Yesterday we held the second Group Mentoring Session focusing on how to commercialize your business idea. Before going into the pricing and packaging products and services, we looked at ways to differentiate the idea from the competition because the ideas we were working on were in crowded sectors.
A classic piece and a fantastic tool for differentiating your business idea is the book called Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne. They make a distinction between two kinds of companies. The ones in the red ocean are doing same things as everyone else with the only option of trying to compete with price and narrowing margin. The ones in the blue ocean have made the competition irrelevant by coming up with a new kind of offering.
Here’s a nice 4-minute introduction to the concept by Renée Mauborgne:
The book contains a lot of practical examples and tools on differentiation, and we used the Remove, Reduce, Emphasize and Create matrix in the session to help us differentiate our ideas. The matrix asks us four questions in the quest of helping us find an uncontested market niche:
- What can we completely remove from the (usual) offering?
- What can we significantly reduce from the offering while still providing a useful service or product?
- What can we emphasize and focus on differently compared to competition?
- What completely new utility can we create to our customers?
The first two questions help you to find solutions for radically reducing costs compared to competition (instead of taking low price from your margin), while the last two questions simultaneously attempt to find new added-value to your customers.
Try this out! Download and print the matrix from below and think of your idea through the questions!
You can also start with and practice with some well-known example like M-Pesa. What they remove completely from the way traditional banks operate? What did they significantly reduce? What are they emphasizing compared to tradional banks, and what completely new services they created in banking? — To learn more and find other examples, check out this great presentation.
The next Group Mentoring Session is going to be again in three weeks on June 6th, 10am-1pm. As always, the session is open for anyone who would like to work on his/her business idea. Next time the session will be individual mentoring as people and groups are starting to be at different stages and facing different questions.