Business innovator Brian Gladden offers new perspective on finding business opportunities.
SACRAMENTO, Calif.–(BUSINESS WIRE)–Business executives are constantly challenged on how to create competitive advantages and grow their business. If you are not growing and innovating, your company will eventually become obsolete. Creating new market space, or a Blue Ocean, is one of the ways companies can create this competitive advantage. Instead of focusing on current customers in current markets with many competitors, business leaders focus on finding customers that have unsolved problems. If there are enough of these new customers with unmet needs, a new market or Blue Ocean can be created. However, hindsight is 20/20, and most companies don’t know how to find these potential Blue Oceans.
Regulatory markets are a way to find new customers with unmet demand and create your next Blue Ocean. When a new regulation is enacted that requires something a business or citizen “must do,” economic opportunities arise. Through regulation, the government creates a new problem that must be solved, in which the opportunity for a Blue Ocean is spontaneously created from thin air. This new regulatory problem creates unmet demand that would not exist otherwise, a new concept known as “artificial demand.”
But what is the best business model to use to capture value from these new regulatory markets with artificial demand? A study was conducted using the California Smog Check regulation to find out how companies can best take advantage of this opportunity. Why the smog check regulation? Because it impacts more people and businesses in California than all other regulations except taxes.
To uncover what impact artificial demand has on business model success, a comparison was done between the revenue generated by “smog-test-only” shops and “smog-test and repair” shops. Surprisingly, the test-only stations business model generated more than 3x the revenue as the test-and-repair business model. This also appears to be the first quantitative research to prove that a regulation created a new market. The outcome is that consumers driven by artificial demand do not follow the same patterns of purchasing behavior. These findings give business leaders the guidance to pursue regulatory Blue Oceans, and to optimize their opportunity. The greatest success in the “must do” government-regulation-driven market space means figuring out what the consumer will need to meet the mandate and deliver exactly (and only) that.
About The Strategy & Innovation Institute (Si2)
The Strategy & Innovation Institute (Si2) is a management consulting firm that works with companies to explore and innovate business models to find new revenue generating opportunities and create Blue Oceans. CEO Dr. Brian Gladden has 33 years’ experience working with Fortune 500 and mid-sized firms as a certified coach with many of the leading business thought leaders throughout the world. Click here for the full article. Contact Si2 for a free consultation and discovery call.
Contacts
Brian Gladden
bkgladden@si2blue.com
Cell: (916) 250-9124