Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

Repackage old ideas.

I tried again to read a business book. In this case the second time. I read to page 9 and the authors mentioned the failure of other business books such as In Search of Excellence and Built to Last. Both books I have read. The failure of the “great companies” described in these books was that in the end they were not truly built to last. So basically, after 200 pages, I learn to 1) find customers not already been serviced by my competition and 2) consistently update my service or product. After almost 30 years in the business world I have found business books to have little value beyond the wisdom that can be boil down to one or two paragraphs and second just to let others in the office see then I am reading the “latest book”. The Blue Ocean Strategy reminded me of a parable found in the Bible. in Luke 14 a person invites his friends to a banquet but they all declined the invitation. They were too busy. So then the host invites all the other people, the forgotten, the marginalized, the poor. This parable seems to have business applications.

I got to listen to Renée Mauborgne speak about "Blue Ocean Strategy." She was a very entertaining speaker and she made a number of interesting points. I tracked down the book and read it. I am glad I did. This book is the result of years of research into the history of business. One of the key questions the authors focus on is: "What makes a business profitable?" They came to the conclusion that companies which develop new markets can basically print money for the first five to ten years. A "Blue Ocean" represents an uncontested market, a product or service that only one company is selling. The authors show that historically this has been the most profitable situation to be in, as opposed to a market with lots of competitors, or a "Red Ocean." The authors found that most of the tools for developing strategies in business are focused on "Red Oceans." The authors found that most "Red Ocean" strategies take the current industry's structural conditions as a given. A "Blue Ocean Strategy" sees market boundaries and industry structures as flexible. This book was written to help people find new markets, analyze if the new market could be profitable, and then develops strategies for fully exploiting the new market. One of the key tools for finding new markets is what the authors call a "Strategy Canvas." The idea is to pick a set of key factors that current markets focus on, then on a scale from low to high put a point for where a market is for each factor, and then draw a line for a market. By looking at where there are no lines you may get some ideas for new markets. Once a new market is identified the authors help analyze if there is potential for making money. They have a set of ideas on how to look beyond the existing demand, more importantly they provide some tools and processes for the analysis just how big a new market might be. And once the decision is made to move into a new market, the authors have ideas on how to organize the business. They made the point that there is often a lot of reluctance to make changes and provide some ideas on how to get employees on board. In many ways developing a new market, or a "Blue Ocean," is a lot of work. And in the past it has been very risky. By using the ideas from "Blue Ocean Strategy" businesses will have a better chance of finding and developing profitable new markets. It will be interesting to see if there is a new emphasis by businesses to more systematically look for new markets, and where that leads us. This is going to be a classic. It is very readable, and worth rereading. The key insights and principles in the book are well explained, and supported by lots of examples. People will be reading it for the next twenty or more years. If you enjoy books about business, read this book. If you are looking for ways to expand or develop your business, read this book.

I was anxiously waiting for this book to be published. Why? Together with my collegues we have run first workshops in Value Innovation in Poland in 2004. VI constitutes cornerstone of Blue Ocean Strategy and I could see it work in real life business context. No wonder I wanted to gain some more inspiration of how it worked elswhere. Authors were also very good at selecting business cases they present. The book is a great read because it has three qualities indispensable to business publication: Firstly it inspires. Many examples create an intriguing story how you can turn around your business. The book has not-only-American examples appealing to readers both in Europe and Asia. For readers in Central Europe definitely example of NABI comes as most interesting. Secondly it is up to date. It goes without saying that the profitable business growth became burning business issue for all management boards across the world. Finally the methodology is research based, coherent and when applied delivers results surpassing traditional strategy formulation. It is simple but not simplistic, and authors maintain tricky equilibrium between simplicity of use and in-depth approach. I was also surprised that this book was real page turner even though I read it in English which is not my native language (as you can see anyways:-). The „Blue ocean strategy" by W. Chan Kim and Renée Mauborgne really gives a refreshing view on the modern business. No fancy wordings, no colorful pictures, no buzz words that do not mean much just simplicity at its best - the future of business will boil down to smart strategic moves. After workshops in Poland where we actually applied Value Innovation I can say the method is a beauty, though requires quite an intellectual effort. Especially to overcome the we-want-to-be-the-best-anywhere-possible attitude. I wish more companie dare follow the Blue ocean path, it is not easy but surprisingly rewarding over short span of time. Lukasz Dabrowski consultant with House of Skills company in Warsaw, Poland.

This is an especially thought-provoking book which, as have so many others, evolved from an article published in the Harvard Business Review. According to Kim and Mauborgne, "[in italics] Blue ocean strategy [end italics] challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant...This book not only challenges companies but also shows them how to achieve this. We first introduce a set of analytical tools and frameworks that show you how to systematically act on this challenge, and, second, we elaborate the principles that define and separate blue ocean strategy from competition-based strategic thought." There are six principles which are introduced and then discussed on pages 49, 82, 102, 117, 143, and 172, respectively. Frankly, I was somewhat skeptical that this book could deliver on the promises made in its subtitle. In fact, the material provided by Kim and Mauborgne is essentially worthless unless and until decision-makers in a given organization accept the challenge, are guided and informed by the six principles, and effectively use the tools within appropriate frameworks. The responsibility is theirs, not Kim and Mauborgne's. To assist their efforts, Kim and Mauborgne focus on several exemplary companies which have dominated (if not rendered irrelevant) their competition by penetrating previously neglected market space. They include the Body Shop, Callaway Golf, Cirque du Soleil, Dell, NetJets, the SONY Walkman, Southwest Airlines, Starbucks, the Swatch watch, and Yellow Tail wine. Of greatest interest to me is Kim and Mauborgne's assertion that the innovations which enabled these companies to succeed with a Blue Ocean strategy did NOT depend upon a new technology. Rather, each company pursued a strategy which enabled it to free itself from industry boundaries. For Dell, that meant mass production of computers sold directly to consumers per each customer's specifications. Quite literally, each sale is "customized." For Callaway, creating an enlarged sweet spot to increase the frequency of solid contact for new or infrequent golfers just as, years ago, the enlarged Head racquet did so for new or infrequent tennis players. For Starbucks, creating a congenial environment within which to socialize, go online, or read while consuming coffee. All of these Blue Ocean strategies created new or much greater value for customers. Their emphasis is on the quality of experience, not on the benefits of a new technology. According to Kim and Mauborgne, their research indicates that "the strategic move, and not the company or the industry, is the right unit of analysis for explaining the creation of blue oceans and sustained high performance. A strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering." The cornerstone of a Blue Ocean strategy is value innovation which occurs "only when companies

In ''Blue Ocean Strategy", Renée Mauborgne and W. Chan Kim, professors of strategy and management at the INSEAD business school in France offer business leaders a blueprint for creating uncontested market space and making the competition irrelevant. This book, based on extensive research by the professors, offers important and fresh insights into business strategy that challenges the widely accepted wisdom of competitive advantage and competitive benchmarking. In this significant book, Kim and Mauborgne clearly articulate the theory of "Blue Ocean Strategy" and elegantly bring the theory to life with entertaining and educational examples. These examples show how companies in mature and unattractive industries have created new market space by following what the professors refer to as "value innovation" strategies. In contrast to competion-based red ocean strategies, value innovation blue ocean strategies are created through the actions and beliefs of business leaders who do not accept the existing boundaries of their markets and industries. Kim and Mauborgne show how companies within existing industries have created new market space by reconstructing their market boundaries and going beyond competing according to the traditional rules of their industries. These strategies have resulted in the creation of new untapped demand and profitable growth that have reached beyond existing customers and have turned non-customers into customers. While competition-based red ocean strategies see either differentiation or low cost as a strategic choice, companies following the logic of blue ocean strategy seek to break the value-cost trade-off by pursuing differentiation and low-cost simultaneously. This is just one of several key insights developed in this book. Up to this point, it has been taken for granted that creating new growth strategies was risky, left to entrepreneurs, and serendipitous. Kim and Mauborgne show that this need not be the case. Through their 15 years of research spanning over 100 years of business, Kim and Mauborgne have succeeded in formulating a comprehensive and systematic set of analytical frameworks to guide management teams in discovering new blue oceans while simultaneously reducing the risk that is typically assumed with growth. Kim and Mauborgne articulate six principles for creating blue oceans, explain an associated framework to support implementation of each principle, and demonstrate how each principle will help business leaders to minimize each specific risk factor that is typically encountered during growth strategy formulation and execution efforts. "Blue Ocean Strategy" is a must read for all business leaders who are responsible for charting their companies' future. It will provide a roadmap to help business leaders guide their teams to discover strategic options which create new blue oceans by aggregating the largest possible mass of buyers for their ideas. Additionally the principles in this book will

The authors have published many articles over the last decade on Value Innovation. This is their first book. It summarizes their extensive knowledge on out-of-the-box strategic thinking. What is a BLUE OCEAN STRATEGY? The authors explain it by comparing it to a red ocean strategy (traditional strategic thinking): 1. DO NOT compete in existing market space. INSTEAD you should create uncontested market space. 2. DO NOT beat the competition. INSTEAD you should make the competition irrelevant. 3. DO NOT exploit existing demand. INSTEAD you should create and capture new demand. 4. DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off. 5. DO NOT align the whole system of a company's activities with its strategic choice of differentiation or low cost. INSTEAD you should align the whole system of a company's activities in pursuit of both differentiation and low cost. A red ocean strategy is based on traditional strategic thinking - e.g. Harvard's strategy guru Michael Porter. Some cases: * Airline industry price wars result in bankruptcies and low profit margins. Southwest Airlines creates a new market by offering the speed of air travel with the low cost and flexibility of driving. * Golf equipment industry competes to win a greater share of existing golf customers. Callaway Golf creates "Big Bertha", a golf club with a large head that attracted new customers to golf that had been frustrated by the difficulty of hitting the ball. * The cosmetic industry creates a red ocean with models, expensive advertising, and promises of youth and beauty. The Body Shop creates a blue ocean that lasts more than a decade by creating functional cosmetics that defied the industry which sold emotionally appealing cosmetics. * The wine industry gluts the market with a red ocean of thousands of brands competing on the finest oaks and tannins and legacy winey names. Casella wines creates [yellow tail], a blue ocean wine that succeeded by eliminating complexity, elitism and consumer confusion and creating a fun simple image that non-wine drinkers could enjoy. A blue ocean is created in the region where a company's actions favourably affect both its cost structure and it value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates. Examples of strategic moves that created blue oceans of new, untapped demand: - NetJets (fractional Jet ownership) - Cirque du Soleil (the circus reinvented for the entertainment market) - Starbucks (coffee as low-cost luxury for high-end consumers) - Ebay (online auctioning) - Sony (the Walkman - personal portable stereos) - Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984) - Computers: Apple personal computer (19