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First Steps

Question:Why are most companies stuck in the red ocean? What’s the first step to sail into the blue ocean?
Answer:

Current global developments like accelerated globalization and technological progress, the movement towards a world of abundance and the onslaught of new lost cost players like China and India all accentuate red ocean competition. By making goods and services available to customers from every corner of the world and by substantially improving industrial productivity, supply in many industries is outpacing the growth of demand. Furthermore, as trade barriers between nations and regions fall and information on products and prices becomes instantly and globally available, niche markets and monopoly havens are continuing to disappear. This situation has inevitably hastened the commoditization of products and services, stoked price wars, and shrunk profit margins. The result is that more and more companies are stuck in a red ocean of bloody competition.

To get out of the red ocean, the first step is to stop benchmarking the competition. The more companies benchmark the competition, the more they allow the competition to set their strategic agenda. The end result is increasing commoditization of offerings as companies race to beat one another. To break free of this race, a company must shift its attention away from the competition to noncustomers—those outside the current market who are not using the company’s products or services. It is here that organizations start to get a lot of blue ocean ideas. The book, Blue Ocean Strategy lays out a systematic process any organization can apply to set sail in the blue ocean.