Sequence of Blue Ocean Strategy

Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption. This allows them to build a viable business model and ensure that a company profits from the blue ocean it is creating. W. Chan Kim and Renée Mauborgne argue that with an understanding of the right strategic sequence and of how to assess blue ocean ideas against the key criteria in that sequence, companies can dramatically reduce business model risk and ensure that both the company and its customers win as it creates new business terrain.

© Kim & Mauborgne. All rights reserved.

Buyer Utility
Is there exceptional buyer utility in your business idea?
Price
Is your price easily accessible to the mass of buyers?
Cost
Can you attain your cost target to profit at your strategic price?
Adoption
What are the adoption hurdles in actualizing your business idea?
Are you addressing them upfront?
A Commercially Viable Blue Ocean Idea

© Kim & Mauborgne. All rights reserved.

Here Kim and Mauborgne articulate the strategic sequence of creating a commercially viable blue ocean idea. The starting point is buyer utility. Does your offering unlock exceptional utility? Is there a compelling reason for the mass of people to buy it?

Second, is your offering priced to attract the mass of target buyers so that they have a compelling ability to pay for your offering? If it is not, they cannot buy it. Nor will the offering create irresistible market buzz.

These first two steps address the revenue side of a company’s business model. They ensure that you create a leap in net buyer value. To secure the profit side you need to assess the third element: cost. The cost side of a company’s business model ensures that it creates a leap in value for itself in the form of profit—that is, the price of the offering minus the cost of production. The key question here is: Can you produce your offering at the target cost and still earn a healthy profit margin? You should not let costs drive prices. Nor should you scale down utility because high costs block your ability to profit at the strategic price. When the target cost cannot be met, you must either forgo the idea because the blue ocean won’t be profitable, or you must innovate your business model to hit the target cost.

The last step in the sequence is to address adoption hurdles. What are the adoption hurdles in rolling out your idea? Have you addressed these up front? The formulation of blue ocean strategy is complete only when you can address adoption hurdles in the beginning to ensure the successful actualization of your idea.

Get BLUE OCEAN SHIFT to learn how to shift your organization from the red to the blue ocean in a way that people own and drive the process. . Pre-order your copy today and get a great selection of bonuses including three-months free access to Blue Ocean Studio, an online collaborative workspace for applying the blue ocean tools in practice so you can get started today.

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W. Chan Kim and Renée Mauborgne created a comprehensive set of analytic tools and frameworks to create blue oceans of new market space. In their soon-to-be released and much-anticipated new book, BLUE OCEAN SHIFT, Kim and Mauborgne share how to put these practical market-creating tools into practice to move from red to blue oceans and to do so in a way that people own and drive the process.

Brimming with battle-tested lessons and the stories of organizations from around the world that put their ideas into practice, Kim and Mauborgne highlight what works, what doesn’t, the potential pitfalls along the way and how to avoid them to achieve the best results in your organization. Get your copy of BLUE OCEAN SHIFT now, and get all these answers plus so much more including exercise templates you can use to apply the tools in your organization.

All analytic tools © Kim & Mauborgne. All rights reserved.

Don’t just check out the tools. Learn how to put them in practice. Find out what works, what doesn’t, the potential pitfalls along the way and how to avoid them to achieve the best results in your organization. Get your copy of BLUE OCEAN SHIFT now, and get all these answers plus so much more including exercise templates you can use to apply each tool in your organization.

Red Ocean vs. Blue Ocean Strategy
Value Innovation
Visualizing Strategy
Strategy Canvas
Four Actions Framework
ERRC Grid
Six Paths Framework
Pioneer Migrator Settler Map
Three Tiers of Noncustomers
Sequence of Blue Ocean Strategy
Buyer Utility Map
Price Corridor
of the Mass
Four Hurdles to Strategy Execution
Tipping Point Leadership
Fair Process

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