric design's “double diamond” framework, but adds its own concepts and tools for creating new demand and new markets — so-called “blue oceans”.
Product teams with high- and hyper-growth ambitions use Blue Ocean Strategy's template in NEXT to constantly uncover new customer needs and wants that will enlarge their target market. Naturally, this brings with it the need to attract “non-users.”
Of course, Blue Ocean Strategy and NEXT can also be used by product teams experiencing steep competition and eroding margins, helping them rethink their offerings for new customer groups and avoid the lose-lose setup of competition.
How product discovery turned a red ocean blue for Nintendo
The Nintendo Wii’s success is an excellent example of blue ocean thinking. In a market squarely focused on avid gamers, console brands competed on performance (in terms of game realism and graphic quality). With the development of the Nintendo Wii console, the product team behind Nintendo uncovered a blue ocean, which they dominated for years. The Wii’s new motion technology eliminated the need for traditional joysticks or controllers. Players could control their games by physically moving the “Wii Remote” — creating a new type of gaming experience.
Non-gamers gaming with Nintendo Wii
Thorough product discovery and UX research that led to Nintendo Wii expand Nintendo’s addressable user base, from hardcore gamers to casual gamers — and even non-gamers. By uncovering unmet needs and wants, the product team behind Nintendo Wii transformed gaming into a family experience, bridging generational gaps to tap into a blue ocean. Ads for the gaming console showed grandparents playing with grandchildren, or elderly people playing together in retirement communities. The Nintendo Wii wasn’t just for gamers — it was for everyone. Targeting non-customers, the Wii outsold Sony’s PlayStation and Microsoft’s Xbox combined, until the market was disrupted by smartphones and tablets.
Or, take personal care corporation Kimberly-Clark Brazil, where the product team in charge of toilet tissue used the blue ocean strategy to create a product that is both compact and eco-friendly.
To do so, the product team focused on these factors rather than competing with other companies to offer toilet paper at the cheapest possible price.
The compelling value created for users (a product that was easier to carry and store, and more environmentally friendly) resulted in an increase of sales. Moreover, it resulted in a 15% reduction in transportation costs, a 19% reduction in packaging, and gross margins exceeding 20%.
Bringing Blue Ocean Strategy to all product teams
NEXT, the #1 product discovery platform used by hundreds of high-performing teams from companies including Deloitte, Bosch, and Canon, is teaming up with Six Paths Consulting, a leading consulting firm specialized in blue ocean strategies, to help product teams integrate the “blue ocean” framework into their product discovery work.
To do so, we have codified the blue ocean principles and methods into templates available in NEXT. This combined offering provides everything product teams need to collect, analyze, and share insights that inform increasingly differentiated product in market they can own — not compete in.
By helping product teams identify blue oceans of growth and success, rather than battling in the one-and-the-same red ocean of competition, we will them unlock unprecedented value for end users — and the world. And unprecedented growth for the products.
So — what now?
Competition is overrated. In fact, product teams at Nintendo and Kimberly-Clark Brazil have shown us that it is the least efficient path to success. Instead of competing, they were successful by identifying unmet user needs and aspirations — “blue oceans” — and differentiating their products in already-crowded markets, rewarding them with monopolies.
Ready to start your own?
Sign up for NEXT now and let’s win — not compete.
Cover image: DALL·E: Peter Thiel by Joan Miró