Sunday, July 19, 2015

Blue Ocean Patent Strategy for New Market Creation

 I. Blue Ocean Strategy

In “Blue Ocean Strategy,” the authors provide a framework and tool set for discovering new markets in traditionally filled spaces (Red Ocean) by changing the nature of competition away from the normal direction of the industry. The main idea of the Blue Ocean Strategy is the value innovation to reinvent the business model such that maximize the value proposition and minimize the cost to provide the value to customers. To achieve the value innovation the authors suggest the companies ask the following four questions (eliminate-reduce-raise-create framework):

a. Which of the factors that the industry takes for granted should be eliminated?
b. Which factors should be reduced well below the industry standard?
c. Which factors should be raised well above the industry standard?
d. Which factors should be created that the industry has never offered?
These four questions can be converted into the strategy canvas (level of value proposition v. value proposition factors) to create a new value curve. In “Blue Ocean Strategy,” the authors use strategy canvas to analyze the competitive environment of the market. Drawing a strategy canvas does three things. First, it shows the strategic profile of an industry by depicting very clearly the factors that affect competition among industry players (BLUE OCEAN FACTORS). Second, it shows the strategic profile of current and potential competitors, identifying which factors they invest in strategically. Finally, it shows the company’s strategic profile- or value curve-depicting how it invests in the factors of competition and how it might invest in them in the future.

II. Blue Ocean Patent Strategy

The basic principle in the Blue Ocean Patent Strategy is to exploit existing patents to achieve the value innovation, and thus, to serve the customers in fundamentally different ways. For example, a company in the consumer electronics industry that wants to enter the medical device industry can exploit existing patents that cover the factors of the strategy canvas. By deciding which factors (that are covered by the existing patents) are really crucial, and thus, needed to raise and/or create, a new business model that changes the nature of competition away from the typical direction of the medical device industry can be developed. Patents regarding superior UI/UX, compact/portable design, robust wireless connectivity are the good candidates for the BLUE OCEAN FACTORS.

Another way to achieve the value innovation is to integrate into the existing platforms. HBS Professor Iansiti, the author of “The Keystone Advantage,” suggested technological assimilation as a new engine for technological innovations in his article “Creative Construction.” In the technological assimilation frameworks, a core innovation that once provided stand-alone products or services for a specific market can be the building blocks for mass market generating innovations through assimilation to broader platforms that were not existed at the time of innovations. A good example may be the GPS technology providing LBS (location based services) applications for smartphones and automobiles. Another good example may be the DVR technology of TiVo that was integrated into digital set-top box platforms. By contrasting all possible value propositions from an existing platform to the potential value propositions provided by the inventive departures (novelty points) of the existing patent(s), the integration feasibility of the existing patented technologies into the platform can be found, and thus, the new integrated value propositions can be developed.

As the smartphone market matured, many companies are looking for the post-smartphone market that can generate new revenues. Many market researchers expect that the interconnected IoT (Internet of Things) devices will create a new market that will result in more than $1 trillion in value added to the global economy within 10 years. Recently, many global leaders in IoT business provide the IoT platforms to create diverse platform-based business models and form IoT business ecosystem. According to the market research of Research and Markets, there are more than 260 companies that are offering IoT platforms. These IoT platforms can be the good candidates to be considered for the development of the Blue Ocean Patent Strategy.

For details regarding the Blue Ocean Patent StrategyTM development, please contact Alex G. Lee (

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