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Do You Have a ‘Blue Ocean Strategy’?

April 1, 2013
by Jordan Soll, BSc, (Hon.), DDS, Dip. ABAD


I recently read a viewpoint by Marc Cooper, DDS, MSD (Dentistry Today, January 2013) in which he confirmed my fear and suspicion. The viewpoint was entitled “The Future of the Solo Private Practice”. After reading only a few sentences, and before reading his condensed bio, I immediately realized that Dr. Cooper had an excellent grasp of the present circumstances of Dentistry in North America and a realistic vision of what the future holds.

Specifically, he points out that the traditional solo private practice is on life support and will not recover. He lays out a methodical scenario in which he des-cribes just how fast the world is changing and how these changes are affecting dental practices in general. He also addresses what new graduates are facing as they try to establish themselves as young professionals. Things start to get scary when he introduces us to the “800 pound ­gorilla” in the room, namely, Retail Dental Corporations. Though we are only beginning to recognize the truth in Canada, the United States has undergone significant change in the dental landscape, as circumstances have led to the “Corporatization” of the traditional solo private practice. Dr. Cooper goes on to explain the naiveté of the majority of solo practitioners, who long for the good old days, hoping that things will blow over and return to the status quo. Unfortunately, the facts are overwhelming and convincing that change is in the air, and though the pace is much faster in the United States, it will not be long before we witness the same process in Canada. To illustrate my point, one only needs to look no further than our own back yard. Ontario Teachers Pension Plan (OTPP), which is the third largest pension plan in Canada, recently sold their majority stake (75%) in Maple Leaf Sports and Entertainment, who are owners of the Toronto Maple Leafs, the most valuable hockey club in the National Hockey League, at just over an estimated value of $1 billion dollars. The selling price for exiting Maple Leaf Sports and Entertainment was a cool $1.3 billion dollars. That money was quickly re-deployed in Heartland Dental as the majority stakeholder in November 2012. In my world, it is a pretty significant event when you walk from the most valuable team in professional hockey to buy a U.S dental corporation that is made up of more than 400+ dental offices, which all contribute their profit to the mothership. The old saying, “follow the money” should be your first clue as to the future of our profession.

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In the wake of the changes that are upon us, Dr. Cooper predicts that dentistry will evolve into the 80/20 rule whereby 80% of dental practices will be insurance driven corporate entities and 20% will be solo practices, which not only survive, but will excel in this new environment. This level of excellence, that is restricted to a few, will be the result of immensely focused professionals who are totally dedicated to their game and are constantly on the ball. They will be located in centres of prosperity and be referred to as “Concierge Practices”. These dentists will be obsessed with quality, run their practices with a persona of exclusivity, continually marketing and branding their practices, and shun PPOs. In short, dentists that truly personify leadership and embrace its values will own this niche. As such, have you created a strategy to ensure your place among the best?

A good place to start is creating a “Blue Ocean Strategy.” This term refers to the title of the book Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne (Harvard Business School Press, 2005), where the theme of the book is “how to create an uncontested market space and make the competition irrelevant”.

Dental practices, like all businesses, have long competed head on to try and gain a competitive advantage. Some have stood out by offering exceptional service and quality of care while others have taken a more “gimmicky” approach. Often the results have been mediocre at best, and most practices end up swimming in a sea of red. To survive the new order of oral health care providers, one must be innovative in their approach and reach beyond conventional wisdom to create a blue ocean in which their competition rapidly becomes irrelevant. Finding these pathways will not be easy, nor for the faint of heart. Moreover, it is imperative that you avoid the “commoditization” of your dental practice. Because customer loyalty and trust is so fickle, simply trying to compete on price and “free promotions” is a sure way to lose sight of clarity and a winning strategy.

Two such examples of this concept are illustrated as follows:

1) In the 1970s Ringling Brothers and Barnum+Bailey Circus constantly battled each other for market share amid declining attendance due to public apathy, neglected tents and animal rights groups; resulting in both companies swimming in a red ocean. Amid the turmoil rose a new concept that had an uncontested market and made the competition irrelevant. This new blue ocean was created by the emergence of Cirque du Soleil.

The combination of circus and theatre made this new experience a worldwide multi-billion dollar phenomenon.

2) To create an airline is difficult. To create an airline among established giants is insurmountable given the barriers of entry. However, against all odds, Toronto based Porter Airlines has succeeded in the face of adversity.

By going counter current, Porter Airlines established itself as a niche player.

It succeeded by choosing the fledgling Billy Bishop Airport on the Toronto Island, thereby avoiding the congestion and direct competition at Pearson International Airport, refurbished it and offered convenient service to the business community on short haul flights. Porter further refined its advantage by flying only one type of aircraft–the Bombardier Dash 8. This resulted in all pilots knowing how to fly the company’s fleet, only one type of replacement parts and standardization among mechanics. This made for an incredible amount of operational efficiency. Consequently, following an unconventional pathway to creating an airline, Porter has created a blue ocean in which it is the dominant player.

As time marches on and the Canadian dental marketplace begins to resemble that of the American model, will you get ahead of the curve or simply deny the incontestable facts? The cliff divers in Mexico are successful because they have the courage to dive when they see the rocks. As the tide comes in on their decent, they safely land in the water ensuring a successful outcome. By diving when you see the water will most likely result in catastrophe. What colour will your ocean be?OH


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1 Comment » for Do You Have a ‘Blue Ocean Strategy’?
  1. any advice to build a blue ocean in dentistry?

    thanks

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