Blue Ocean Strategy

We had a very good class today in Strategy. It's sad to say, but it may be the only class I've really enjoyed this year at INSEAD. The core courses that we are required to take in P1 & P2 are so essential to anyone who will carry the MBA title but so mundane for anyone with a business background. On the other hand, I am so pumped for the electives I'll take in the last 3/5ths of the year & I'm sure they will more than make up for the lack of excitement felt until now.

To be fair, Strategy has been a winner all P2 long, but today I actually felt disappointment that the 90 min class had to come to an end. The professor, Peter Zemsky, is a really favorite among the class. He fits my stereotypical image of strategy professor. Very quirky, bouncing off the walls with energy, he is very much like a professor version of Jim Carrey.

The topic of the day was Blue Ocean Strategy, a concept made famous by 2 INSEAD professors. According to Zemsky, it is one of the biggest developments in the Strategy field in the last decade and definitely the most important idea to come out if INSEAD in that time. We started the class with a look at a very clear case of successful use of Blue Ocean Strategy; that is Nintendo with their development of the Wii. It looks like this, if Nintendo would have done the traditional move and developed a product based on graphics and power like Sony & Microsoft, all 3 firms would be fighting it out in the same ocean that would be turned red from the bloodbath. Instead, by leaving those two firms to fight it out for the traditional customer set, Nintendo developed a system that went after an uncontested market and thus was able to enjoy its own blue ocean.

We went on to a very fun discussion of the circus industry and how Cirque du Soleil's model is another successful example of Blue Ocean Strategy. By developing this concept which is something of a cross between a traditional circus and a Broadway show, founder Guy Laliberte has created $1.5B of wealth for himself....not bad!!!

We have been learning some frameworks to assist with the thought process behind coming up with these types of strategies, such as the Non-Customer Opportunity and Value Curves. It is really cool seeing how such simple tools can add structure to strategic thought development. Who knows, maybe they will help me come up with the next Cirque du Soleil or Yellow Tail wine.

Private Equity, the incredible dream

PE is quite probably the most sexy career out there for us MBAs. It has such an alluring appeal that even those who have no clue what the hell it is claim that it is their #1 aspiration post INSEAD.

I am too drawn in by PE. In what other career can you incorporate so many interesting facets of business? It can potentially cover everything from technical analysis, strategic planning, organizational engineering, and operations to networking, deal sourcing/structuring, and negotiations. It really appeals to me given that I know that I have all the relevant analytic skills and have convinced at least myself that I have all the business sense required to build businesses and create value.

The bad news is that it is almost impossible getting a job in PE. There are no formal recruiting processes on campus. Most positions are filled informally or through headhunters. We had one of the top PE headhunters from the UK in to present last week. He painted a grim picture... First, given the current financial conditions, growth in the sector is questionable at best. Second, unless you have an IB background or at least top tier consulting with serious focus on transactions, then you can forget PE or at least go get the relevant feeder experience and then you can dream.

Recruiters from industries that leach off of PE have found a unique sales pitch...join us as a gateway into PE. Bain & Co.'s head of European PE practice was in today to introduce his practice, a subset of their traditional mgmt consulting group which slaves away on due diligence work for, fair enough, a lot of the big deals taking place in Europe.

So, what to do? I would love to do private equity type work, maybe even on a very small scale with a couple of colleagues. Just have to figure out how to scape together the capital. I'm really excited for the Realizing Entrepreneurial Potential (REP) course in P4 that essentially prepares you to do all of this (sourcing/financing/biz planning) and then the follow-up in P5, First 100 Days, which actually replicates the intensity of the days following a takeover in a close to reality type format.