Saturday, February 28, 2009
Blue Oceans, Nintendo, and Real Estate
So, while the rest of my classmates in college were off drinking, partying, and doing the normal irresponsible college kid stuff, I came across an interesting book entitled Blue Ocean Strategy. How did I find out about this book? To be honest, I learned about it from Nintendo! I am an avid video game player, and love all things Nintendo. One day I happened to be following the speech of Nintendo of America's President Reggie Fils-Aime, and Reggie introduced a new business concept to me that day: blue oceans. I said, "What the heck is a blue ocean?" Well, I'll tell you._______________________________________________
Here are a couple of definitions for you to chew on for a moment:
A blue ocean is uncontested market share that has never been touched, neither has it even been considered part of the market.
A red ocean is the bloodied waters of current market share. It is the consumers out there that companies are currently fighting tooth and nail to get to buy their products.
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About the time of Reggie's speech, the book Blue Ocean Strategy began buzzing around the business marketing strategy world, and it piqued my interest. And it interested me because I saw what Nintendo was about to do with this strategy. They were about to introduce to the world the Nintendo Wii which we have all seen revolutionize the industry of video gaming, opening up previously untapped market share to an industry which was historically only for (predominately male) kids, teens, and college nerds. With the Blue Ocean Strategy, I saw Nintendo about to make the biggest comeback in video game history... from a dismal third place with the purple (yet, so lovable) Gamecube to an overwhelmingly first place spot with the Nintendo Wii, which even after a couple of years on the market, continues to dominate every region it is sold in and still stays consistently sold out in every store across America.
So, before we get into real estate, let's observe what Nintendo did. Because this change wasn't all about sticking older people and women in their ads. It was about price point, getting rid of what was not adding value, and focusing on what does ad value. Basically, they attacked the market with the least expensive game console of all the video game companies out there. In order to do that they did away with the high-def graphics that video game companies have been trying to one-up each other with for years, and they added a unique control scheme that added much more fun to the game play and could do away with the large, many-buttoned, and more complex controllers of the other competitors. In so doing, they were able to grab the attention of all people, young and old, male and female, thus opening up many market sectors that had never been targeted by video game companies. They have single-handily disrupted the entire video game market, and it will never, ever be the same again because of what they've done. The result: your grandmother buys a Nintendo Wii. She is part of that vast blue ocean of previously uncontested market share just waiting for something to come along that even she can participate in.
Now, back to real estate. In my previous blog, I uncovered some of the concepts we are going for with our company. These concepts are radically different from anything else out there. We are basically opening up a company that can easily take care of all the needs of your property. We're not just there to sell you the house, we can expand it for you, fix it for you, and then sell it for you when you're ready to move on. This opens up a whole new market in real estate that is largely ignored... those who aren't necessarily in a position to currently buy or sell. Historically speaking, when real estate sales are down, remodels and add-ons are up, thus giving us a virtually recession-proof real estate company. What this means is that I establish a client and can stick with them for the entire time they own their home as a partner alongside them, making sure that ALL their needs are met regarding that property.
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The two main business strategy models currently out there are:
1. to compete with price
2. to compete with quality.
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The common thinking out there is that you can't combine the two. You have to choose one or the other, price or quality, but not both. I argued with one of my professors while at UAH that it is indeed possible to compete on both of those terms. He had never read The Blue Ocean Strategy. The Blue Ocean Strategy gives us a model in which we can in fact do both. We now offer one more service to the public, which gives us another way we earn income, which means we can be more flexible with our commission and still stay profitable. Therefore, we can still offer high quality services, flexible commissions, all the while adding one more service which adds value which the client wants and needs.
I think the old saying fits: If you always do what you've always done, you'll always get what you've always gotten. We are competing against real estate agents and companies who have been at this game for decades fighting over the same red oceans doing exactly the same things. Hopefully with our concepts, we'll make all that bloody scrapping and fighting over your business meaningless.
The subtitle of the book Blue Ocean strategy is "How to Create Uncontested Market Space and Make the Competition Irrelevant." Hopefully we're on our way.
Let us know what you think!
Joshua Pettus
President and Broker
Home Grown Real Estate
http://www.homegrownrealestate.net
http://homegrownrealestate.blogspot.com
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