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Blue Ocean Strategy

by W. Chan Kim & Renee Mauborgne

The subtext for this book reads 'How to create uncontested market space and make the competition irrelevant' and on that basis alone surely it's worth a read?

Blue Ocean Strategy challenges organisations to break out of the 'red ocean of bloody competition'. Red oceans represent market space i.e. existing industries, and blue oceans denote all the industries not yet in existence, the unknown market space. It will almost always be necessary to swim through the red oceans, where the rules of the game are known. Here companies try to outperform each other to grab a greater share of the market.

Blue oceans on the other hand hold an opportunity for much higher profit and growth, so how can they be created?

Kim and Mauborgne have researched companies that have been successful in creating 'blue oceans' to define how this has been done. One key point they make is that what consistently separates winners from losers in this area is their approach to strategy, and in particular, the competition. The creators of blue oceans didn't use the competition as a benchmark, preferring to follow a strategic logic the authors call 'value innovation'. Instead of focussing on beating the competition, blue ocean strategists concentrate on making the competition irrelevant by creating a leap in value for buyers thus opening up new market space.

Easier said than done? Absolutely. So there needs to be careful formulation and execution (or the odds of succeeding will be greatly lessened). This book lays out a clear methodology to support these ideas through reconstructing market boundaries, through looking at the big picture; reaching beyond existing demand; overcoming the hurdles and getting the plan right, to execution; sustainability and renewal.

There are some great examples of where complementary products and services could be introduced which would open up untapped value, for a simple example, imagine a cinema with a built in babysitting service. There are lots of case studies in the book.

If you're looking to review your strategy with a creative and innovative, rather than a combative approach, 'Blue Ocean Strategy' is definitely worth a look.

25 November 2007