The ERRC Grid (Eliminate-Reduce-Raise-Create) is a strategic tool from the Blue Ocean Strategy arsenal that empowers businesses to evaluate and redefine their value propositions systematically. By challenging companies to critically assess their activities and offerings through this lens, the ERRC Grid facilitates the discovery of new, uncontested market spaces—blue oceans. Here are key strategies for leveraging the ERRC Grid to innovate and shift away from the competitive battlegrounds of red oceans:
Eliminate Overlooked Costs and Features
The first quadrant of the ERRC Grid encourages companies to identify which factors or features the industry has long competed on can be eliminated. This step challenges the status quo and helps businesses strip away complex, costly, or outdated elements of their offerings that no longer add value to the modern consumer. Elimination simplifies the product and reduces costs, making the offering more accessible and potentially opening up a new market segment.
Reduce Non-Essential Elements
The ‘Reduce’ aspect of the grid pushes companies to critically evaluate their current offerings and identify factors that can be scaled back without significantly diminishing the value delivered to customers. This could involve simplifying a product, reducing service levels in areas less critical to customer satisfaction, or cutting back on features that are nice to have but optional. Reducing these elements helps align costs closely with actual consumer use and value perceptions, making the offering more competitive in new or existing markets.
Raise Standards Where It Matters Most
Conversely, the ‘Raise’ dimension prompts businesses to enhance particular product or service aspects well above the industry standard. Companies can differentiate their offerings from competitors by focusing on areas that significantly impact customer satisfaction and are highly valued. Raising the bar in key areas can lead to a superior value proposition that attracts customers from existing markets and entices non-customers into the market space.
Create Unprecedented Value
The ‘Create’ component is about innovation—adding new features, services, or elements the industry has never offered. This could involve leveraging new technologies, introducing a novel business model, or addressing customer needs entirely overlooked by the industry. Creation is at the heart of unlocking new blue oceans as it presents a unique value proposition that can redefine consumer expectations and establish a new market space.
Implementing the ERRC Grid for Strategic Innovation
To effectively utilize the ERRC Grid, businesses must adopt a holistic view of their industry and a deep understanding of their customers. This involves:
- Engaging in Customer Research: To accurately identify what can be eliminated, reduced, raised, or created, companies must deeply understand their customers’ needs, desires, and frustrations.
- Encouraging Cross-Functional Collaboration: Innovation often requires input and collaboration from various parts of the organization. Cross-functional teams can provide diverse perspectives that enrich the strategic process.
- Maintaining a Flexible Approach: As markets evolve, what needs to be eliminated, reduced, raised, or created may change. Companies should remain agile and ready to adapt their strategies based on ongoing market feedback and emerging trends.
By systematically applying the ERRC Grid, companies can critically reassess and reconfigure their offerings to carve out new blue oceans. This strategic exercise drives innovation and growth and enables businesses to step away from the fiercely competitive red oceans, fostering a more sustainable path to success in untapped market spaces.