Monthly Archives: October 2015

Set Sail on a Blue Ocean

Do you want to operate in an industry that is characterized by strong competition, exploitation of existing demand, and a value/cost tradeoff? If you’re thinking no, then you’ve probably read Blue Ocean Strategy: How to Create Uncontested Marketspace and Make the Competition Irrelevant by W. Chan Kim and Renée Mauborgne, Harvard Business Review Press, 2005, 2015. If you’re wondering what that first sentence was all about, then visit www.BlueOceanStrategy.com and read the book. Go ahead; we’ll wait.

The big takeaway from Blue Ocean Strategy is this: make your own industry. True, that’s easier to write than to do. It’s even easier to plan than to execute. But the world is full of examples of companies that took a look at a traditional industry and said, “No thank you.” Kim and Mauborgne use two modern companies to illustrate their point: Cirque du Solei and Yellowtail Wine. The authors also frequently reference Henry Ford and the Model T. What do non-luxury cars, fancy clowns, and cheap wine have in common? Each company stripped offerings, or product features, that weren’t relevant or made the product too expensive and brought something entirely new to the marketplace. Cirque Du Solei rightly dropped the costly dancing elephants and horses in favor of theatrical performances set to intense light and music. Yellowtail Wine positioned itself as wine for people who didn’t like wine, offering semisweet, drinkable wine. Its marketing message dropped terms such as vintage and terroir in favor of scenes of happy adults enjoying a beverage outdoors. Henry Ford famously said, “The customer can have any color he wants so long as it’s black.”

Why are these companies worth learning from? Founded in 1984 by Montreal street performers, Cirque du Solei is now the largest show producer in the world and was recently valued at 1.5 billion. The Yellow Tail Wine brand has been accused of transforming the worldwide wine industry. As for Henry Ford: the Model T ushered in the era of mass production of complex machines. Try finding anything in your modern life that can’t be traced back to Ford’s methods.

Blue Ocean Strategy isn’t just for products. One of our partners here at BizDeLite.com is an interesting start-up that is applying Blue Ocean’s principles to business learning. Progressly, www.progressly.com, transforms business processes into visual, repeatable, and actionable work flows, which are appropriately called Flows. Cofounders Nick Candito and Clarence Wooten have developed a visual interface that takes complex business processes, such as on-boarding a new employee, and makes them simple. What’s more, the platform is cheap and allows for distributed teams to work on the same project at the same time. Think of what Candito and his team are doing this way: instead of hiring a consultant or sending a manager to a pricey training seminar, teams can access best practices anytime and keep doing that best practice again and again. The more we here at BizDeLite.com have studied Progressly, the more impressed we are with its offering. BizDeLite.com is using Progressly Flows to help grow our own company.

Blue Ocean businesses aren’t always easy to understand at first. In fact, you’ll often find yourself thinking Huh? What? the first time you stumble across them. That’s a good sign. If a company is truly doing something that is brand new, in terms of the market, it won’t make sense to you because you won’t have a frame of reference. Wine for people who don’t like wine? A circus with no animals, geared for adults? A running automobile in 12 hours? At their origins, none of these products made sense. Now, of course, we expect them. So, what Blue Ocean will you set sail on? Drop us a note and let us know. We love to talk about interesting new companies.

Embracing the Pivot

Embracing the Pivot

Based in Detroit, Michigan, four-year-old company foodjunky.com is poised to take on the big competition in the on-line food order/delivery arena. With restaurants scraping out a living on 13.5% margins, the food-order referral business is in hot water. When founder Travis Johnson first launched foodjunky.com, he followed the (lunch) crowd and set his business model on charging restaurants a 5% fee for on-line lunch orders from crabby, hungry professionals. Hey, cash-rich GrubHub charges as much as 30%; why shouldn’t a fledgling start-up? Not surprisingly, foodjunky.com failed to sign up restaurants and generate revenue. So, two years after their first launch, Johnson and his team completely revamped their business model and website. At the end of 2015, foodjunky.com is adding new restaurants across the country at a rate of 1,000 per month.

We recently talked to Travis Johnson to find out how their new “recipe” is doing.

BDL: What makes your business different from your competition?

Johnson: Our competition has made the restaurant, not the person eating the food, the customer. So, you have to make your customers happy. But, how can you do that when you’re charging them outrageously high fees for rush-time orders? foodjunky.com has made the end user, specifically large food orders for office meetings and events, our customer. And we only charge a small fee for the total order. We provide restaurants with large business orders, which on average come two days in advance with no charge to the restaurant. Why wouldn’t restaurant operators want to work with us? Also, if the customer has a problem with their order, we have customer service agents on hand to take care of issues right away. If a restaurant isn’t working out in terms of quality or service, we drop them. We can do that because they are a vendor and not a customer.

BDL: What do you consider to be your biggest accomplishment to date?

Johnson: We are very proud of hitting our goals in terms of vendors and the number of people we serve. But, building our team and company culture is what I’m really proud of. We’re documenting everything we do in our company “cookbook,” which spells out who we are and how we do things. Our top values are integrity, honesty, and a willingness to make changes—especially the hard ones.

BDL: If you could go back in time to the point you started your business and give yourself advice, what would you say?

Johnson: I knew I wanted to own a business since I was kid. But, after graduating college, I took a corporate cubicle job like most people my age and bought a lot of stuff—car, house, investment property. Even after advancing in my career, I wasn’t happy and wanted to strike out on my own. I had to sell most of my stuff, and it was the best thing I ever did. So, my advice to my younger self would be to stay in your parents’ basement and follow your real dreams.

BDL: What advice you have for other business owners?

Johnson: Starting a company is not rocket science. All it takes is drive and the wiliness to make decisions, with the understanding that you’re going to make lots of mistakes. Learn from everything. Don’t go into to something saying, “I already know this”; find out what you don’t you know. There is always something to be learned, and it’s up to you to find that.

We would like to send out a big thanks to Travis Johnson and the foodjunky.com team for sharing their experiences with us. Who’s hungry for lunch? Check out www.foodjunky.com! @foodjunky