In your research, why did you choose “strategic move” as your unit of analysis instead of the popularly used company or industry? And how do you define strategic move?

Kim & Mauborgne: When we first asked ourselves if there is a systematic approach to create blue oceans, we began by looking at the basic unit of analysis used in business literature: the company. However, history reveals that there are no perpetually excellent companies. Consider In Search of Excellence, the first bestselling business book published in 1982. Within just five years two-thirds of the identified model firms in the book had declined. Likewise, for those sample companies in the book Built to Last, another blockbuster business book, it was later found that if industry performance was removed from the equation, many of the companies in Built to Last were no longer exceptionally excellent. As Foster and Kaplan point out in Creative Destruction, the companies listed certainly outperformed their markets, but so did their entire industries.

So if there is no perpetually high-performing company and if the same company can be brilliant at one moment and wrongheaded at another, it appears that the company is not the appropriate unit of analysis in exploring the roots of high performance. Likewise, there are no perpetually excellent industries. Consider IT. Five years ago people envied companies in that industry, today the reverse is largely true.

Our analysis of industry history revealed 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 the root of profitable growth. Our definition of strategic move is the set of managerial actions and decisions involved in making a major market-creating business offering. The strategic moves we discuss – moves that have delivered products and services that opened and captured new market space, with a significant leap in demand – contain great stories of profitable growth. We built our study around these strategic moves (over 150 from over 30 industries spanning from 1880 to 2000) to understand the pattern by which blue oceans are created and captured and high performance is achieved.

Blue Ocean Strategic Moves

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