Since the rise of Redbox, have you noticed how fast your local video stores have gone out of business? And Redbox is only a recent upstart. Do you remember the days before DVDs, snowboards and even cell phones? How did we ever live without them? How did we survive without a GPS in the tractor or check on the irrigation system without remote telemetry. With the record high cost of fertilizer, mainstream 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? It took a new way of thinking; a new paradigm.
There is a rising need for new ways of thinking in our business. We can no longer afford to continue farming the way we have in the past. Albert Einstein once said, “The significant 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 advancements have accelerated in our industry. The result in many agricultural sectors is that supply exceeds demand. The problem is compounded further as trade barriers between the US and other nations diminish and as the global marketplace provides instantaneous information on prices for most products.
The internet has made potential competitors out of anyone who wants to hook up to it. What used to be niche markets have now disappeared as global completion continues to build. Even with high commodity prices, the farmers’ profit margins are shrinking. Our farming organizations are in a vicious cycle to develop better ways of competing against the global competition, which is driving up quality and driving down costs. We can no longer rely on benchmarking against neighboring growers; now we have to benchmark against “world class” competition.
In their book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne argue that tomorrows progressive businesses will succeed not by clashing head-on with competitors, but by creating “Blue Oceans” of new uncontested market space. If Red Oceans represent all of the known markets in existence today, then Blue Oceans represent all those not in existence today.
Redbox is a good example of a Blue Ocean market opportunity. The automated Redbox 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 the traditional competition irrelevant.
In Red Oceans, companies work hard at outperforming their competitors to grab a bigger share of the existing market demand. As those markets get crowded, profits begin to decline and cutthroat competition turns bloody.
The Redbox example demonstrates that Blue Ocean thinking utilizes a total different paradigm from the old Red Ocean accepted standard. In Blue Oceans, the competition is irrelevant, the opportunities for highly profitable growth are prevalent and the rules of the game are just waiting to be set.
Dr. Stephen Covey, one of the great management thinkers of our time, relates 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, then work on your paradigm. Your paradigm is your frame of reference, perception, or your view of the world. Work on shifting your paradigm and your behavior and attitude will change automatically.
Blue Ocean opportunities evolve out of shifting paradigms from the old Red Ocean view of the world to a whole new way of thinking. For the Red Ocean thinker, it will be threatening to learn a new mind-set and skill-set. Those that have begun sailing into Blue Oceans have already figured this out. They have recognized what it takes to be a player in this new era. Imagine what it would require of you and your organization to sail in Blue Oceans.
We will always need to know how to navigate in Red Oceans and successfully outcompete our rivals because Red Oceans will always be a fact of our agribusiness life. But that will no longer be enough to sustain us. We’ll need to know how to create Blue Ocean opportunities if we plan to make the quantum leap into new profit and growth prospects.
Next time you pick up your DVD, take a moment to reflect on what new Blue Ocean ideas might be coming into your industry. Or, better yet, create your own Blue Ocean opportunity and make the competition irrelevant.