There are four defining characteristics that separate the mind of a blue ocean strategist from a red ocean one. They determine the questions you ask and what you see and don’t see, which makes your perspective important. The four characteristics revolve around the assumptions people make regarding industry structure, competition, customers, and value and cost. Let’s zoom in on one, industry conditions, to show you how these two perspectives differ and play out.
When executives develop strategy, they nearly always begin by analyzing the environment: Is the industry growing, stagnant, or shrinking? Are raw material prices rising or falling? Are competitors building new plants, launching major new product lines, laying off hundreds, or hiring new talent? And so on. This view of strategy is deterministic in that: (1) it treats an organization’s strategic options as limited by the environment; and (2) it bounds executives’ imaginations by the industry’s current conditions. That’s the mindset of a red ocean strategist. This mindset keeps your strategy anchored in the existing industry conditions.
A blue ocean strategist, by contrast, does not take industry conditions as given. Rather they set out to reshape them in their favor. What a blue ocean strategist recognizes, and most of us often forget, is that while industry conditions exist, individual firms created them. And just as individual firms created them, individual firms can shape them too. They are as fluid as our imaginations. Blue ocean strategists, therefore, ask fundamentally different sets of questions that enable them to challenge long-held assumptions and artificial boundaries that red ocean strategists may unknowingly be imposing upon themselves. In that sense, adopting the perspective of the blue ocean strategist is like looking up at the night sky at the single constellation your industry has long been focused on and then turning your head to see the vast expanse of the universe that hadn’t been in your field of vision before. It expands your horizons and shifts your understanding of where opportunity resides.
Blue Ocean Shift explains the other three characteristics that revolve around the assumptions people make regarding competition, customers, and value and cost, and shows how they separate the mind of a blue ocean strategist from a red ocean one.