Would You Rather Own an Existing Market or Build a New One?

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“Is it better to be the best at something lots of people are doing or to differentiate and try something slightly different?”

That’s the question Jonathon Zetterholm from Asheville, NC recently asked on twitter. And, I thought it was such a good question, it merited an answer that went beyond the confines of 140 characters.

It’s the concept of Red Ocean versus Blue Ocean.

It’s easier to go into an existing market, where you know there is demand for the best solution, then work to stake your claim. To carve up the existing pie differently and to be good enough to take your slice by pulling it out of the hands of others. Because, one of the biggest hurdles has been cleared, proof of demand.

You know a market exists, you’ve just got to figure out how to own it. That’s called a Red Ocean strategy, because, well, there’s blood in the water when you do that, it’s a zero sum game. You win by competing, so someone else loses. It’s the way most business is done.

The other approach is to take a much bigger leap of faith and create something that’s completely unproven, but if it works, will not just give you a slice of the current pie, it will either expand the existing pie or create an entirely new one. This is called Blue OCean strategy, you’re literally creating an entire new ocean to swim in. Competition becomes a non-issue, at least in the near term, because you’re playing on a field that you discovered or created and everyone else is still wandering around the old one.

Psychologically, it’s a tough thing to do. To get people to buy into something that’s far less proven than “we can do what they’re doing but better.” And, the educational burden that comes along with creating a Blue Ocean can be huge, both internally and with your potential market. But…BUT…if you pull it off, you will very likely own your market for a long time to come and have the opportunity to solve and delight (and generate revenue) on an entirely different level.

If you really want to dive into this, check out the fabulous book – Blue Ocean Strategy

Then, there’s a little known third option, one artisanal firebowl sculptor, John T. Unger calls the Zillion Sum Game, where nobody wins unless everybody wins.

What do you guys think?

Have you experienced any or all of these approaches?

What’s your chosen approach?

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23 responses

23 responses to “Would You Rather Own an Existing Market or Build a New One?”

  1. Marnie says:

    I don’t know if my approach fits either of those. In niches there seems to be room for everyone, as long as what they have to offer is of use.

  2. The Blue Ocean requires courage, belief in self, belief in what you are doing. It requires a willingness to fail. There are less “others” to blame the failure on.

    Blue Oceans are typically thought of as products, but they could be services.

    I think it also depends on your objectives: being famous, making money, making a difference et al.

    Me, I’m off working on my own Blue Ocean.

  3. To thrive in a Blue Ocean I think you have to be intrinsically motivated and have complete faith that the end result is worth it.

    I think their is competition in a Blue Ocean – but it is with yourself. Competing to finish new milestones, get new clients. And you don’t waste too much time thinking about competitors because there aren’t any.

    I am a Blue Ocean Girl and the one I am currently swimming through is The Sea of Conscientia

  4. Rachelle says:

    How about purple ocean where you apply new ways of competing to traditional industries. Property management is one of the more conventional services. But I use the knowledge I’ve used learning from the blogosphere to get my clients. As far as I know no one is even coming close to my transparency. This is a brand new way of reaching clients and communicating with them

  5. Let’s take blogging for money as an example of the red ocean: What turns me off about the blogging world is the proliferation of know-it-alls (who really don’t) trying to sell their self-proclaimed expertise in blogging and marketing. It prompted me to parody them in my New Year’s Day post, “6 reasons why my blog doesn’t give advice…and 3 reasons why it doesn’t go for gimmicks.” Even the title is a parody—of the tip to use lists and numbers.

    http://scrollwork.blogspot.com/2011/01/6-reasons-why-my-blog-doesn-give-advice.html

    Your blog stands head and shoulders above the rest, Jonathan. Yours is genuine, as are you.

  6. Excellent question!

    How about.. starting out in a red ocean to learn your field and toughen yourself up for competition, since it is inevitable. Then, after a few to several years move into a blue ocean strategy using the experience and toughness and resilience you gained in your red ocean days to establish your own platform that makes onlookers gawk in wonderment.

    Thanks, Jonathan!

    • marie-jeanne juilland says:

      Peter: I’m liking this approach. It balances affords more immediate income generation, but leaves open the option for great things at some point. A good move for many in this world where everyone is promising “Get rich quick.”
      Marie-Jeanne

      • marie-jeanne juilland says:

        BTW, how do I get my photo to show up, rather than the purple octopus avatar that chose me ? 🙂
        Thanks!
        Marie-Jeanne

  7. Kel says:

    everythign starts with an idea spurred from someone elses orignal thought … so it’s like the chicken and the eg – ya know?! Hhmmm … I look forward to other’s insight and feedback …

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  9. Sean Cook says:

    Hey Jonathan,

    I really like the analogy here. Thanks for sharing.

    As for me, I feel sometimes that I swim in a Blue Ocean with a red tide. I do life and career coaching (Red Ocean) with niches that are off the well-beaten path, but starting to emerge: Life and Transition Coaching for College Students and their parents (trying to help solve the “helicopter parent” phenomenon) and career coaching for higher ed professionals.

    More of the coaching market toward college seems to center around how to get into college. I help people manage the transition and the life challenges. Higher Education professionals don’t benefit from the same kinds of strategies that corporate job seekers do, and I really don’t see many coaches trying to compete for them. In both areas, this makes sense, because college students and higher ed professionals have many different resources available to them (through student affairs,if a student, or through HR and/or internal development and training departments. That means that my competition is, for the large part, the university system (which is where I came from, and why I am interested in the market-I know that 1-on-1 life and career coaching can create a different kind of accountability and progress, and that the system isn’t really set up for that-coaching and counseling services for students are often “triage”services, which won’t do for those who really need “critical care.” But they free (well, included in the price of admission or employment) and I am not. So more often than not, the blood I see in the water is my own. But I hope to persevere long enough to be more of a “red tide”- not the kind that poisons the system, just the kind that changes the way people look at how to manage the ocean and keep it healthy.

    Do you think this makes me nuts? I really believe the need is there, and I have been sought out by many who are interested in the idea, and I do have quite a bit of tenacity about getting up and dusting myself off, but would love to hear your thoughts and those of some of your other frequent readers. As I mentioned before in comments here, your book Career Renegade was one of the books I read that gave me some of the confidence in my ideas and my ability to figure out how to bring them out to the world.

    • Mark Kelly says:

      Sean,
      I think your right about it being a strong market. I think even more important then getting them into college is making it productive once they start.
      – Help them find where their passion is early to avoid major changes and increased costs

      – Help them understand how essential networking is and to get started now.

      – Help show parents the value and correlate it to having a successful launch when they graduate (ie a lower chance of moving back home or only for a yr or some other useful metric)

      – Help them stay out of credit card debt and get a good financial start

      Want to be partners haha.

  10. Love the post & love the ideas in the comments even more – especially Rachelle’s Purple Ocean and Peter’s Red to Blue
    journey.

    Along the lines of Rachelle’s cross-pollination between industries, I think you can also create a Blue Ocean by combining two usually disparate offerings. I just watched Kathy Bates’ new show where she plays a high-powered patent lawyer who starts a new life as a criminal defender in a dangerous part of town. The storefront she ends up leasing is an abandonned shoe store full of seriously expensive shoes (Prada, Jimmy Choo, etc). Her administrative assistant decides to open up shop selling the shoes … in the same space where Bates is launching her law firm.

    I’m not saying there’s a demand for law firms where you can also pick up a pair of rhinestone encrusted slingbacks, BUT I think there are opportunities out there for creative people to mix up their own perfect business recipes by masterfully combining existing ingredients into a fabulous, new concoction.

    🙂

  11. So far I’ve been using the red ocean strategy. I’ll find a great market and figure out a way to differentiate.

    I feel the blue ocean strategy is much more risky and requires a lot more money.

  12. I’m currently swimming in my own blue ocean. I created Tail Wags Helmet Covers 5 years old and tapped in to a totally new market – A product that makes it fun to wear a safety helmet.

  13. Rob Place says:

    Good post Jonathan! I think it really depends on your situation.

    A Red Ocean strategy might be more appropriate if you need to start making sales now and/or you don’t have a lot of time or money to build a market. Blue Oceans–even in a social media world–are hard to create.

  14. Interesting post which helps me frame the transition I am making from desk jockey to entrepreneur. I am creating a market as I go – not because of any overarching strategy in that, but because my heart is on fire with wanting to do this. An unnamed drive inside me says, “Sandi – do this, you’ll love it, it will have a huge impact on the world.” The strategy comes after. I recognize the risk of blue ocean and realize the years of working up to this point are part of paying the dues as a leader. My wish now is the pay-day before competition.

    Thanks for the thought-provoking post.

  15. John Sherry says:

    Mmm, an interesting combination. Existing markets are often crammed full (unless you get in on the early phases as it’s establishing itself) while new markets take quite some leverage to encourage customers to interact but offer the whole ten yards. For me one answer lies in what your market is – new, way out selling of homes might be difficult but dating holiday’s for pets less so. But, after all is said and done, the main solution is down to your own individual enterpreneurial spirit. Are you a safe player or a risk leader? The answer tells what market you may opt to be involved with!

  16. Phil says:

    As with everything in life, there’s no “best answer”. What I’ve seen in my business career is that certain personality types do better in one environment over the other. It often depends on how comfortable you are with ambiguity.

    In red oceans you are often innovating along a clear path, but disrupting with better performance on a clear set of well understood parameters (price, speed etc.).

    In blue oceans, nobody even knows what the product is. Think Post-it, iPhone etc. Didn’t know I needed it until I saw it, then couldn’t live without it. This takes a totally different set of skills and has a high failure rate. But BIG upside if you win.

    I think this also ties back to people’s career thinking. How comfortable are you not knowing what comes next? Or do you want to know what comes next, the expectations, the pay etc.?

    I’ve always been “purple”. I like some autonomy, the ability to be creative, but also getting a paycheck with benefits.

    What color are you?

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