Blue Ocean Strategy of Spectra Energy

Introduction

The blue ocean strategy refers to a situation or a market where there is no irrelevant competition, or where there is negligible competition. The blue ocean strategy of Spectra Energy is focused on searching for new markets and business avenues which operate with minimal pricing pressures. The blue ocean strategy can be applied across different sectors and industries, and the businesses that exist within them. Spectra Energy blue ocean strategy is pivoted on entering new market spaces, or developing them as well as on innovation focused internally or externally that helps reinvent the industry to ensure no irrelevant competition (Kim & Mauborgne, 2014).

Moving away from saturated markets

The Spectra Energy continues to operate in saturated market spaces, and is restricted in growth and expansion. The Spectra Energy’s businesses often face hurdles in the way of development and are also faced with increasingly intense pricing pressures- and are thus said to operate in a red ocean. A red ocean is marked with cut-throat competition and pricing wars that compromise the profits for all players. Pressures in saturated markets along with narrow growth spaces had forced the Spectra Energy to search for new avenues – vertically or horizontally – to be able to enjoy higher market shares, and swim in blue oceans (Kim & Mauborgne, 2014).

Blue ocean strategy and differentiation

New industry boundaries

As companies and organizations move towards blue oceans, they redraw and redesign industry boundaries. This is possible through innovation and creativity. The Spectra Energy also explores new platforms and channels, as well as means of doing business and is thus able to expand existing industry boundaries. The Spectra Energy has also been able to show the potential of developing new industries through its innovations – by identifying new spaces and making the competition irrelevant (Agnihotri, 2016).

Differentiation

The Spectra Energy has focused on differentiation under the blue ocean strategy. The Spectra Energy’s efforts towards differentiation are focused on creating unique value for the customers in its product and service offerings (Agnihotri, 2016; Blue Ocean Strategy, 2022).

Cost efficiencies and low cost

Under blue oceans, the Spectra Energy also focuses on maintaining affordability for the value additions and differentiated products and services that it offers. The Spectra Energy commonly continuously reevaluates and reassesses its own processes and systems to maintain high-cost efficiencies (Freedman, 2022).

Value innovation – value addition and low-cost maintenance

In doing so, the Spectra Energy has been able to explore blue oceans through value additions as well as affordability for consumers. The Spectra Energy has been able to successfully identify what consumer’s value and include it in its offerings and value propositions. At the same time, the Spectra Energy has been able to provide the value differentiation at affordable costs. In this manner, the Spectra Energy enjoys high levels of value innovation (Kim, 2002; Kim & Mauborgne, 2014).

Understanding red oceans

Under red oceans, where the Spectra Energy previously operated, all layers had accepted the predefined structures and boundaries of the industry, and had continued to operate as well as compete within these (The Economic Times, 2022).

Cut throat competition

To be able to remain profitable and successful, players, including the Spectra Energy within red oceans, focused efforts on developing and maintaining competitive advantages over one another, and other players. This advantage was largely cost-based, as in the case of the Spectra Energy. In this way, wealth was only redistributed at the expense of other players, and the Spectra Energy failed to create any new wealth in the red oceans (Kim & Mauborgne, 2005).

Understanding blue oceans

Under the blue ocean strategy, the Spectra Energy operates in an industry and market space that is not marked with set boundaries or structures. These blue ocean structures have been recreated by the Spectra Energy at large, as well as by other players. Other players have also contributed to the restructuring of the industry through innovation (Kim & Mauborgne, 2014).

Restructuring industrial boundaries under the blue ocean strategy

Under the blue ocean strategy, the Spectra Energy is not restricted by predefined rules, barriers, and principles. Instead, the Spectra Energy has been able to shift its strategic direction and attention from focusing on supply towards working on developing and creating demand (Blue Ocean Strategy, 2022). The Spectra Energy, in this manner, is focused on the building of value innovation in its offerings, along with ensuring efforts towards building and maintaining differentiation and cost-effectiveness. In this way, the Spectra Energy has been able to immaterialize the competition (Kim & Mauborgne, 2017).

Strategic directions for blue oceans

The Spectra Energy has four different strategic directions, which it can choose from four continuing to pursue its blue ocean strategy. All of these strategic directions will strengthen the company’s current business position and will supports its strategy of value addition and cost efficiencies, as well as differentiation – allowing it to develop strong and sustainable market positions. These directions are

Raise

• The Spectra Energy should assess and evaluate the current industry standards and practices.

• The Spectra Energy should identify loopholes, and areas which can be improved, expanded upon, or developed a new within the industry.

• The Spectra Energy should identify different drivers and factors within the industry boundaries.

• The Spectra Energy should identify through research and observation the different factors that could raise above the existing industry standards (Kim, 2002; Kim & Mauborgne, 2017).

Eliminate

• The Spectra Energy should assess and observe current industry standards.

• The Spectra Energy should observe players’ practices within the industry, and relate the same with the industry standards.

• The Spectra Energy can identify the standards which are not needed, which are obsolete, and which may slow down operations and processes.

• These standards can be eliminated in own operations by the Spectra Energy (Kim & Mauborgne, 2014; Freedman, 2022).

Reduce

• The Spectra Energy can also assess an observe industry standards for identifying factors that are not needed, or needed partially.

• The Spectra Energy can work on reducing these standards to enhance operational performance and maximum utilization of resources as well as value addition (The Economic Times, 2022; Kim & Mauborgne, 2014).

Created

• The Spectra Energy can also expand current industry boundaries and standards.

• This expansion will be possible by the Spectra Energy through expanding and creating new standards.

• The new standards can be created by the Spectra Energy through observing industry processes and operations, and identifying potential loopholes.

• The Spectra Energy can introduce new processes and standards to redesign industry boundaries (Agnihotri, 2016; Kim & Mauborgne, 2005).

Blue ocean strategy: organizational competencies

The Spectra Energy has been able to successfully implement the blue ocean strategy because of three important organizational elements (Freedman, 2022). These organizational elements have allowed the Spectra Energy to explore blue oceans, experiment successfully with innovation, and add value to its product offerings. These elements include the following:

Mindset

• The Spectra Energy has a progressive mindset that is rooted in this participative and visionary leadership (Bratton, 2020).

• The Spectra Energy has a positive and can-do attitude and mindset.

• This mindset has allowed the Spectra Energy to achieve success through high focus and efforts (Wilson, 2018).

• The Spectra Energy has high motivation levels of employees – which enhances the optimal performance of the organization and has allowed it to explore Blue Ocean through creativity (Kim & Mauborgne, 2017; Kim & Mauborgne, 2005; Wilson, 2018).

Tools

• The Spectra Energy has access to multiple resources that has allowed it to take advantage of the blue ocean strategy (Mebert & Lowe, 2017).

• These resources Spectra Energy capabilities are internal as well as external for the Spectra Energy.

• The Spectra Energy has also invested resources and trainings for developing internal capabilities and capacities for ensuring upgraded skills and increased value addition (Buchanan & Huczynski, 2019; Chernev, 2018).

Culture

• The Spectra Energy has a learning culture, and encourages all employees to ask questions and carry out healthy discussions (Anthony, 2021; Schein, 2010).

• The Spectra Energy has a culture that is focused on research and development, which in turn leads to new innovations and solutions for existing demands and challenges (Wunder, 2019).

• The Spectra Energy has an inclusive and diverse culture, which leads to increased synergies that allow the development and implementation of blue ocean strategies easily (Wilson, 2018).

Using the blue ocean strategy effectively: steps for successful implementation

The Spectra Energy has developed the blue ocean strategy following systematic and organized processes and steps (Kim & Mauborgne, 2017). The steps that the Spectra Energy undertook for developing the blue ocean strategy include:

Step1

The Spectra Energy conducted thorough market and industry research to identify the right place to work towards developing a core team (Kim & Mauborgne, 2014; Freedman, 2022). This core team was responsible for driving Spectra Energy forward strategically towards new value additions and differentiations (Blue Ocean Strategy, 2022; Kim & Mauborgne, 2017 b).

Step2

The Spectra Energy continued to conduct deep market analysis as well as studied and assessed the competition closely. This was needed by the Spectra Energy to identify potential opportunities, and demand gaps in the existing industry as well as potential structural changes in the existing industrial boundaries (Blue Ocean Strategy, 2022).

Step3

The Spectra Energy’s assessment of the macro environment, and the market spaces allowed it to also identify the challenges and issues hidden in the current industry structure and design (Machado, 2019; Kim & Mauborgne, 2017 b). These issues and problems have restricted the industry size, and led to restrictive growth for the Spectra Energy. The Spectra Energy was also blue to identify new non-customers in this assessment- which could be turned into future consumers (Blue Ocean Strategy, 2022).

Step4

The Spectra Energy worked to redesign and reconstruct the industry boundaries and structures in a systematic manner. This was done through identifying new opportunities, as well as through exploring new innovations and valuations in existing offerings (Blue Ocean Strategy, 2022).

Step5

The Spectra Energy finally elected the right blue ocean move, i.e. conducted various pilot testing’s and market testing for its new offerings before finalizing and launching them in the market to attract new consumers, and explore new markets (Blue Ocean Strategy, 2022).

Tackling challenges on the way to Blue Ocean

Restructuring and reorganizing the boundaries and structures of the industries is not that simple (Anthony, 2021; Kim & Mauborgne, 2017 b). Managers and practitioners of the Spectra Energy seek to renew the value of their offerings within the organization – mostly using new technologies and advances networks to not only create value propositions, but also transform existing ones (Kim & Mauborgne, 2005; Kim, 2002). However, the Spectra Energy has been able to overcome resistance towards change and innovation within the organization, as well as in the external environments, because of:

Organizational culture

The culture within the Spectra Energy supports exploration and innovation. This culture is important for supporting the development and implementation of new ideas that boost the value propositions of the Spectra Energy (Chernev, 2018; Bratton, 2020; Martinez, Beaulieu, & Gibbons, 2015).

Business design

The Spectra Energy also continually practices business design (Freedman, 2022). The Spectra Energy ensures that it’s leading from the font. This means that the Spectra Energy ensures that its teams are empowered, and confident in tackling ambiguous and difficult challenges and issues. This allows the Spectra Energy to identify new opportunities and innovate (Wunder, 2019).

Strong and visionary leadership

The Spectra Energy has a forward-thinking, progressive, charismatic leadership. This leadership ensures that the Spectra Energy continually engages in disruptive processes and innovations – which in turn allow the company to explore and implement the blue ocean strategy. The leadership is supportive of, and facilitates the change processes within the company (Machado, 2019).

Communication

The Spectra Energy ensures that all communication within the organization is transparent and quick (Chernev, 2018; Buchanan & Huczynski, 2019). The leadership and management levels have frequent meetings within the company along managerial levels (Wilson, 2018; Wunder, 2019). This allows employees to feel on board of the happenings, and be part of a change from the beginning – understanding its need and facilitating its implementation. This is critical for ensuring successful innovation and adoption of the blue ocean strategy (Anthony, 2021; Chernev, 2018; Kim, 2002).

Value innovation in blue ocean strategy

Value innovation within the blue ocean strategy focuses on value as well as innovation (Blue Ocean Strategy, 2022; Kim & Mauborgne, 2017). This means that the Spectra Energy seeks to innovate and create value at the same time as a means of differentiation within the marketplace to be able to implement the blue ocean strategy (Kim & Mauborgne, 2014). The Spectra Energy does not only engage in value creation – which focuses on scaling the existing value only instead of creating a new one (Blue Ocean Strategy, 2022; Agnihotri, 2016; Kim & Mauborgne, 2014).

Technology innovation

The Spectra Energy engages in value innovation through technology innovation. The Spectra Energy ensures that it uses advanced and progressive technology to address various consumer demands and problems as well as needs in innovative ways and manners (Kim & Mauborgne, 2005). However, the Spectra Energy ensures that it focuses on value innovation rather than technology innovation in its value propositions so that new value through technology is created for consumers (Kim, 2002; Wilson, 2018).

Low cost

The Spectra Energy also ensures affordability with value innovation. The value innovation allows the Spectra Energy to operate at low costs, and maintain cost efficiencies (Chernev, 2018). As a result, the Spectra Energy maintains low costs and high value for consumers – allowing it to tap into new consumer groups as well. As a result, the Spectra Energy is able to enjoy a high growth rate as well as increased sales and profits (Kim & Mauborgne, 2014).

The strategies and strategic directions for designing and implementing the blue ocean strategy have been overseen through some guiding and fundamental principles by the Spectra Energy. These include”

Formulation principles

Redesigning the industry

• The Spectra Energy sought to reconstruct, redesign and rebuild the market boundaries and standards.

• The Spectra Energy was bold enough to redefine the industry space and the market space in which it operated (Mebert & Lowe, 2017).

Long term focus

• The Spectra Energy focused on long-term success and sustainability, instead of short-term gains and numbers.

• The Spectra Energy was visionary, and aw beyond the existent customer demand and needs (Freedman, 2022).

Demand creation

• The Spectra Energy creates demand for the new value-added offerings it manufactured and proposed in the blue oceans (Kim, 2002).

• The Spectra Energy tapped into new customer groups and target audiences (Kim & Mauborgne, Red Ocean Traps (Harvard Business Review Classics), 2017 b).

Execution principles

Overcoming organizational challenges

Organizational culture

• The Spectra Energy has a result organizational culture (Martinez, Beaulieu, & Gibbons, 2015; Schein, 2010).

• The Spectra Energy invests in research and development.

• The Spectra Energy is quick to adapt to change and has a disciplined change management team to oversee change processes (Chernev, 2018; Kim & Mauborgne, 2014).

Environmental assessment

• The Spectra Energy continually assesses its internal and external environments and creates contingency plans (Chernev, 2018; Machado, 2019).

• The Spectra Energy engages in pre-strategic planning to help strengthen its strategic focus and direction (Wilson, 2018; Kim & Mauborgne, 2017 b).

Leadership

• The Spectra Energy has a visionary leadership (Bratton, 2020).

• The leadership at the Spectra Energy has a participative approach which encourages employee motivation and their organizational commitment.

• The leadership ensures optimal organizational performance at the Spectra Energy (Freedman, 2022; Kim & Mauborgne, 2005).

Developing execution strategy

• The Spectra Energy has developed a sequential strategic direction for execution.

• The execution of the blue ocean strategy is based on market research (Anthony, 2021).

• The execution of the blue ocean strategy has been carefully planned to ensure that it’s timely.

• The execution involves all parts and members of the Spectra Energy (The Economic Times, 2022; Kim, 2002).

Blue ocean strategic Tools

The Spectra Energy has been able to use multiple operational and strategic tools.

Shift in organizational mindset

These tools kits have been important for the Spectra Energy in helping it develop the right mindset needed for aligning processes and systems towards the blue ocean strategic direction (Kim & Mauborgne, 2017 b). The tools have been a powerful source for the Spectra Energy in facilitating it towards aligning its resources, and identifying potential blue oceans (Kim, 2002). The Spectra Energy has been diligent in ensuring that its teams and organizational members are familiar with the blue can strategies and tools so that the shift in their mindset is facilitated and strengthened (Wunder, 2019).

Cultural driver

Moreover, the tools also ensure increased alignment of the Spectra Energy’s culture with the strategy. This, in turn, has allowed the Spectra Energy to realize the increased number of opportunities, and embed creativity in its internal processes and systems (Kim, 2002; Buchanan & Huczynski, 2019).

These tools include, for example:

• Value innovation

• Six path framework

• Strategy canvas

• Four action framework

• Tipping point leadership

• ERRC Grid

• Pioneer settler migrator map

• Buyer utility map

• 3 tiers of non-customers

• Fair processes

• Visualizing strategy (The Economic Times, 2022)

Conclusion

With the use of the blue ocean strategy, the Spectra Energy has been able to redesign the industrial boundaries and standards using multiple techniques and tools that have been identified and discussed briefly in this paper.

The blue ocean strategy has been an important strategic element for the Spectra Energy. The Spectra Energy has been able to explore new markets and tap into new customer groups through using the blue ocean strategy. This has been possible for the Spectra Energy through continuous investment in research and development as well as through its organizational cultural, which is focused on innovation and creativity. The Spectra Energy has been able to make use of innovative processes and progressive technology to create value innovation. At the same time, the Spectra Energy has moved out of red oceans and no longer competes over pricing strategies. This has also allowed Spectra Energy to build a cost advantage, and maintain affordability in its offerings for customers.

References

Agnihotri, A. (2016). Extending boundaries of blue ocean strategy. Journal of Strategic Marketing, 24 (6), 519-528.

Anthony, H. (2021). Understanding strategic management. New York: Oxford University Press.

Blue Ocean Strategy. (2022). WHAT IS BLUE OCEAN STRATEGY? Retrieved 2022, from Blue Ocean Strategy: https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/

Bratton, J. (2020). Organizational leadership. Newcastle upon Tyne: Sage.

Buchanan, D., & Huczynski, A. (2019). Organizational behaviour. London: Pearson UK.

Chernev, A. (2018). Strategic marketing management. Berlin/Heidelberg: Cerebellum Press.

Freedman, M. (2022). Blue Ocean Strategy: Creating Your Own Market . Retrieved 2022, from https://www.businessnewsdaily.com/5647-blue-ocean-strategy.html

Kim, W. (2002). Blue ocean strategy: from theory to practice. California management review, 47 (3), 105-121.

Kim, W., & Mauborgne, R. (2005). Value innovation: a leap into the blue ocean. Journal of business strategy .

Kim, W., & Mauborgne, R. (2014). Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Boston, Massachusetts: Harvard business review Press.

Kim, W., & Mauborgne, R. (2017 b). Red Ocean Traps (Harvard Business Review Classics). Boston, Massachusetts: Harvard Business Review Press.

Kim, W., & Mauborgne, R. (2017). Blue ocean leadership (Harvard business review classics). Boston, Massachusetts, United States: Harvard Business Review Press.

Machado, C. (2019). Organizational Behaviour and Human Resource Management. Berlin: Springer.

Martinez, E., Beaulieu, N., & Gibbons, R. (2015). Organizational culture and performance. American economic review, 105 (5), 331-35.

Mebert, A., & Lowe, S. (2017). Blue Ocean Strategy. Literary Criticism.

Schein, E. (2010). Organizational culture and leadership. Hoboken, New Jersey: John Wiley & Sons.

The Economic Times. (2022). What is 'Blue Ocean Strategy' . Retrieved 2022, from https://economictimes.indiatimes.com/definition/blue-ocean-strategy

Wilson, F. (2018). Organizational behaviour and work: a critical introduction. New York: Oxford university press.

Wunder, T. (2019). Rethinking strategic management: Sustainable strategizing for positive impact. Berlin: Springer Nature.