In 2005, the video game company known as Nintendo was bleeding. At that point, Sony’s Playstation 2 had demolished Nintendo’s latest console, the GameCube, in head-to-head sales, and by the end of the year Microsoft had released the popular Xbox 360. Nintendo, which had been losing market share for a full decade by this point, was now a distant third in the cutting edge console race.
But then something changed — Nintendo gave up. It gave up the technology wars. Or to be more precise, it gave up the graphics technology wars. Nintendo had lost the competition to deliver the fastest processors with the most technical power to consumer electronics giant Sony and global software powerhouse Microsoft, who were more than happy to sell their advanced console hardware at a loss so they could compete with Nintendo’s weaker and cheaper consoles, in order to make their profit from selling video game licenses to developors. Nintendo refused to adopt this strategy and paid dearly for it.
Until they gave up.
Instead of slogging in third place, Nintendo found a shortcut. Nintendo adopted a strategy now known as Blue Ocean Strategy. That theory defined the business world as having both red oceans and blue oceans. In the red oceans, competition was fierce, rules were very defined, the profit margins were small, and the stakes were very high. The red ocean represents the blood in the water that results from this fierce battle. In blue oceans meanwhile, which were simply undiscovered markets, the game was wide open to be defined, and the possibilities — and profits — were, in a sense, endless.
When Nintendo introduced the Wii to compete with the Xbox 360 and Playstation 3 it was panned by critics for its graphic inferiority. But it was a smashing success and handily outsold both of its competitors. The reason was because it found a blue ocean. It reached a new market — people who enjoyed games, but didn’t enjoy the complexity and violence that had made the Xbox and Playstation famous. The Wii offered them an alternative with its simple motion-controlled games and exercises.
The reason I’m telling you this is because you need to teach your employees to find blue oceans. In the Federal Government, we also have both red oceans and blue oceans. Technology may be one. Social media, for example, may be an untapped resource for your agency, waiting for someone in your office to enter and create a new, innovative solution to a persistent problem. One great blue ocean that I discovered in my organization was internships. While permanent employees were a definite red ocean with many cumbersome regulations and policies, internships and interns were the opposite. So whenever I have a new innovative idea that I think will benefit our workforce, like my podcast mentoring idea for example, I start by testing it with our hundreds of interns — our very own blue ocean.
Well-written piece, Andre. Well done.
I love the analogy here, and the theory. Thanks!