Applying the Blue Ocean Strategy to the Business Model Canvas

To apply the Blue Ocean Strategy, you start with a Business Model Canvas that describes your industry and then look at your the business model canvas from three different perspectives: the cost prospective, value proposition, and the customer segment.

From the cost prospective, identify the highest cost infrastructure elements and see what would happen to the model if you eliminated or reduced them. Then consider the infrastructure investments you could make or improve upon and see what would happen to the model. When Blue Ocean Strategyit comes to looking at your model from the cost prospective, ask yourself the following questions:

– What activities, resources, and partnerships have the highest cost?
– What happens if you reduce or eliminate some of these cost factors?
– How could you replace useless or costly elements by reducing expensive resources, activities, or partnerships?
– What value would be created by planning new investments?
– How will changes made from a cost prospective affect your value proposition and customer side of the model?

Next, look at your business model from the value proposition prospective and see what new value you can create or increase. Then see what value you can eliminate or reduce. When it comes to looking at your model from a value proposition prospective, ask yourself the following questions:

– What less valuable features or services could be eliminated or reduced?
– What features or services could be enhanced or created to produce a valuable new customer experience?
– What are the cost implications of your changes to your value proposition?
– How will changes to the value proposition affect the customer side of the model?

Finally, look at your business model from the customer prospective and see what new customer segments you could focus on. Then see what customer segments you can eliminate or reduce. When it comes to looking at your model from the customer prospective, ask yourself the following questions:

– Which new customer segments could you focus on and which segments could you possibly reduce or eliminate?
– What jobs do new customer segments really want to have done?
– How do the customers prefer to be reached and what kind of relationship do they expect?
– What are the cost implications of serving new customer segments?
– What effects does adding or eliminating customer segments have on your value proposition?

How would you start to apply the blue ocean strategy to your business?

Note: this article was originally posted November 11, 2015 at


How to Validate Your B2B Go-to-Market Plan

What are we selling? This is where we determine the specifics of our offering, not just in terms of product features and functionality, but also in terms of uses, pricing, messaging and offers. Following the minimum viable product (MVP) strategy, we create as little of the product as necessary to prove its economic viability. In fact, there are ways to do this without actually building the product, which I will explain in a future article.

Who are we selling it to? At this stage, we do persona mapping — determining the demographics and psychographics (personal and business) of who we think will purchase our product or service. Remember that who you think will purchase and who actually purchases may be quite different, so it is important to test this in the early stages of the launch.

Why do our prospects need this? Given all the ways our prospects can spend their money (or not spend it), why is our offering something that will grab their mind share and wallet share? What are the compelling factors that will make them overcome inertia and hit the “buy now” button or engage with a sales representative?

Where can we reach them? This is where you determine where your prospects hang out, what they read and who they listen to, and also where you discover which media are the best at reaching people who may not currently know who you are or why they may need you.

How do we go to market?  I’ve written a lot about marketing and sales models, including this recent post where I discussed sales models as a core component of marketing and sales alignment. There are four major types of B2B models, including direct, telesales, channel and online, with dozens of hybrids and variations. There are ways to test these models at very low cost, with the goal of achieving a consistent and repeatable go-to-market model as you scale the business.

When should we launch?  Okay, to confess, the “when” isn’t as important as who, what, when, where, why and how, but I needed it to complete the set. Actually, “when” can be important when you consider the impact of seasonal purchasing and competitive product launches. Enough said about this.

Marketing research does have its place in your go-to-market plan validation, but usually as a form of pre-testing. Conducting research online or at the library — or asking someone whether they would buy a product at a focus group – is not the same as proving whether there is a market for your product. Better to spend some time and a few dollars on the type of testing that really counts – whether your prospects will actually purchase of what you are selling.  That’s the type of testing that gets me excited!

Reprinted with permission from Great B2B Marketing. To view the original post, click here.

The Dangers of Premature Funding – Why You Should Think Twice Before Taking the Money

As you can read on this site, many of our smart bloggers preach the doctrine of lean start-up. Steve Blank wrote a great article on this subject for Harvard Business Review titled Why the Lean Start-Up Changes Everything. The article points out that 75 percent of startups fail, regardless of how much time, effort and funding are involved. The lean approach, the way Blank teaches it, is to test fast, fail fast and learn whatever lessons are necessary to get you to the next level. And this can often be done with far less money than you think.

I’ve been involved with a number of startups ranging from the pure bootstrap -where my partners and I were camped in borrowed office space, sitting on chairs we brought from home – to the VC funded model, where we launched with tens of millions of dollars of other people’s money (OPM). And while the outside money was comforting, it always comes with a price. Other people will have a say in how you run your company and sometimes, in whether you even get to run your own company.

Based on these experiences, as well as what I have learned from my clients and entrepreneur friends, my recommendation is to take the least amount of money possible in the early stages of your venture, for these reasons:

  1. You will spend your own money wisely. Ventures that get big infusions of cash often spend the money in ways that do not advance the needs of the business. A recent example of this is the spectacular failure of the Israeli electric car company Better Place, which took in almost $1 Billion in funding but crashed in a big way. By contrast, if it is your money, you tend to monitor every penny and make sure all expenses are productive and necessary.
  2. You won’t change your business model too often. I’ve been in a situation where a large investor forced us to change our business model instead of staying a course that I believe would have been ultimately successful. Money often comes with some loss of control and this can be a trade-off you later regret. On the flip side, there are investors who add a great deal of non-monetary support so you need to take the cost vs. benefits into account.
  3. You will set habits that serve you well as you grow. By starting frugally, you will develop a pattern of maximizing every dollar. This will help you tremendously whether or not you take funding from outside sources in the future.
  4. When you do ask for money, your valuation will be higher. This is the same principle of how the people who least need a loan from the bank are able to get the money on the best terms and interest rate. We saw this with one of our ventures where the company gave up half its equity in return for a couple hundred thousand in angel funding. The company was ultimately very successful – and while the principals could have self-funded – because they chose not to do so, their share of the upside and control were severely diminished.

For another great perspective on the “lean” model, read the article from Fast Company titled How we founded a startup with Only $600 – and why we wouldn’t do it any other way.” The author, Anna Redmond, talks about how the average startup raises $200-$300K and yet, many of these supposedly well-funded startups don’t make it. In fact, only 30 percent of startups are fully bootstrapped, where the founder supplies all the funding. A good portion of these startups not only survive, but end up accepting outside capital not for survival, but for business acceleration. And as I pointed out above, when you take money in this type of scenario, the valuation and business terms are much better for the founders.