Reviewed by Special K, ETMG Writer and Blogger
In their best-selling book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, W. Chan Kim and Renée Mauborgne propose a bold new way to think about business markets. It’s a useful read for marketers looking for innovative ways to approach business strategy.
The old, standard way of thinking is what the authors refer to as red ocean strategy, where businesses operate within bounded, known market space and engage in bloody competition by trying to best competitors who are basically doing the same thing.
Blue ocean strategy, on the other hand, focuses on creating blue oceans of uncontested, new market space and growing untapped demand in spaces where competition is nonexistent because the rules of the game haven’t been set.
Oceans of Excellent Case Studies
While blue oceans sound lovely, figuring out how to create them presents a challenge. Kim and Mauborgne’s book addresses this challenge with over 15 years of research and data going back over 100 years.
For example, in the early 1980’s, the Canadian entertainment company, Cirque du Soleil looked at the red oceans of the waning circus industry and saw Ringling Bros. and Barnum & Bailey struggling to stay afloat. Cirque du Soleil charted new waters by offering people the fun of the circus and the sophistication of the theater.
The company dropped the expensive components of animal acts, three-ring entertainment, and aisle concessions yet maintained the allure of the circus by keeping the tent, the clowns, and the classic acrobatic acts. Looking across the market boundary to theater, Cirque du Soleil added factors such as a story line, artistic music and dance, and multiple productions. While the red ocean players competed by tweaking traditional acts, Cirque du Soleil developed a blue ocean by changing the game.
The book is full of stories about once unknown industries – such as mutual funds, cellular phones, snowboards, coffee bars, and home videos – which began as blue oceans. The histories of the automobile, computer, and film industries are examined in depth as a series of evolving blue oceans.
Key Blue Ocean Strategies
The authors are keenly aware that successful blue ocean creation requires more than a good idea or new technology, and their book provides several frameworks for the journey from red to blue ocean thinking. For example, their strategy canvas graphs the current state of known market spaces based on competition factors, and it also functions as an action framework to explore ideas for new blue oceans.
Beyond analytics, the authors maintain that the cornerstone strategy for blue oceans is value innovation which occurs when a company’s actions favorably affect both its cost structure and its value proposition. This innovation involves several guiding principles, such as ideal sequencing to determining buyer utility before setting prices.
The authors excel at describing blue ocean strategy, and they provide a thorough overview of the different mindset required. If you’ve been tasked with growing sales and market share in a challenging industry, consider exploring blue oceans. This book will definitely help you chart the waters.
Blue Ocean Strategy Institute at INSEAD Business School for the World
Research for the book was funded by Pricewaterhouse-Coopers and the Boston Consulting Group, and it was conducted at INSEAD Business School for the World.