What Is Blue Ocean Strategy And How Can You Create One?
2 July 2021
When management experts Chan Kim and Renée Mauborgne offered a new perspective on how to stand out above the competition and do business in an “uncontested market space” in their book Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant, it seemed too good to be true. Most businesses operate in what the authors termed “Red Oceans,” a place of vicious competition (think bloody, shark-infested waters). What could happen if businesses sought to find a relatively competition-free place to conduct business, AKA a Blue Ocean? Let’s find out.
Kim and Mauborgne completed a study of 150 strategic business moves in 30 industries over the period of 100 years. Their book shares the full study details, but the authors sought to answer the question: “Why do some companies succeed in creating new market spaces while others fail?” What they found is that most companies tend to compete in the same crowded marketplace, with very similar products and value propositions, vying for the same shrinking profits. Blue Ocean Strategy says there’s a different way. It’s all about defining and tapping into new markets rather than jumping into existing markets that are oversaturated. Blue Ocean Strategy is an approach to business that doesn’t concern itself with the competition. This strategy encourages you to suspend all that you know about building success to take a leap into a new way of thinking about business strategy.
How Do You Create a Blue Ocean?
Blue Oceans sound like the place to be, right? But if it was so easy to find, wouldn’t everyone flock to the Blue Oceans of their industries so they are the uncontested business in that marketplace? It’s not about finding a Blue Ocean, it’s about creating one.
Here’s how you create a Blue Ocean:
1. Define the current reality. What are the key attributes of a product or service in your industry?
2. Identify a segment of customers who are only interested in or find value in a portion of the features of a product or service. This is your new target audience.
3. Alter the product or service to be inferior on the aspects that are less valued by your new target audience. While this might at first appear like a bad business move, it’s actually quite essential to create value and lower costs.
4. With the savings realized on Step 3, there’s an opportunity to enhance a product or service based on what your new target audience values or with new features that are targeted specifically to this audience.
Companies Who Succeeded in the Blue Ocean
To help illustrate Blue Ocean Strategy, let’s look at a few examples of companies who succeeded by switching up the market space where they did business by offering a valuable product or service to a new target market.
Cirque du Soleil: Even though Ringling Bros. and Barnum & Bailey “owned” the circus space, it took less than 20 years for Cirque du Soleil to achieve the level of revenue it took them more than 100 years to reach. When Cirque du Soleil entered the “circus” industry, it was not an attractive place to build a business from the perspective of competition-based strategy. Yet, they still succeeded quickly and dramatically. Instead of appealing to children, Cirque du Soleil created a new market audience—adults and corporate clients—who were willing to pay a premium price for one-of-a-kind entertainment with a reinvented circus where there were no animals.
Canon: Instead of focusing on the traditional customer for copiers—office purchasing managers—Canon created a new market space and began to sell to users. This is a classic Blue Ocean Strategy—shift who the target buyer is to find new ways to unlock value.
Curves: This women’s fitness company created new boundaries between home exercise programs and traditional health clubs and by doing so they grew tremendously when they began to sell franchises in 1995. They found the sweet spot to appeal to women who wanted to get fit, but didn’t want to spend premium prices at high-scale and inconvenient health clubs, but also wanted to have fun while working out with a group of women who would hold them accountable.
The idea of finding uncontested markets in the form of your Blue Ocean Strategy is applicable to every business in every industry. What new market space can you create today?
The 7 Most Successful Business Models Of The Digital Era
The first two decades of this century are characterized by digital entrepreneurs upending traditional business models in search of new ways of creating revenue and serving customers.[...]
How To Drive Corporate Innovation And Outpace Startups
Startups are often considered the natural wellspring of industrial innovation.[...]
What Tech Trends Should Companies Focus on in 2023? Here Are Three to Consider (And One to Ignore)
It’s common to hear it said that today, in order to thrive, every business needs to become a tech business.[...]
Bringing Real-Time AI To The Core Of Your Business
Artificial intelligence (AI) is big news right now thanks to a wave of viral applications such as ChatGPT and Dall-E, which have captured the public’s imagination.[...]
The Future Of Work: Are Traditional Degrees Still Worthwhile?
Jobs and the world of work are changing. This raises one very important question: As many roles become increasingly focused on specialized skills and on-the-job experience, are traditional degrees still valuable to employers?[...]
The Real Reasons For Big Tech Layoffs At Google, Microsoft, Meta, and Amazon
Between them, some of the world’s biggest tech companies have collectively laid off more than 150,000 workers in recent months.[...]
- Get updates straight to your inbox
- Join my 1 million newsletter subscribers
- Never miss any new content