What is Value? Blue Ocean Strategy & Online Dating; iDate 2010 Conference Presentation

Last week I had the opportunity to talk about Blue Ocean Strategy at the 2010 iDate conference; the largest conference for the online dating world.

Click here to view the presentation.

Early analysis revealed the field is mired in the red ocean of competition and technical innovation. Given how little the industry has changed I expected maybe three people might be interested in applying Blue Ocean Strategy for their websites. I couldn't have been proven more wrong.

The room was packed and the audience completely engaged. This was especially surprising given that it was a morning presentation and the conference was in Miami's South Beach District, not exactly a venue to inspire people to wake up early for discussions about business strategy in dark rooms. Figuring out how to lift oneself out of the daily dreariness of red ocean competition trumps the siren song of the very real blue ocean outside.

Because of time constraints we didn't have time to review all the components of Blue Ocean Strategy so focused on value innovation, and even then tried to dig into the often misunderstood concepts of non-buyers, buyer value, and the six path framework.

One great example of buyer value came from the popular dating website Plenty of Fish. The enormously popular websites online chat system went down months ago. All their users noticed but none apparently cared. Their metrics don't appear to have been affected, users quickly found alternative methods of communication; it was clear that users of the site found little if any value in the on-site chat system despite that maintaining it presumably required both capital and time that could have been better spent on factors that added real utility.

Along the same lines we tried to focus on a perennially misunderstood concept: key factors that should be reduced or eliminated. It's not uncommon to see companies try to re-characterize these by defining them in the inverse. For example somebody may write "Reduce user frustration" ... presumably by adding lots of features a project champion wants. This couldn't be more wrong: factors we eliminate or reduce are factors buyers and non-buyers find valuable but where the value does not align with the cost. In the example above we're actually raising ease of use. When we phrase the key factor like that we're forced to examine the importance of Ease of Use to buyers and non-buyers, and -- almost more importantly -- we need to find other factors to eliminate and reduce to pay for our increased ease of use. Remember that it is substantially harder to eliminate and reduce factors than it is to raise and create them.

My hope is that over the next months or years somebody comes along with a better way of matching people online, and maybe even retains those previously first-tier non-buyers, helping them build a foundation for their budding relationships. If all works out well we'll see offerings that focus on the larger interests affecting singles, looping in the second-tier non-buyers. Finally, we may even learn something from the third tier non-buyers -- parents in happy relationships looking for playgroups for their kids, couples looking for other couples to hang out with, job hunters looking for work opportunities -- that can be applied to transform the red ocean of the online dating industry into the blue ocean outside our conference center.

One thing I learned about myself is that talking about Blue Ocean Strategy is fun! I've been working with the framework for ten years now. I'm not sure I'd want to stray far from the tech or web industries but if people want to learn more about BOS, or apply it within their own businesses, please don't hesitate to contact me at olenick @ valueinnovation.net.

Blue Ocean Strategy: Microsoft & Yahoo -- Build a better search

Writing again about MS and Yahoo. Yahoo came in with essentially flat earnings. Depending upon how one parses the numbers Google's profitability grew 30-40 percent during the same quarter. Google is clearly a Blue Ocean Strategy company (click here for a BOS analysis of Google: "Bloogle: Making Portals Irrelevant"). Based on earnings MS CEO Steve Ballmer says he's ready to walk away from the deal. He's probably just bluffing but walking away would be the best move.

It isn't that MS doesn't need the reach of a world-class search engine: it's just that Yahoo doesn't fit that model. There are some great Yahoo properties -- Flickr, Groups, Messenger -- but the centerpiece of Yahoo is search and Yahoo's search stinks. The problem with Yahoo search is that it's adulterated. Yahoo liberally co-mingles paid search results with organic results: doing so violates the integrity and credibility of the results. Many consumers outright understand this; others just sense that something is "wrong" or "weird" with the results (I've heard both words used).

Yahoo searchers feel like they've walked onto a used-car lot: they put their guard up and many don't return. Yahoo used to have a strategic advantage by human-indexed search results but that fell apart when they switched to paid inclusion; pay Yahoo a few hundred dollars and you'll become relevant, even if you're a third-rate hack in your field.

For those not in the know paid inclusion is like paying for a job interview: the job you stand to receive is junk. Similarly, Yahoo's search results are worthless. Since virtually everybody knows this at some level only the most clueless are left searching on Yahoo, which dilutes the value of the search results to advertisers. These diluted results -- stemming from a lack of credibility -- push Yahoo to do more to monetize results, which typically means more dumb tricks like co-mingled results, which even further dilutes credibility. The resulting death spiral they're in is well documented and will be studied in business and journalism text books for many years.

Microsoft: if you want to build a better search then build a better search. Look at the tiers of non-customers and apply each through the six path framework to find the key factors of a great search engine. Google's clobbered you and Yahoo but you two set them up perfectly: you, Microsoft, focused too much on technology innovation and Yahoo self-destructed. The only way to fight a BOS offering is with another BOS offering. Google redefined the rules once; you can and should do the same back to them.

Without going into a full-scale analysis I'd think the key factors of a Google beating search engine would include Price, Ease of use, Scope of items returned (not just websites), Credibility of results, Comprehensiveness, Relevance of search results, Honesty and integrity of search provider, Objective and subjective descriptions of results, and Reward to business owners for playing fairly. There's probably a few more, and some of these probably need refinement. But buried in there, I'll bet, is the recipe for a genuine Google killer. It won't be cheap to build, but it'll cost a lot less than buying Yahoo and trying to reform its culture, brand, and technology.