Obviously the legal market is in a state of flux with the recession, deregulation and the threat of new business models and new entrants as the result of the Legal Services Act. Many accountants are scratching around for a response to the commoditisation of audit services and surveyors and agents are familiar with the erosion of traditional services in the new digital age where property information is so easy to come by.
With many firms we explore ways to improve innovative thinking to identify new needs, new markets, new services and the resulting new streams of sustainable profits. Whilst there are many ways to help firms in this exploration I reflected on the sometimes derided “blue ocean strategy” ideas of Kim and Mauborgne in the late 1990s.
In essence, they focus attention on the creation of new markets at the product development stage. It does not look at winning from competitors, but on making the competition irrelevant by creating “blue ocean” opportunities (i.e. uncontested market places in which new demands of customers are met).
The key questions for the management team are:
- Which of the factors that our industry takes for granted should be eliminated?
- Which factors should be reduced well below the industry’s standard?
- Which factors should be raised well above the industry’s standard?
- Which factors should be created that the industry has never offered?
It considers six key risks common to new product/service development, and thus proposes on six principles:
- Reconstruct market boundaries
- Focus on the big picture, not the numbers
- Reach beyond existing demand
- Get the strategic sequence right
- Overcome organisational hurdles
- Build execution into strategy
You can be sure that those currently outside the professions will be looking at the attractive margins and asking themselves similar questions and developing strategies with a view to getting a slice of the action.