Blue Ocean vs Red Ocean: Which are you?
 
Blue Ocean vs Red Ocean: Which are you?
03 AUGUST 2017 7:15 AM

I’ve never looked into business strategy trends too much, but I recently learned about one that has great applications for the hotel industry. 

Normally I’m not a big fan of business books—you know, the “Who Moved My Cheese?” and “What Color is Your Parachute?” tomes of the world.

Granted, I’ve never really given them a chance, which is probably my own fault, but it also means that I’m a little behind the times when it comes to the prevailing trends in management and leadership thinking. (The examples I gave right now probably clued you in to just how behind the times I am, since the “Parachute” one was published in 1970 and “Cheese” hit the shelves oh-so-recently in 1998.)

Anyway, I recently heard about a business trend that might be old hat for some of you, but it sounded really compelling to me: It’s called Blue Ocean Strategy, and it was the subject of a talk by Michael Levie, COO of citizenM hotels, at a recent industry event.

As Levie put it, it’s all about “making competition irrelevant.” So instead of basing everything you do on besting or beating your competition, and measuring success and failure that way, you should instead focus on changing your perspectives on how you operate, how your company operates independent of competition and how you can create something truly differentiated.

Of course I may have butchered that explanation, so follow the link above and read more if you’re interested.

What Levie did to illustrate the fact that so much of the hotel industry has fallen into a sea of sameness (i.e., the Red Ocean, which is opposite of the Blue Ocean) is what made this come alive for me: He projected on the screen guestroom photos of eight different hotel rooms, belonging to different brands, and he asked who in the room could pick out which room belonged to which brand.

Nobody could. Nobody.

It was eye-opening. All of the work brands do to clarify and differentiate and set apart … and a room full of hotel industry experts couldn’t differentiate between a Courtyard room and a Hampton one.

“The focus of our industry has been in putting a chocolate on the pillow,” he said by way of explanation. “And we try to one-up each other with the chocolate. Sometimes it’s a mint; sometimes it has a logo on it. But nobody ever stopped to say, ‘What if I don’t want a goddamn chocolate in the first place after I just brushed my teeth!’”

Levie shared more examples of how he and his team apply this line of thinking to citizenM. Here are two takeaways from the Blue Ocean strategy:

  • Drive cost down: Levie said this is a fundamental tenet of Blue Ocean. “You have to drive cost down; you can’t drive success if the cost goes up,” he said. “Driving cost down can be in construction, in operation, in whatever is relevant for your business.” For citizenM, that meant embracing modular construction.
  • Raise the value: As costs go down, value for the customer has to go up, Levie said. “If you’ve shifted your context and the perceived value to the guest is the same, what use is it?” he asked. For citizenM, that meant that while they conserved costs through modular construction, outsourcing cleaning and renting linens, they could increase value to guests by investing in big communal, comfortable living room-type lobbies and great meeting spaces.

In terms of practical application, the company created a space that was unique to it and its guests, independent of competition. “We eliminated some things; we raised some things,” he said. “We created some things; we reduced others. We wanted to be able to control our own destiny and measure against it, and it’s worked well for us.”

Click here for a quick look at the differences between Red Ocean and Blue Ocean Strategy (you will have to give an email address, FYI).

Have you tried applying this or any other business strategy to your own business? I’d love to hear your thoughts on the topic. Leave a comment below. Or you can email me at sricca@hotelnewsnow.com or find me on Twitter @HNN_Steph.

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