Blue Ocean Strategy

Blue Ocean Strategy is growth strategy framework focused on the idea of creating an uncontested market space–i.e. a “blue ocean.” This framework is very innovative, as its principles challenge the conventional business strategy principles of fighting competitors head-on. The Blue Ocean Strategy framework evolved from a framework called Value Innovation developed by Gemini Consulting (now Capgemini Consulting) in the late 90s.

Rather than competing within the confines of the existing industry or trying to steal customers from rivals (Bloody or Red Ocean Strategy) W. Chan Kim and Renae Mauborgne are suggesting Blue Ocean Strategy: developing uncontested market space that makes the competition irrelevant.

According to Kim and Mauborgne in the HBR of October 2004, competing in overcrowded industries is no way to sustain high performance. The real opportunity is: to create blue oceans of uncontested market space.

blue-ocean-strategy

Competitive Advantage critique

Of course competition is important. But by focusing on competition and competitive advantage, according to Kim and Mauborgne, scholars, companies, and consultants have ignored two very important – and far more lucrative – aspects of strategy:

  • To find and develop blue oceans, and
  • To exploit and protect blue oceans. These challenges are very different from those to which strategists have devoted most of their attention.

In blue oceans demand is created, rather than fought over. There is ample opportunity for growth that is both profitable and rapid.

Two ways to create blue oceans

  1. One is to launch completely new industries, as eBay did with online auctions.
  2. It is more common for a blue ocean to be created from within a red ocean when a company expands the boundaries of an existing industry.

Certainly Kim and Mauborgne deserve credits for having made the point of the over-focus on competitive advantage and also for their beautiful metaphor of the two types of oceans.

For a more information on Blue Ocean Strategy and Value Innovation, take a look at this article and this Blue Ocean Strategy Primer.

Source: W. Chan Kim, Renae Mauborgne – Blue Ocean Strategy

Growth Strategy Reference Documents

Growth Strategy Toolkit
https://flevy.com/browse/business-document/growth-strategy-208

Growth Opportunity Assessment
https://flevy.com/browse/business-document/growth-opportunity-assessment-759

Blue Ocean Strategy 
https://flevy.com/browse/business-document/blue-ocean-strategy-the-peaceful-strategy-114

Consolidation-Endgame Curve - this framework was developed AT Kearney and highlights the appropriate strategy for businesses driven by the lifecycle of the industry (e.g. when to make acquisitions, when to focus on operations/cost management)
https://flevy.com/browse/business-document/consolidation-endgame-curve-framework-201

Porter’s Five Forces
https://flevy.com/browse/business-document/porters-five-forces-235

Fiaccabrino Sales Selection Process - this framework focuses on selecting a top notch sales team, developed by a sales executive who grew Roche Diagnostics to a Fortune 200 company
https://flevy.com/browse/strategy-marketing-and-sales/fiaccabrino-sales-selection-process-566

Five Stages of Business Growth
https://flevy.com/browse/business-document/five-stages-of-business-growth-249

Services Growth & Effectiveness Strategy
https://flevy.com/browse/business-document/services-growth-and-effectiveness-strategy-735

Business frameworks like Blue Ocean Strategy are invaluable to evaluating and analyzing various business problems. You can download business frameworks developed by management consultants and other business professionals at Flevy here.

Receive our FREE Strategy Development Deck

This is a discussion deck template for a corporate strategy development session. In this discussion, we go through a 2-prong approach to growth and evaluate the merits of various growth drivers. This same document is available for purchase on Flevy here.
 
Have you used Blue Ocean Strategy in your work? Please share your experiences and insights in the comments section below.

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