What is Blue Ocean Strategy?
Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players.
What are Red Oceans and Blue Oceans?
In their classic book, Blue Ocean Strategy, W. Chan Kim & Renée Mauborgne coined the terms ’red ocean’ and ‘blue ocean’ to describe the market universe.
Red oceans are all the industries in existence today – the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.
Here, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, profits and growth are reduced. Products become commodities, leading to cutthroat or ‘bloody’ competition. Hence the term red oceans.
Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.
In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth.
The Book
The origin of the terms red and blue oceans comes from Blue Ocean Strategy – How to Create Uncontested Market Space and Make the Competition Irrelevant.
Recognized as one of the most iconic and impactful strategy books ever written, Blue Ocean Strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. It presents a systematic approach to making the competition irrelevant and outlines principles and tools any organization can use to create and capture their own blue oceans.
Blue Ocean Tools
Blue ocean strategy comes with a complete set of analytical tools and frameworks for formulating and executing a blue ocean strategic move.
Value Innovation
Strategy Canvas
Four Actions Framework
Six Paths Framework
Pioneer Migrator Settler Map
Three Tiers of Noncustomers
Sequence of Creating a Blue Ocean
Buyer Utility MapBlue Ocean Strategy Examples
Here are some examples of successful blue ocean strategic moves, and strategies that enabled organizations to successfully break out of red oceans and create blue oceans of uncontested market space.
