A big thing that most entrepreneurs are asked when building a new idea or starting a new company is, “what does the competitive landscape look like?”. It’s an important question that can define how you build and position your business based on how populated your competitive landscape is. While building the first two startups that I was a part of a mentor gave me some quick and easy advice to help test for the feel of your competitive landscape, the Blue Ocean, Red Ocean test.
How simple is the Blue Ocean, Red Ocean test? You can google it, literally, you just need google. As you shape your business, you will develop value-props and your single sentence description of what it is you do, your tagline. Take that tagline and punch it into google and see how many results come back, it’s really that easy. Let’s see an example of what this looks like with three taglines, CRM, Restaurant CRM, and Restaurant CRM and POS. Below are the results:
In the above three searches we highlighted in the red boxes the total number of results google returned for each search. Here is where we test for our Blue Ocean or Red Ocean. Take the search term “CRM” which returned 203 million results! Not only that, but you can see a large number of ads at the top to the search results and we have a wikipedia article and description on the right of the results. This is a “Red Ocean”, meaning the water is full of sharks and the water is going to get bloody from all the competition.
The second search gets a bit more specific, “Restaurant CRM”. The search returns just shy of 25 million results which is still a lot, but much less than our 203 million from the CRM search. So we can see the waters getting a little less red as the competitive field thins out.
Last, we searched for “Restaurant CRM and POS”. This combo of functions for a specific industry only returned an even thinner 4.1 million results from google. Now we are finding a blue ocean, clear water with much less competition or “sharks” swimming around that might bloody the water.
Now you can do a quick “Blue Ocean, Red Ocean” test yourself to see what your ocean looks like. You can be successful in either ocean, it just has different implications for how your approach building your business. Some think a blue ocean sounds better because less competition, but maybe it’s a blue ocean because there is no market demand, so sure you competition will be light, but consumer interest might be light as well. The results fo the Ocean test is meant to give you a glimpse into your competitive landscape and help decide how you will need to position and differentiate yourself as you bring your idea to market.