How to Avoid Competition for Decades
On March 13, 2015, streets and office buildings across Britain will be filled with people wearing red noses, and schoolchildren and celebrities alike will take on challenges to raise money for the charity, Comic Relief. Red Nose Day and Red Nose Night, as the related events are known, have helped the organization raise more than £950 million since it launched in 1985.
What’s behind its enduring success?
The organization created a sustainable new market space, what we call a blue ocean, by carefully aligning its value proposition, its profit proposition, and its people proposition.
To illustrate how Comic Relief pursued a textbook blue ocean strategy, let’s first look at the existing red ocean of charity fundraising in the UK in 1985. Like any red ocean, the market was overcrowded and highly competitive. Organizations had to work harder on fundraising and marketing to stand out from the crowd. Meanwhile, the public felt confused by so many groups asking for money and donor fatigue had set in.
Comic Relief didn’t compete. It made the competition irrelevant
It rapidly achieved 96 percent national brand awareness and raised its £950 million without any marketing expense. Nearly thirty years on, there are still no credible imitators. As we discuss in the Expanded Edition of Blue Ocean Strategy, the organization offers clear lessons in how to build and sustain a blue ocean of new market space. The most useful is how it aligned the three strategy propositions – value, profit, and people – around differentiation and low cost. Let’s break down Comic Relief’s strategy.
The value proposition
Conventional charity fundraising leverages guilt and pity (think photographs of starving children) to raise money – mostly via large gifts from high-income donors through year-round campaigns. To the contrary, Comic Relief’s biannual events are all about doing something fun to change the world.
Taking part is as cheap and easy as spending £1 for a little plastic red nose. 66 million of them have been purchased so far. People can also donate by sponsoring the antics of friends, family, or colleagues, giving money while getting a laugh.
Unlike traditional charities, Comic Relief recognizes even the tiniest donation, down to one little girl mentioned during Red Nose Night who gave “all her pocket money.” Even the poorest and the youngest can contribute to ‘changing the world.’
While traditional charities never stop asking donors for money, Comic Relief focused on creating a unique biannual experience, eliminating donor fatigue.
Lastly, Comic Relief donates 100 percent of all funds raised with its “golden pound promise” that it spends none of the funds on its own overhead or operating costs.
The result is a value proposition that is not only fun and clear but also allows donors to make a huge difference with a small donation. In other words, it is both differentiated and low cost, affordable to everyone from the very young to the very old and from low to high income.
The profit proposition
How has the organization supported its operations and expanded while fulfilling its “golden pound promise”? By complementing its compelling value proposition with an unbeatable profit proposition.
Traditional fundraising methods — hosting galas, soliciting individuals by mail or phone, and operating charity shops — entail significant overhead costs. Comic Relief, by some estimates, has eliminated more than 75 percent of traditional fundraising operations.
It uses existing retail outlets to sell its red noses rather than operating its own charity stores. Its administrative costs are negligible because it makes grants to other charities rather than running its own programs. And its fundraising costs are minimal given its community “fun”draising approach.
The related Red Nose Night—the star-studded comedy extravaganza – doesn’t cost a penny. The network donates airtime while celebrities donate their services and generate excitement that drives word-of-mouth advertising. Corporate partners cover any outstanding operating costs in cash or in kind.
The overall result is a differentiated, low-cost profit proposition that effectively supports its value proposition.
The people proposition
With a small staff inspired by its value proposition, Comic Relief’s people proposition focuses on inspiring volunteer fundraisers, corporate sponsors, and celebrities to make the value and profit propositions sustainable.
To lure its army of volunteer fundraisers, Comic Relief has made it easy to have fun and earn respect at the same time. People only need to volunteer once every two years and Comic Relief’s website suggests zany ways to do so. Volunteers also feel a sense of pride as friends and colleagues see the contribution they are making.
It is similarly easy for corporate sponsors and celebrities to take part and they get tremendous free publicity for doing so. And no doubt the organization’s golden pound promise encourages them to participate.
Comic Relief’s thriving blue ocean strategy is built on the alignment of the value, profit, and people propositions so that each reinforces the others.
It is easy for an organization to focus predominantly on one or two strategy propositions to the exclusion of the other(s). An organization that gets the value or profit proposition right, but fails to align the people proposition is headed for execution failure. Likewise, a motivating-people proposition with poor strategy content as reflected in the value or profit proposition is also a path to poor performance.
All companies aiming to build a sustainable blue ocean need to ask:
- How can one strategy proposition support and reinforce the other two to create a strong, positive cycle?
- How can an organization leverage a compelling value proposition to strengthen its profit proposition or build on a powerful people proposition to create a strong value proposition?
Successfully aligning the three makes imitation far more difficult and extends the lifetime of your blue ocean. Comic Relief is still swimming in blue, nearly 30 years after its launch.