Marketing: Six Sigma vs Blue Ocean Strategy
In order to succeed in a capitalistic society, a business must have a defined edge over its competition. Companies go to great lengths in order to develop their competitive edge. It may be the technological advancement of its products or services, its cutting-edge marketing programs, or the way it recruits its employees. These are examples of the common areas that most companies seek to build, define, and expand their edge over competition. Another way that businesses seek to develop an edge is in their actual strategy, and two of the most popular business strategies in operation today are the 6 Sigma Strategy and the Blue Ocean Strategy. Both of these business strategies have gained widespread traction in the business world over the last 10 years. Although they are both effective, they are different, and depending on a company’s primary operations and objectives, one may be a better fit than the other.
Blue Ocean strategyThe “Blue Ocean Strategy” is based on a business strategy book released in 2005 by authors W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD. The basic idea behind the Blue Ocean Strategy is that an organization may experience higher growth and increased profits by creating new demand in an uncontested market space instead of trying to compete in a market space that is already overcrowded with competitors. Blue Ocean seeks to capitalize on the most basic premises of economic theory which is supply and demand. Is it easier to generate profit in a market that is full of sellers, or in a market in which your company is the only seller. The answer, of course, is in a market where you are the only seller. The challenge in the Blue Ocean Strategy, though, is creating this new demand. Creating is not easy. It requires innovation, creativity, and strong vision. It may be very difficult to establish market share at first in a new market space, but once the difficult first steps are taken, a company can increase profits and growth at exceptional levels. There are four basic principles in the Blue Ocean Strategy that must be adopted by a company: The uncontested market space must be created by:
1-Expanding market boundaries.
2.Focusing on the Big Picture
3.Reaching beyond the existing demand and
4. Establishing and implementing the correct strategic sequence.
Blue Ocean strategy explains that a Red Ocean is where competition already exists. The term Red Ocean is used to denote that is where companies fight each other in a plethora of ruthless and even unethical ways in order to gain an edge over the competition and capitalize on the market. The term red is used to symbolize blood in the water from all the fighting.
The Blue Oceans, however, are where the water is clear. No one has been there, the market is open, and competition is scarce. Instead of trying to find all of one’s market in the Red Oceans that are infested with other companies, a company may do better to venture out into the Blue Oceans in order to find clean water and fresh markets.
Six SigmaThe business acumen of Asian companies has gained widespread respect throughout the world in the last 20 years. Not only do they often know how to make profits, but companies such as Toyota and Motorola who practice Six Sigma are recognized as world leaders in company management and business practices. The 6 Sigma business strategy is a business management strategy originally developed by Motorola in 1981, and throughout the last 20 years, this business strategy has been adopted by countless companies in the United States. 6 Sigma’s primary objective is to improve the quality of process outputs by identifying and removing the causes of defects, or errors, and minimizing variability in manufacturing and business processes. 6 Sigma actually creates an infrastructure within an organization of people who are experts in various 6 Sigma principles. These people are recognized by colored belts, similar to karate. Different businesses will find each strategy unique Due to its very basic and comprehensible approach, 6 Sigma will generally be much more attractive to businesses that are heavily involved in manufacturing. While a business that is not in manufacturing may still find benefit with the 6 Sigma Strategies, it is without a doubt, most effective in companies that are manufacturers. While Six Sigma is great for optimizing existing processes, it can sometimes inhibit the development of new products and markets. To start thinking outside of the box, you might want to create a blue ocean strategy.
The Blue Ocean Strategy, however, is a bit more applicable to wide array of business types. Companies that may find Blue Ocean most applicable are technology companies or companies that are able to easily innovate their products. Innovation is a key component of this business strategy, and therefore companies that are able to innovate product development in basic and creative ways may find it easier and more productive to adopt the Blue Ocean Strategy.