Novo Nordisk, the Danish insulin producer, created a blue ocean in the insulin industry by challenging the industry’s conventional wisdom about which buyer group to target. By looking across buyer groups, it gained new insights into how to unlock a leap in value for a previously overlooked set of buyers.
Insulin is used by diabetics to regulate the level of sugar in their blood. Historically, the insulin industry, like most of the pharmaceutical industry, focused its attention on the key influencers: doctors. The importance of doctors in affecting the insulin purchasing decision of diabetics made doctors the target buyer group of the industry. Accordingly, the industry geared its attention and efforts to produce purer insulin in response to doctors’ quest for better medication.
The issue was that innovations in purification technology had improved dramatically by the early 1980s. Novo itself had already created insulin that was a chemically exact copy of human insulin. As long as the purity of insulin was the major parameter upon which companies competed, little progress could be made further in that direction and competitive convergence was rapidly occurring.
Novo Nordisk, however, saw that it could break away from the competition and create a blue ocean by shifting the industry’s longstanding focus on doctors to the users – patients themselves. In focusing on patients, Novo Nordisk found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering. This led Novo Nordisk to the blue ocean opportunity of NovoPen, the first user-friendly insulin delivery solution that was designed to remove the hassle and embarrassment of administering insulin. Patients could take the pen with them and inject insulin with ease and convenience without the complexity and social embarrassment of syringes and needles.
To dominate the blue ocean it had unlocked, Novo Nordisk followed up by introducing NovoLet, a pre-filled disposable insulin injection pen with a dosing system that provided users with even greater convenience and ease of use. And it later brought out the Innovo, an integrated electronic memory and cartridge based delivery system.
The Novo Nordisk case study illustrates how market boundaries can be reconstructed by looking across the chain of buyers, path three in blue ocean strategy’s six paths framework.
Here are a few examples of blue ocean strategic moves from a variety of different industries and sectors. Select from the icons below to learn more.