In the building supply industry which consumers are considered noncustomers? What are you doing to attract them to your business? The book Blue Ocean Shift: Beyond Competing – Proven Steps to Inspire Confidence and Seize New Growth by W. Chan Kim is an awesome and eye-opening book about moving from red to blue ocean industry.
Identify the three tiers of noncustomers in your industry
Now we turn from current customers to noncustomers. Using the three-tiers graphic, shown in figure, (below) as a guide, ask each of the team members to think through and write down their thoughts about who might be in each tier. To help you perform this task effectively, relevant materials and templates are provided for your free download and use at Exercise Templates. Here are the questions you want to ask:
- Who sits on the edge of our industry and uses its offering reluctantly and/or minimally?
- Who considers our industry and then consciously rejects it, satisfying their needs through another industry’s offering or not at all?
- Who could strongly benefit from the utility our industry offers, but doesn’t even consider it, because the way it is currently being delivered makes the industry seem irrelevant or out of their financial reach?
For many people, this will be the first time they’re ever been asked to systematically think through the issues of non-customers. As we have witnessed, if an organization has given thought to noncustomers, it’s usually in terms of their competitors’ customers, not the noncustomers of their overall industry. They ask, “Who are our competitors’ customers, and how can we win a greater share of those who patronize other players?” But this is not the meaning of noncustomers in blue ocean terms. What is key at this stage is getting team members thinking deeply about noncustomers and, critically, letting them discover for themselves how little they may know or have thought about the wider opportunity landscape that exists beyond the current industry’s horizon.
Organizations often become comfortable commissioning and outsourcing large, formal market studies. Hence, it is not surprising that, at this juncture, we’ve often been asked, “Don’t we need to be supported by formal market research so we will know, concretely, who the three tiers of noncustomers are?” In response, remind them that the blue ocean shift process is built on firsthand discovery that will be done when the team goes out in the field. The purpose here is to maximize the team’s firsthand learning and confidence in what they see for themselves in the field. With firsthand discovery, the resulting strategy is likely to be executed strongly, as the confidence that emanates from the team reverberates throughout the larger organization.
Much to their surprise, team members generally find that, by struggling through this exercise independently, they flesh out a rich list of noncustomer groups and are really pushed to broaden their thinking. Equally important, they see how tightly focused on existing customers their strategic lens has been. When people are spoon-fed answers by having reports commissioned up front, they seldom realize what they don’t know, and too often easily conclude that they “got it, knew it, no big deal,” when, in fact, they didn’t have or know it, and it is a big deal. People seldom realize what they don’t know or appreciate the value of what they’ve learned if they haven’t struggled to obtain it themselves. Making people discover firsthand that what they know-and don’t know-is key to getting them to internalize and value what they learn.
After each of the team members has compiled their list of noncustomers, ask them to share their thoughts about whom they put where and why. The objective now is for the team to identify and select the people or organizations they collectively see as the dominant noncustomer group or groups in each tier. Note that team members may continue to feel a bit uneasy, because they’re being asked not only to move away from what they know, but also to share their thoughts in front of their colleagues. Some unease is good, however, because it means that team members are being pushed to broaden their current understanding. As each of the team members contributes their thoughts on each of the three tiers, you should record and post them in front of the group. This allows everyone to see the whole team’s thoughts, which in itself is eye-opening, as they get to appreciate the differences and similarities in how each of them views the same market reality.
As people share and debate their selections and the thought processes behind them, team members’ understanding of who potentially belongs in each tier starts to deepen. So does their confidence that opportunity exists in the untapped demand that lies beyond the boundaries of their industry as it’s currently defined. Typically, as members discuss the validity of one another’s reasoning, a number of customer groups are crossed off, and different sets of customers get grouped together, producing fairly solid agreement among team members as to whom they see as the main non-customer groups in each tier. With this, a good understanding of the industry’s total demand landscape starts to come into focus.