Since the rise of Redbox, have you noticed how fast your local video stores have gone out of business? And Redbox is just a recent upstart. Remember the days before DVDs, snowboards, and even cell phones? How could we live without them? How did we survive without a GPS in the tractor or check on the irrigation system without remote telemetry. With the cost of fertilizers record high, conventional farmers are trying to maximize profits by spending money only in areas that need fertilizer. How could they have done that without relying on precision agriculture? She took on a new way of thinking; a new paradigm.
There is a growing need for new ways of thinking about our business. We can no longer afford to continue farming the way we have in the past. Albert Einstein once said, “The important problems we face cannot be solved at the same level of thinking we were at when we created them.” In other words, we need a paradigm shift.
There are several driving forces behind the need to develop new ways of thinking in agriculture. Technological advances have accelerated in our industry. The result in many agricultural sectors is that supply exceeds demand. The problem is made even worse as trade barriers between the United States and other nations are lowered and as the global market provides instant price information for most products.
The Internet has turned anyone who wants to connect to it into potential competitors. What used to be niche markets have now disappeared as global completion continues to build. Even with high commodity prices, farmers’ profit margins are shrinking. Our agricultural organizations are in a vicious cycle to develop better ways to compete against global competition, which is increasing quality and reducing costs. We can no longer rely on benchmarking against neighboring producers; now we have to compare ourselves to the “world class” competition.
In their book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne argue that tomorrow’s progressive companies will not succeed by not going head-to-head with competitors, but rather by creating “blue oceans” of new, uncontested market space. If the red oceans represent all the known markets that exist today, the blue oceans represent all those that do not currently exist.
Redbox is a good example of a Blue Ocean market opportunity. Redbox’s automated kiosk concept is simple. Consumers simply use a touch screen to select their favorite movies, swipe a valid credit or debit card, and go. It was the brainchild of McDonald’s Ventures, LLC and didn’t even exist six years ago. Redbox first appeared at Denver, Colorado McDonald restaurants in 2004 as a test market concept. Recently, Redbox surpassed its billionth DVD rental and celebrated with its “Thanks a Billion” event. In just a few short years, Redbox has made traditional competition irrelevant.
At Red Oceans, companies strive to outperform their competitors to capture a larger share of existing market demand. As those markets fill up, profits begin to decline and cut-throat competition turns bloody.
The Redbox example demonstrates that Blue Ocean thinking uses a totally different paradigm from the old accepted Red Ocean standard. At Blue Oceans, competition is irrelevant, highly profitable growth opportunities prevail, and the rules of the game are waiting to be established.
Dr. Stephen Covey, one of the great management thinkers of our time, recounts one of the most profound learnings of his life. That is, if you want to make small improvements then work on your behavior or your attitude. But if you want to make huge quantum improvements, work on your paradigm. His paradigm is his frame of reference, perception, or worldview. Work on changing your paradigm and your behavior and attitude will change automatically.
Blue Ocean opportunities evolve from shifting paradigms of the old Red Ocean worldview to an entirely new way of thinking. For the Red Ocean thinker, it will be a threat to learn a new mindset and a new set of skills. Those who have started sailing towards the blue oceans have already discovered this. They have recognized what it takes to be a player in this new era. Imagine what it would take from you and your organization to sail Blue Oceans.
We will always need to know how to navigate red oceans and successfully outrun our rivals because red oceans will always be a fact of our agribusiness lives. But that will no longer be enough to sustain us. We will need to know how to create Blue Ocean opportunities if we plan to make the quantum leap into new prospects for earnings and growth.
The next time you pick up your DVD, take a moment to reflect on what new Blue Ocean ideas might be coming to your industry. Or, better yet, create your own Blue Ocean opportunity and make the competition irrelevant.
