Blue Ocean Strategic Moves - Bloomberg

Consider Bloomberg the U.S. based financial information provider. In a little more than a decade, Bloomberg became one of the largest and most profitable business information providers in the world. Until Bloomberg’s debut in the early 1980s, Reuters, Dow Jownes and Telerate dominated the online financial information industry, providing news and prices in real time to the brokerage and investment community. The industry focused on purchasers —IT managers—who valued standardized systems, which made their lives easier.

This made no sense to Bloomberg. Traders and analysts, not IT managers, make or lose millions of dollars for their employers each day. Profit opportunities come from disparities in information. When markets are active, traders and analysts must make rapid decisions. Every second counts.

So Bloomberg designed a system specifically to offer traders a leap in value, one with easy-to-use terminals and keyboards labelled with familiar financial terms. The systems also have two flat-panel monitors so that traders can see all the information they need at once without having to open and close numerous windows. Because traders must analyze information before they act, Bloomberg added a built-in analytic capability that works with the press of a button. Before, traders and analysts had to download data and use a pencil and calculator to perform important financial calculations. Now users can quickly run “what if ” scenarios to compute returns on alternative investments, and they can perform longitudinal analyses of historical data.

By focusing on users, Bloomberg was also able to see the paradox of traders’ and analysts’ personal lives. They have tremendous income but work such long hours that they have little time to spend it. Realizing that markets have slow times during the day when little trading takes place, Bloomberg decided to add information and purchasing services aimed at enhancing traders’ personal lives. Traders can use these services to buy items such as flowers, clothing, and jewellery; make travel arrangements; get information about wines; or search through real estate listings.

By shifting its focus upstream from purchasers to users, Bloomberg created a value curve that was radically different from anything the industry had seen before. The traders and analysts wielded their power within their firms to force IT managers to purchase Bloomberg terminals.