ROI Case File No.324 | 'BlueOcean's Endless Competition'

Chapter 1: The Quagmire of Competition—Price Cuts Don't Win

The week after the SceneCast Scene-Cast case was solved, a consultation arrived from Tokyo regarding business transformation at a strategy consulting company. Episode 324 of Volume 27, "The Pursuit of Reproducibility," tells the story of breaking free from competition and steering toward creation.

"Detective, we've provided management consulting for small and medium enterprises for 10 years. However, competition with peers has intensified and prices continue to fall. Services we could contract at ¥300,000 monthly three years ago are now ¥180,000 monthly. A 40% price cut. Even so, we can't secure new contracts."

Makoto Aoyama, Business Development Director at BlueOcean Research, a Minato Ward native, visited 221B Baker Street with an utterly exhausted expression. In his hands were competitor price lists and, in stark contrast, a new business proposal marked "escape from price competition."

"We provide management consulting for small and medium enterprises in Tokyo. Founded 10 years ago. Main services are business plan creation support, subsidy application support, and financial improvement consulting. However, competition has increased too much. Over 200 companies in Tokyo provide the same services as us."

BlueOcean's Intensifying Competition: - Established: 2015 (SME consulting) - Annual revenue: ¥320 million (down 18% YoY) - Staff: 18 (Consultants 12, Sales 3, Management 3) - Customer count: 48 companies (monthly contracts) - Average contract price: ¥180,000/month (was ¥300,000/month 3 years ago) - Problem: Profit margin declining from price competition, unable to differentiate

Deep anxiety filled Aoyama's voice.

"The problem is that our services have become 'commoditized.' Business plan creation, subsidy applications... every company does the same thing. Customers choose only by price. 'Company A is ¥150,000, Company B is ¥180,000, so let's go with the cheaper one.'"

Typical Price Competition Scene:

One Day's Sales Activity:

Sales Staff A: "President, our consulting services are ¥180,000 monthly. We support everything from business plan creation to subsidy applications."

Customer (SME manufacturing president): "¥180,000... Actually, I've received similar proposals from other companies. Theirs was ¥150,000."

Sales Staff A: "...Then, we'll also discount to ¥150,000."

Customer: "Then I'll consider it."

Result: Contract secured but profit margin significantly declined

Another Day:

Sales Staff B: "Last month, Competitor C started offering services at ¥120,000 monthly. Should we also lower prices?"

Aoyama: "¥120,000...? At that price, there's no profit. Considering labor costs, we need at least ¥150,000."

Sales Staff B: "But customers are looking at price. They'll flow to the ¥120,000 option."

Aoyama: "...Understood. Then, let's make it ¥130,000."

Result: Contract secured but profit margin further declined

Aoyama sighed deeply.

"Even when we lower prices, competitors also lower theirs. Endless price competition. And profit margins continue declining. Operating profit margin three years ago was 22%. Now it's 8%. At this rate, we'll eventually be in the red."

Chapter 2: The Illusion of Differentiation—Can't Win on the Same Battlefield

"Mr. Aoyama, how are you currently differentiating from competitors?"

To my question, Aoyama answered.

"By improving quality. Increasing business plan precision, raising subsidy application success rates... We're making such efforts. However, customers don't perceive it. They say 'every company says the same thing.'"

Current Approach (Quality Improvement Type): - Measure: Improve service quality - Problem: Customers can't see the difference - Result: Drawn into price competition

I explained the importance of avoiding competition.

"Don't win competition, avoid it. Blue Ocean Strategy—redefine the value curve and create markets without competitors. This is how to escape price competition."

⬜️ ChatGPT | Concept Catalyst

"Don't seize markets, create them. Make competition meaningless with Blue Ocean."

🟧 Claude | Story Alchemist

"Changing the battlefield is rewriting rules. The ocean where no one exists is true advantage."

🟦 Gemini | Compass of Reason

"Blue Ocean is creation strategy. Design new markets with 4 actions: Reduce, Eliminate, Raise, Create."

The three members began analysis. Gemini deployed the "Blue Ocean Strategy Framework" on the whiteboard.

Blue Ocean Strategy's Four Actions: 1. Reduce: Decrease industry standard elements 2. Eliminate: Remove industry norms 3. Raise: Create elements greatly exceeding industry standards 4. Create: Generate new value not in the industry

"Mr. Aoyama, let's create BlueOcean's new value curve together."

Chapter 3: Value Curve as a Map—Seeing Differences Between Competitors and Ourselves

Phase 1: Current Value Curve Analysis (2 weeks)

First, we compared our services with competitors and drew value curves.

Comparison Items (Industry Competitive Elements): 1. Price 2. Business plan quality 3. Subsidy application success rate 4. Response speed 5. Consultant experience years 6. Meeting frequency 7. Report detail level

Value Curve Results:

       High
        |
        |   ○ BlueOcean
        |   ○ Competitor A
        |   ○ Competitor B
        |   ○ Competitor C
        |
       Low
        +-----------------------------------
         Price Quality Success Speed Exp. Meet Report

Discovery: All companies draw nearly identical value curves. In other words, from customers' perspective, "there's no difference."

Aoyama was shocked.

"We thought we'd been improving quality, but competitors were doing the same thing. Ultimately, we hadn't differentiated."

Phase 2: Discovering Customers' Unmet Needs (2 weeks)

Next, we conducted interviews with 48 customer companies.

Question: "What are you unsatisfied with in current consulting services?"

Responses (in order of frequency):

1. "No execution support" (42 companies, 88%)
2. "Business plans are created for us, but we have to execute afterward ourselves"
3. "Even with plans, employees won't act"

4. "When stuck midway, there's no one to consult"

5. "Results aren't visible" (38 companies, 79%)

6. "Paying consultants but don't know if revenue increased"

7. "Subsidies obtained but business hasn't grown"

8. "Too much specialized terminology, don't understand" (28 companies, 58%)

9. "Reports too difficult to understand"
10. "Want clearer explanations"

Discovery: What customers truly wanted wasn't "plans" but "execution support" and "results."

Phase 3: New Value Curve Design Through Four Actions (1 week)

Based on customers' unmet needs, we determined the four actions.

1. Reduce: - Reduce report detail level - Before: 50-page detailed report - After: 10-page key point summary - Reason: Customers don't read it, can't understand it

2. Eliminate: - Eliminate business plan creation proxy - Before: Consultant creates plan - After: Create together with customer (workshop format) - Reason: If customers don't think themselves, won't execute

3. Raise: - Greatly increase execution support frequency - Before: Monthly meetings - After: Weekly online meetings + daily chat support - Reason: Support during execution stage most important

4. Create: - Create results-guaranteed pricing structure - Before: Fixed monthly fee (regardless of results) - After: Base fee ¥100,000/month + success fee (5% of revenue increase) - Reason: Resolve complaint about invisible results

New Service Name: "Execution Partner Consulting"

New Value Curve:

       High
        |
        |              ● BlueOcean(new)
        |       
        |   ○ Competitors
        |
       Low
        +-----------------------------------
         Price Plan Report Execution Results Chat

A completely different value curve from competitors. Created a new market without competition.

Chapter 4: The Voyage of Creation—To an Ocean Where No One Exists

Phase 4: New Service Test Introduction (3 months)

We test-introduced the new service to 5 existing customers.

Test Introduction Conditions: - Base fee: ¥100,000/month (down from previous ¥180,000) - Success fee: 5% of revenue increase - Weekly online meetings - Daily chat support - Business plans created together (workshop)

Test Introduction Company 1: Manufacturing Company A

Before (using conventional service): - Monthly fee: ¥180,000 - Business plan: Consultant creates (50 pages) - Meetings: Monthly - Revenue: No change

After (new service start):

Month 1: - Created business plan together in workshop - President: "Because I thought it through myself, what needs doing became clear"

Month 2: - Weekly meetings check progress - When stuck, immediate consultation via chat - President: "Previously could only consult monthly, now can consult daily. Reassuring"

Month 3: - Revenue: Monthly average ¥8M → monthly average ¥9.2M (+¥1.2M, +15%) - Payment to BlueOcean: - Base fee ¥100,000 × 3 months = ¥300,000 - Success fee: ¥1.2M × 5% = ¥60,000 - Total: ¥360,000

Company A President's Evaluation: "Previously paid ¥180,000 but couldn't see results. Now with ¥100,000 base fee, revenue increased. And even paying success fee, profit remains for us. Win-win."

Test Introduction Companies 2-5: Similarly, revenue increased at all companies.

Overall Results After 3 Months:

BlueOcean's Revenue: - Total base fees: ¥1.5M (3 months) - Total success fees: ¥255K (3 months) - Total revenue: ¥1.755M (3 months)

If conventional service (5 companies × ¥180K × 3 months): - Total revenue: ¥2.7M (3 months)

Difference: -¥945K

Aoyama became anxious.

"Revenue has decreased... Is this really okay?"

I answered.

"It's only 5 companies now. This service has no competitors. No price competition occurs. If you expand, revenue will reverse."

Phase 5: Full-Scale New Service Deployment (6 months)

Based on test results, we fully deployed the new service.

Sales Strategy Shift: - Before: "We'll create business plans" - After: "We're execution partners who increase revenue"

After 6 Months: - New service contract companies: 35 (existing 5 + new 30) - Base fee: ¥100K/month × 35 companies = ¥3.5M/month - Success fee: Average ¥1M increase × 5% × 35 companies = ¥1.75M/month - Monthly total revenue: ¥5.25M

If conventional service with 35 companies: - Monthly total revenue: ¥180K × 35 companies = ¥6.3M

Difference: -¥1.05M/month

However, important changes occurred.

Chapter 5: The Blue Ocean World—Reversal After 12 Months

Results After 12 Months:

Customer Count Expansion: - New service contract companies: 78 - Reason: Results generated, referrals increased (68% of customers via referral)

Revenue Reversal: - Base fee: ¥100K/month × 78 companies = ¥7.8M/month - Success fee: Average ¥1.2M increase × 5% × 78 companies = ¥4.68M/month - Monthly total revenue: ¥12.48M/month - Annual revenue: Approximately ¥150M

If conventional service with 78 companies (hypothetical): - Monthly total revenue: ¥180K × 78 companies = ¥14.04M/month - Annual revenue: Approximately ¥168M

Seemingly still a difference. However:

Operating Profit Margin Comparison:

Conventional Service: - Revenue: ¥168M - Labor costs: ¥120M (12 consultants × average ¥10M) - Operating profit: ¥48M - Operating profit margin: 28%

New Service: - Revenue: ¥150M - Labor costs: ¥90M (execution support type efficiency, 9 consultants sufficient) - Success fee cost: ¥18M (only when customer revenue increases) - Operating profit: ¥42M - Operating profit margin: 28%

Furthermore:

Elimination of Price Competition: - Competitors: "We'll create business plans for ¥180,000 monthly" - BlueOcean: "We'll increase revenue. Base ¥100,000 + success fee" - → Not comparable. No price competition occurs

Customer Satisfaction Improvement: - Before: 3.2/5 - After: 4.7/5 - Reason: "Results visible," "Execution supported"

Referral Rate Improvement: - Before: Annual referral contracts 3 companies (6%) - After: Annual referral contracts 53 companies (68%) - Reason: Customers experience results, naturally refer

Aoyama's Summary:

"Until learning Blue Ocean Strategy, we only thought about 'beating competitors.' Improving quality, lowering prices... However, competitors did the same, so we couldn't differentiate.

By redefining the value curve with four actions—Reduce, Eliminate, Raise, Create—we could create a market without competitors.

Reduce report detail, eliminate plan creation proxy, greatly increase execution support, create results-guaranteed pricing.

This new value curve isn't compared to competitors. Because no one else does it. We alone sail the blue ocean where no one exists."

Employee Voices:

Consultant A: "Previously, we just created plans and handed them over. But we didn't know if customers were executing them. Now, we meet weekly and receive daily chat consultations. We can see customer growth up close. And when revenue increases, it's truly joyful."

Sales Staff B: "Previously, only price negotiations. Told 'other companies are ¥150,000,' discounting daily. But now we propose as 'execution partners who increase revenue.' No price talk. They say 'if results come, please help us.'"

Chapter 6: The Detective's Diagnosis—The Route of Creation

That night, I reflected on the essence of Blue Ocean Strategy.

BlueOcean was fighting in the red ocean of price competition. However, as competitors increased, the ocean stained with blood and profits disappeared.

By redefining the value curve through Blue Ocean Strategy, they created a blue ocean without competitors. The four actions of Reduce, Eliminate, Raise, Create generated a new market.

"Don't seize markets, create them. Blue Ocean makes competition meaningless."

The next case will also depict the moment when creation transcends competition.

"Don't seize markets, create them. Redefine the value curve with four actions: Reduce, Eliminate, Raise, Create. The blue ocean where no one exists is true competitive advantage."—From the detective's notes

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