Blue Ocean Strategy - Review

The Market Consists of Red and Blue Oceans

“Winning by not competing: a fresh approach to strategy.  Since the dawn of the industrial age, companies have engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. Yet these hallmarks of competitive strategy are not the way to create profitable growth in the future.”

Red Ocean

Red Oceans are all the industries in existence today. The red oceans are today’s market and are highly competitive. Each player in the space is striving to capture the greatest market share. As more players enter the same market, competition gets tighter, and prices are inevitably driven downward. In other words, the playing field becomes cutthroat or a “red ocean.”

Blue Ocean

Blue Oceans are those industries that don’t exist today. It is the new, unknown markets where profitable opportunities abound.

Six Principles of Blue Ocean Strategy

Reconstruct market boundaries. Identify the direction that leads to blue ocean opportunities. Look across industries, groups, buyer groups, product and services, and time.

Focus on the big picture, not the numbers. Use a visualizing approach to focus on the big picture.

Reach beyond existing demand. Business concentrate on their current customers. Real growth can lie beyond your existing customers. Focus on potential future customers. Identify the similarities in what the customers and noncustomer value.

Get the strategy sequence right.

Overcome key organizational hurdles. Identify how your leaders can overcome the cognitive, resource, motivational, and political hurdlers in executing your blue ocean strategy.

Build Execution into your strategy.  Reduce your risk by beginning blue ocean implementation into your ongoing processes.

Blue Ocean Strategy Tools

Value Innovation.  This is the cornerstone of blue ocean strategy.  It pursues both differentiation and low cost.  It makes the competition irrelevant.

Four Action Framework.  The framework is used to:

    • Eliminate: Which of the factors that the industry takes for granted should be eliminated
    • Reduce: Which factors should be reduced well below the industry’s standard?
    • Raise: Which factors should be raised well above the industry’s standard?
    • Create: Which factors should be created that the industry has never offered?

Strategy Canvas:  An assessment tool that helps you to develop a blue ocean strategy. It identifies:

    • Where the competition is investing
    • How the players currently compete
    • The value the current customers receive

Other Blue Strategy Tools Include:

      • ERRC Grid
      • PMS Map
      • BEC / BUM
      • 3-Tiers of Noncustomers

Blue Ocean Strategy - Review

Highlights by David Willden