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FIGURE 3-1
The strategy canvas of NetJets
The biggest telecommunications success in Japan since the 1980s also has its
roots in path 1. Here we are speaking of NTT DoCoMo’s i-mode, which was
launched in 1999. The i-mode service changed the way people communicate and
access information in Japan. NTT DoCoMo’s insight into creating a blue ocean
came by thinking about why people trade across the alternatives of mobile
phones and the internet. With deregulation of the Japanese telecommunications
phones and the internet. With deregulation of the Japanese telecommunications
industry, new competitors were entering the market and price competition and
technological races were the norm. The result was that costs were rising while
the average revenue per user fell. NTT DoCoMo broke out of this red ocean of
bloody competition by creating a blue ocean of wireless transmission that
reconstructed the mobile phone industry and the internet.
NTT DoCoMo asked, What are the distinctive strengths of the internet over
cell phones, and vice versa? Although the internet offered endless information
and services, the killer apps were e-mail, simple information (such as news,
weather forecasts, and a telephone directory), and entertainment (including
games, events, and music entertainment). The key downside of the internet was
the far higher price of computer hardware needed to access the internet at the
time, an overload of information, the nuisance of logging on to go online, and
the fear of giving credit card information over the internet. On the other hand,
the distinctive strengths of mobile phones were their mobility, voice
transmission, and ease of use.
NTT DoCoMo broke the trade-off that existed at the time between these two
alternatives, not by creating new technology but by focusing on the decisive
advantages that the internet has over the cell phone and vice versa. The company
eliminated or reduced everything else. Its user-friendly interface has one simple
button, the i-mode button (
i
standing for interactive, internet, information, and
the English pronoun
I
), which users press to give them immediate access to the
few killer apps of the internet. Instead of barraging you with infinite information
as on the internet, however, the i-mode button acts as a hotel concierge service,
connecting only to preselected and preapproved sites for the most popular
internet applications. That makes navigation fast and easy. At the same time,
even though the i-mode phone was priced 25 percent higher than a regular cell
phone, the price of the i-mode phone was dramatically less than that of a PC or
laptop, which were the dominant means to access the internet at the time, and its
mobility was high.
Moreover, beyond adding voice, the i-mode used a simple billing service
whereby all the services used on the web via the i-mode got billed to the user on
the same monthly bill. This dramatically reduced the number of bills users
received and eliminated the need to give credit card details on the internet. And
because the i-mode service was automatically turned on whenever the phone was
on, users were always connected and had no need to go through the hassle of
logging on.
Neither the standard cell phone nor the PC or laptop could compete with i-
mode’s divergent value curve. By 2009, ten years after its launch, i-mode
mode’s divergent value curve. By 2009, ten years after its launch, i-mode
subscribers had climbed to just shy of 50 million and its revenue from the
transmission of data, pictures, and text increased from 295 million yen ($2.6
million) in 1999 to 1,589 billion yen ($17 billion). The i-mode service did not
simply win customers from competitors. It dramatically grew the market,
drawing in youth and senior citizens and converting voice-only customers to
voice and data transmission customers. The i-mode was the world’s first smart
phone to achieve mass adoption by a country. It wasn’t until 2007 that the
iPhone was launched, which seriously challenged the i-mode and created a new
and even larger blue ocean space with the introduction of apps (see path 4).
Many other well-known success stories have looked across alternatives to
create new markets. The Home Depot offered the expertise of professional home
contractors at markedly lower prices than hardware stores. By delivering the
decisive advantages of both alternative industries—and eliminating or reducing
everything else—The Home Depot has transformed enormous latent demand for
home improvement into real demand, making ordinary homeowners into do-it-
yourselfers. Today it is the world’s largest home retail improvement store.
Southwest Airlines concentrated on driving as the alternative to flying, providing
the speed of air travel at the price and flexibility of car travel to create the blue
ocean of short-haul air travel. Similarly, Intuit looked to the pencil as the chief
alternative to personal financial software to develop the fun and intuitive
Quicken software. Today, more than thirty years on, Quicken still remains the
number-one-selling personal financial software, even as Intuit explores the
creation of new blue oceans in online financial services and apps.
What are the alternative industries to your industry? Why do customers trade
across them? By focusing on the key factors that lead buyers to trade across
alternative industries and eliminating or reducing everything else, you can create
a blue ocean of new market space.
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