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The Red Ocean Paradox Rik Vera - October 8, 2019

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Forget Blue Oceans. You need a Red Ocean Strategy.

In the New Normal, say the year 2030, there will be no more Blue Oceans left. All industries will melt down into one devastating Red Ocean.

Three trends summarize how that New Normal will be shaped:

  1. Mass personalisation: We all will want and get our very own products, services and CEX (customer experience) whenever and however we want it. Mass production is dead, we just have to get used to it.
  2. OMO - online merges with offline: Companies that still think in on and offline, and multichannel or omnichannel make a lethal mistake. There are no more channels. Customers want online convenience in the offline world and offline experiences in the online one. Get used to it.
  3. Blurring of Industry Lines. Causing one gigantic Red Ocean. It is inevitable.

World War 3

Blurring may even be too kind and soft a word to describe the catastrophic implosion of what used to be the traditional industries in which we could use Porter’s 5 forces, the BCG matrix and the Business Model Canvas. Old School. The management books of today will turn into history books overnight.

In between now and 2030 all businesses, whether it are banks, insurance companies, retailers, hotels, car manufacturers, food producers, pharma companies, ,… will be fighting the same war on the same battlefield. They all will try to collect the same dynamic data of that same customer, trying to win their time and attention in order to start a conversation and offer the ultimate well-being, both on and offline. The result will be a context in which the customer will be the very centre of his or her very own universe.

The huge amounts of data needed to enable companies to create as many universes as they have customers (connect to many, engage individuals or c2MxEi) need to be processed by deep learning AI and activated by generic algorithms that automate the interactions between customers and companies. The old rules of specific industries will be replaced by these new ones that are defined by the winners. I call this World War 3, in which the customers are both the battlefield, the target and the soldiers.

Mobility

Take mobility. Its future lies in Mobility as a Service (Maas): a mobility app on your connected device that gives access to connected transportation (OMO) so we can design our very own hyperpersonalised travel from A to B. And all of this depending on who we are, how much luxury we want, how fast or cheap we want to travel, whether we want to travel alone, or have a meeting, or a meal, or a sleep over, or do some shopping, or watch a movie…. We will no longer need to own a car, because those autonomous and connected mobile (transportation) devices on 1,2,3, 4 or more wheels will be run by fleet owners that have access to data and run the algorithms. What used to be the hotel business, the taxi business, the restaurant business, the entertainment business, the airline business, public transport, … all melts down into one new, still non existing space in which those that have the data and the algorithms will run the world and will need to work together with others that have complementary assets to create new business models. Toyota, Ford, Waymo or Tesla may work together with Hilton or Mariott to build autonomous (meeting, sleeping, party…) room vehicles; with Uber, Lyft or Google to have access to algorithms; with KLM or Lufthansa to organise short ‘flights on wheels’; with Netflix or Disney for entertainment; with Vodaphone or Orange for connectivity; with Wallmart or Starbucks or … The list is pretty much endless if you use your imagination.

Why would Amazon not enter this game or Apple or even Facebook with all their data and algorithms. And how about banks? Cities? Insurance companies? No Blue Oceans will be left here, but one gigantic Red Ocean of companies trying to survive or take the lead in this new space. I do not dare to predict who will win, but it will be one epic battle.

Food and pharma

Take pharma, food and the fitness and lifestyle industries. When we have access to all our static data like our DNA and our microbiome and combine that with access to our contextual data (our wearables), the pharma industry will move from mass sick-care to mass personalised healthcare. And when we get sick, we will be treated with our very own personalised medicine. Healthcare is related to the food we eat and healthy food is different for all of us. And a healthy life is related to our lifestyle, the way we get motivated and the exercise we do. So food converges with lifestyle, fitness and pharma. All will be based on ones and zeros and personalised algorithms, forcing all companies into decomposing their offering so that consumers can mix and match the elements to their very own personal needs. And why would insurance companies and banks, that try to find the bigger purpose not join that game. In fact, Chinese insurance, banking and investments company Ping An has already entered that game with its Ping An Good Doctor, a platform that connects doctors and patients for bookings, online diagnoses, and treatments. Amazon and Google have already entered the battlefield and will compete with Johnson and Johnson and Procter And Gamble, Nestlé and Unilever… in another gigantic Red Ocean. And nobody knows who will win.

Develop a Red Ocean Strategy

In order to lead and win, companies need to stop developing Blue Ocean strategies. There will be no new products for new markets left as it will all melt down into data and algorithms. Companies need to focus on this ‘mother of all business wars’ and start developing a Red Ocean Strategy before it is too late:

  1. Collect, process and activate customer data in order to build a personalised relationships to get even more access to even more customer data. Those that own the customers and their data will lead. Those that master the holy formula c2MxEi - connect to many, engage individuals - will win.
  2. Transform customer frustrations - that are left untouched by the industry for years just because the whole industry has forgotten about it - into customer delight. Focus on the origin of species of your industry: reconnect with the original problem that was being solved and then keep falling in love with that problem and never with the solution. Falling in love with the solution makes you fall asleep and forget about your customers. You need to be extremely close to your most important asset: customers and their data. Put your customers in the centre of the universe. All customers.
  3. Decompose your product, services, solutions or concepts into building blocks that can be re-composed by your customers and create a peer-to-peer incentive so they become your sales and marketing machine. Make them love to work as your data producers by making them feel part of the company. Customers are your exponential army of soldiers you need to fight the war.
  4. Create new ecosystems. Imagine what can be and go out and hunt the data, knowledge and assets you need to make that happen. Find your allies to win the war. Be in the lead. Those in the lead will beat or even eat the others and use, or just steal their assets. You lead by being first and being powered by your customers.

Start preparing today for The Day After Tomorrow

Those companies that master the art of Red Ocean strategy will shape and lead the new business models and the new industries. The Red Ocean Masters will develop the new rules of the new industries. They will eat most fish in the Red Ocean and they will live the moment when the Red Ocean turns bluer than ever before. Winner takes all.

In his book “The Inevitable”, Kevin Kelly describes the future business environment like an ‘open market, with no specialists yet, full of low hanging fruit and with very low entry levels and cost’. I would add: under one condition and that is to be fully prepared and well trained and equipped, with enough weapons, soldiers and allies to fight that ultimate battle and by starting right now to be ready for The Day After Tomorrow.

Rik Vera
Rik Vera

Rik is a renowned thought-leader, worldwide keynote speaker and author of business bestseller "Managers The Day After Tomorrow". He’s a trusted advisor on the topics of extreme...

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