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| Opening Address: Blue Ocean Strategy |
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Frank Leerkotte, Managing Director of Cepifine and PRIMA´s Chairman, got the ball rolling with a warm welcome to existing and new friends, then introduced Stephanie Birmanns, an expert anti-trust lawyer who made sure that the presentations complied with competition rules and that the conference documentation was transparent.
Leerkotte then underlined the tough competition in the paper industry since the advent of the internet and the explosion of e-mail, and outlined the measures taken by the paper industry to remain competitive and successful. However, he noted that ´traditional´ measures won´t solve the industry´s problems, according to some, and with that, Leerkotte introduced the first of the presentations, which he promised would challenge everything you thought you knew about our business.
The first presentation proper was the Opening Address from John Riker, Managing Director, Blue Ocean Strategy - Initiative Centre, UK. Blue Ocean Strategy was the theme of the best-selling business book of 2005, describing a theory which encourages businesses to identify and enter uncontested market spaces, not competing along existing lines, but doing business in a truly new and different way.
Riker argued that Blue Ocean Strategy was highly appropriate for a conference with the theme of Beyond Operational Excellence. Existing strategic approaches drive firms into the competitive trap, he argued, and in the supply-driven battle to exploit only existing demand by offering a little more for a little less, benchmarking competitors, implementing best practice, improving and being faster, few companies manage to avoid being an imitator or being beaten by fast followers.
Blue Ocean Strategy was developed from 20 years of research, during which time the success of 108 observed businesses was found to be completely unrelated to the attractiveness of their industries or markets, their specific countries, their investments, their existing or new status in a market, their size or ownership structure. In fact, the key to success was due to people thinking differently about how to make sense of their business and following a new strategic logic.
He gave examples of three businesses which succeeded despite operating in sectors with flat or declining growth, low or declining profitability and which were highly-populated with existing competitors, perhaps even with an already strong incumbent market leader or with all the best locations already taken. All three businesses completely turned the accepted business practices on their head, in some cases deliberately offering lower standards (or even nothing at all) in some traditional aspects of their businesses, while at the same time offering a much higher standard in a few other aspects, as well as perhaps introducing some completely new aspects that had never been offered before (although he noted that this usually increases costs). Successful examples included a hotel chain that decided not to have a restaurant or a lounge or attractive architecture, choosing instead to outperform the accepted standards on bed quality, hygiene and silence. Another success was a circus company that chose to under-offer on star performers and animals, while focusing more on aspects previously given little or no attention, such as the uniqueness of the venue, the refinement of the watching environment and artistic music and dance.
The result was companies that did not compete on all key factors, but sharply contrasted themselves from the competition with a clear, compelling and truthful message. Importantly, by thinking beyond how their industries thought, they succeeded not only with existing customers in their sector, but also drew in clients who were previously not customers of the industry/sector.
Riker´s recommendations included Do not be constrained by what you already have: ask ´what would we do if we started anew?´ Offer the total solution that buyers seek, even if it takes you beyond traditional industry offerings.
This was a presentation that really got the audience thinking. |
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