Why do we suggest a blue ocean strategy in the dive industry? What is it? How can we do it?

You probably know the quote attributed to Albert Einstein: “The definition of insanity is doing the same thing over and over again, but expecting different results.” And that’s what we’ve seen in the dive industry for the last few years and even, decades.

Every year, at the DEMA Show, representatives of training agencies tell us they have new stuff. They usually trumpet that change is essential. But what do they deliver under a ‘new’ label? About the same thing. They changed a few paragraphs here and there. They produced a more modern video. They improved their website. But nothing has fundamentally changed. There’s no innovation. And we are not growing!

What about dive resorts, travel wholesalers, and dive gear manufacturers? Again, we get marketing slogans telling us “this and that” is “brand new,” but nothing is fundamentally changed. There’s no real innovation on that front either. And for the most part, your local dive shop looks the same it did in the 1980s.

So, what would be a fundamental change? What innovation do we need? And why does it matter? Before answering these questions, let’s look at a few examples of a Blue Ocean strategy outside the dive industry. And first of all, let’s define what a Blue Ocean Strategy is.

1. What is a Blue Ocean Strategy? A Red Ocean Strategy?

A blue ocean strategy is one in which we stop dividing the existing pie (market). Instead, we grow demand by breaking away from the competition.

A Blue Ocean Strategy is about breaking out of the red ocean of bloody competition to create a new uncontested market space that makes competition irrelevant.

What Are Red Oceans?

They are all the industries in existence today in a known market space. In these industries, as you experience every day, there’s cut-throat competition which turns the ocean to a bloody red. Hence the term “red ocean.”

In a red ocean market place, it’s all about competition. There’s little innovation. Companies fight for a more significant share of limited demand. This is what we see happening at the moment between SSI and PADI.

Competing in a red ocean is a zero-sum game. The pie is not growing. As competition increases, prospects for profit, ROI, and growth decline.

What Are Blue Oceans?

They are all the industries that do not exist at the moment. You have to create such an industry. The blue oceans are unexplored (there’s risk involved) and untainted by competition (the rewards can be significant).

A Blue Ocean is an unexplored market space that hasn’t been tainted, yet, by competition. It’s about creating new demand in a new market place, with innovation creating new value for the consumer.

“Blue oceans” are vast, deep and powerful in terms of opportunity and growth.

Creating a Blue Ocean is not a zero-sum game. Because you’ve created a new market place, there’s plenty of opportunities for rapid and profitable growth.

The concept of a Blue Ocean Strategy is the brainchild of Renée Mauborgne and W. Chan Kim, professors of strategy at INSEAD. They are the authors of the bestseller “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.”

2. Examples of Blue Ocean Strategies Outside the Dive Industry

When thinking of companies who have created a brand new market space for themselves, it’s tough not to mention Apple and Amazon.

Apple launched its digital music store at the time when you could easily download all the songs you wanted, free, in mp3 format. It was the Napster pier-to-pier download era. Remember that? The rest is history.

Amazon pushed online sales while people in the retail industry dismissed it. Walmart is, recently, trying to catch up to Amazon.

An example I like even better is Blockbuster vs. Netflix. Blockbuster had the chance to buy Netflix for popcorn but they though the Netflix business model didn’t make sense. Today, you probably have a Netflix subscription. And I’m sure you do not have a Blockbuster store in your neighborhood. There’s only one left in the world!

Le Cirque du Soleil

The example I liked the most is Le Cirque du Soleil. Let’s take a bit of time to review Le Cirque. You may see some similarities with the dive industry.

Picture that: The circus industry was a declining one. It was dominated by “Ringling Bros. and Barnum & Bailey Circus,” an old and well-established company. All analysis of this industry, at the time, pointed to minimal potential for growth and profits. Both supplier power & buyer power were strong; two of the forces used my Porter to predict industry profitability.

Enter Le Cirque du Soleil. It changed the conventions of the circus industry. What was seen as a given by industry players was thrown out the window by Le Cirque.

Le Cirque achieved phenomenal growth without taking customers from the shrinking circus industry, which catered mostly to children. Le Cirque targeted adults and corporate clients. And it produced a circus show without animals. What do you think existing players in the circus industry thought about that? Yes, they thought it was absurd.

Today, Le Cirque’s productions have been seen by more than 150 million spectators in more than 300 cities around the world, with no less than seven permanent shows in Las Vegas alone.

Meanwhile, Ringling performed its final show in 2017 and closed after 146 years of existence.

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This all sounds great, but each one of these companies has bigger annual revenues than the entire dive industry. Right! The potential in the dive industry is smaller than the possibility of providing music to everybody on Earth. Correct. But we are talking, here, about changing the dive industry. Who knows how much bigger we could make it if we stopped doing the same thing over and over again while the sector is shrinking year after year? Let’s look at an industry more closely resembling the dive industry.

Golfing

The Golf Industry is our last example of a Blue Ocean Strategy at work, outside the dive industry. But it’s not the least! We’ll find more similarities between scuba diving and golfing that we could find with Apple, Netflix, and Le Cirque du Soleil.

Let’s start with a few lines from an article about the golf industry, “Turning Green Fairways Into Blue Oceans,” written by Colin Weston:

“When I first looked at golf (…), I saw an industry that was both in deep trouble and ripe for innovative creativity. The golf industry was on the decline, as over 20% or five million golfers had left the game, resulting in courses closing and equipment sales to drop. Golf courses and companies desperately wanted to connect with a younger and more culturally diverse audience, but their approach was to package the same products and experiences to a market sector that didn’t care to buy what they were selling.”

Let’s re-read this paragraph while changing “golf” for “scuba diving.” The same could be said about the dive industry.

Now let’s look at Colin’s summary of the pain points non-customers had with golfing:

  • too hard to learn
  • too expensive
  • takes too much time
  • doesn’t align with contemporary social lifestyles
  • has an image problem of being stuffy and elitist
  • intimidating and complicated

Wow! Did she steal this list from the dive industry? There are numerous similarities between the golf industry and the scuba diving industry – with one big difference. Entrepreneurs in the golf industry used innovative creativity to bring a renaissance to golf.

We can do the same in the dive industry.

3. Who Can Implement a Blue Ocean Strategy In the Dive Industry?

We’ve used five different methods for a preliminary analysis of the dive industry. Many of these analysis methods were initially designed to be applied to a specific company (or project within that company). Yet, these methods could also be used to take a look at an industry – and that is what we did.

It is not the case with a Blue Ocean Strategy.

The Blue Ocean Strategy methodology is designed to bring a specific company out of the red ocean of competition. This Blue Ocean can’t be defined at the industry level. If we bring along all dive industry players to an innovative blue ocean market space, we are back into a red ocean of competition!

Therefore, a Blue Ocean Strategy has to be developed within a current dive industry company or with a new investor wanting to start with a new concept creating innovative value for the consumer.

Hence why we’re talking about a Blue Ocean Strategy “in” the Dive Industry not “for” the whole dive industry.

4. What is the difference between a Blue Ocean Strategy and A Competitive Strategy?

Before diving any deeper into a Blue Ocean Strategy in the dive industry, let’s clarify a fundamental principle. It’s quite significant.

For decades, Michael Porter’s book on Competitive Strategy was a bible in business circles. If you’ve done an MBA, you probably had to read it. Since then, one of Porter’s fundamental theories has been proven wrong. Yet, there are still many executives referring to it. And those who keep working with the mindset associated with that theory are limiting themselves (and their companies) and will never be able to implement a Blue Ocean Strategy.

Porter’s theory we are talking about is called “Stuck In The Middle” and can be summarized with the following graph on our whiteboard:

 Source: “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” Michael Porter, 1980. 

The theory represented in this graph states that we have two ways of making a good return on our investment (ROI) in a company. Either we are a low-cost producer with high market shares. Or we sell a differentiated product. In this last case, our market share will be lower because our prices for this product must be higher.

In other words, behind this competitive strategy theory, there’s an assumption that differentiated products (better quality, better features, etc.) always sell at a premium. Meanwhile, the only way a low-cost producer can reach low manufacturing costs is by producing something of lesser quality or with fewer features. If you are neither, then you are stuck in the middle with a low ROI and an ordinary market share.

This theory applies to services as well. Services are a product – just an intangible one. In this case, instead of manufacturing costs, we’re looking at the cost of delivering a service.

Stuck-in-the-middle: A Theory Proven Wrong

If you still believe in this Porter theory, delete it from your brain, or you’ll never create a Blue Ocean.

The Blue Ocean Strategy is based on creating a new market place by offering new value to consumers. At the same time, you work on reducing costs. In other words, you do both ends of Porter’s curve, simultaneously.

In the last few years, we’ve seen many cases of such achievements.

The Case of CN Rail

Let’s look at the case of CN rail. The Canadian government owned it. Its operating costs were huge, with little profits. Meanwhile, the service was horrible. Under most accounts, CN was the worse railroad in North America.

In the process of preparing for an IPO to privatize CN Rail, a new leader took the helm. He came from outside the rail industry and, therefore, wasn’t stuck with “that’s how we’ve always done it.” He had never done it.

I was there at the time. This new leader put us on a track to simultaneously cut operating costs and increase the quality of our rail service. I was also a newcomer to the rail industry, so I was “all in.” But I can tell you that around me, the old-timers thought it was ridiculous and impossible to achieve.

Well, guess what? CN rail became the best railroads in North American. After a handful of years, CN had the lowest operating costs in the industry and the best on-time delivery. This story is immortalized in a book adequately titled “The Pig That Flew.” And most other railroads in the dive industry are now adopting CN’s new operating model.

The moral of this story: You may think that a pig can’t fly. But it can. Similarly, you may think it’s impossible for your dive business to work on reducing costs while increasing value to the customer. You may be right when we look at the current players in the dive industry. They all seem focused on cutting costs and fighting on the price for market shares.

Bur bring in somebody with a new vision, and we can create a Blue Ocean Strategy in the dive industry. And it’ll be another black eye for Porter’s theory!

5. How can we implement a blue ocean strategy in the Dive Industry?

If you want to create a blue ocean for your company, you can’t look at what people are doing in your competitive industry. You need to look outside to understand how to shift what you do to create new value for the end-buyer.

Identify pain points for your customers and non-customers. There may be significant segments of the population who would become your clients if you fix the pain points that prevent them from becoming your clients. Then, brainstorm solutions.

Imagine shaping industry conditions  in your favor. Imagine achieving rapid, profitable growth. Imagine providing more value to the consumers, at lower costs. That’s what we are talking about.

A Blue Ocean Strategy is not about fine-tuning your current business activities. It’s not about incremental improvements. It’s about making a giant stride entry into a new world, defined by you. “Shun the incremental and go for the leap,” as Jack Welch said.

A Blue Ocean strategy focus on the big picture, not the statistics which are stuck in the past. It’s based on a vision more than on market data.

Help From The Business of Diving Institute

On scubanomics.com, you’ll find a series of strategies we are suggesting for the dive industry. Some of them are incremental. These strategies can help you improve your current business results, although the first 2, could also be part of a new Blue Ocean strategy:

However, we’re also putting forward a few strategies for which you probably think we’re “smoking something good.” Those are the ones we should keep on exploring and developing. They could bring us to catch a wave toward a Blue Ocean. And we should find more of these crazy ideas until we have enough to formulate a solid vision:

These are just starting points to work on a vision and a plan leading to a Blue Ocean.

Once we’ve defined the Blue Ocean we are navigating toward; we still need to convert the vision into a plan and implement it. This is the focus of the 2nd book by Renée Mauborgne and W. Chan Kim: Blue Ocean Shift.

Help From the Blue Ocean Academy

Once a company team is willing to work on a Blue Ocean Strategy, there are numerous tools available, including:

  • Buyer Utility Map
  • Three Tiers of Non-Customers
  • Six Paths Framework
  • Value Innovation
  • Four Actions Framework
  • Sequence of Creating a Blue Ocean

And many other tools. You can learn them with the Blue Ocean Academy – that’s a good start!

But why has nobody done it, yet?

6. Current Dive Industry Executives and Investors Swimming In A Red Ocean

Through the last few years, I’ve discussed the deploring state of the dive industry with a lot of dive industry executives and quite a few investors. I still haven’t found one willing to grab the numerous opportunities that exist if we define a new business model providing innovative value to the consumer. We need an investor interested in outstanding results in the medium-term, not in the short-term. This investor’s ROI will be much more impressive than what current investors are getting – but the management team needs a vision and a good plan. It needs work! Amazon, Apple, and Le Cirque du Soleil started with a vision – and a lot of determination.

There have been quite a few financial transactions in the dive industry, lately. The largest training agency and the largest dive gear manufacturer were, both, purchased by private equity firms. One would think this would lead to innovation. It doesn’t seem so. From what we can see, the only thing these investors have done is radically cut costs to boost the bottom line. With a higher profitability level, they can re-sell the company at a higher price based on a better bottom line.

Any monkey can do that. No offense! It provides an excellent short-term ROI, but it leaves on the table much bigger returns that could have been achieved with strategies and innovation paths that do not seem to have been explored.

And it could eventually bring some of these companies to the brink of collapse. In every business, there’s always ‘fat’ that can be cut out. But when you cut too much, eventually you’re cutting in the muscles and the skeleton.

Let’s take the example of a railroad company. You can easily and immediately increase profits by cutting most maintenance work. But eventually, the trains will derail much more frequently because the tracks weren’t maintained properly.

Imagine Shaping Industry Conditions in Your Favor

If you know of a private equity firm or a current dive industry player willing to work on an outstanding ROI in the dive industry, let me know!