This is the third and final part of the Blue Ocean Strategy series. The INSEAD Blue Ocean Strategy Institute is dedicated to extending the research on Blue Ocean Shift, Blue Ocean Strategy, and Blue Ocean Leadership by Chan Kim and Renee Mauborgne and disseminating it to professors, researchers and practitioners around the globe. The focus on uniqueness and differentiation is so important to Porter, that he even defines strategy as “being different. Blue Ocean is based on more than a decade-long study including 150 strategic moves spanning more than 30 industries over 100 years. Opinions expressed by Forbes Contributors are their own. Blue Ocean Strategy Blue ocean strategy is a strategic move that organizations or individuals use to create new product or ideas. It may sometimes work, but in many cases it won’t and it might even harm the organization if not used with sufficient care. With over 4 million copies sold, it is one of the most popular strategy texts today. On the contrary, it advises companies to differentiate themselves from others. The approach of blue ocean strategy is as follows: i. The crux of the strategy is a value-cost trade off. So, Blue Ocean Strategy is not that novel or distinct as a concept, but it does offer some handy tools to generate new strategy. 9. Pitney Bowes began its spectacular decline in value almost nearly 2 years after creating its so-called uncontested market through a blue ocean strategy, which was trumpeted by its former CEO, Michael Critelli (Knowledge@Wharton, 2006). Furthermore, Kim & Mauborgne’s book contains a host of examples and some handy tools helping managers facing the challenge of developing new strategy. Sequence of Blue Ocean Strategy. Not entirely. Let’s look at how company used the blue ocean in the book authored by Kim and Renee. Adoption. Here, companies try to outperform their rivals to grab a greater share of existing demand. That means 61% of the profits were generated by 16 blue ocean businesses. Blue ocean strategy is based on over decade-long study of more than 150 strategic moves spanning more than 30 industries over 100 years. With the Jaws movies series in mind, we can easily visualize a bloody red ocean with aggressive sharks eating you alive. Blue Ocean Strategy - Including Examples And PDF Download. Along those same lines, Porter’s generic strategies framework (cost leadership, differentiation, and focus) does not tell companies to develop strategies equal to their competitors. There is ample opportunity for growth that is both profitable and rapid. All Rights Reserved. Learn the basics of blue ocean strategy and shift created but the #1 Management Thinkers in the World. a. blue ocean 41. eBay's invention of online auctions is an example of the _____ strategy. Blue ocean strategy pushes companies to create new industries and break away from the competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. Can it be more Blue Ocean? With over 4 million copies sold, it is one of the most popular strategy texts today. Thinking you need to be first to market to unlock a blue ocean. The basic message of Blue Ocean Strategy is that organizations should not try to compete in existing markets (red oceans) but rather create or find new markets where competition does not yet exist (blue oceans). You don’t. Yet, the blue ocean metaphor is also misleading, for it suggests that the red versus blue distinction is the main distinct and new contribution of the book. Using the framework for building a compelling blue ocean strategy, we will apply the Blue Ocean Strategy Canvas to healthcare across three areas: Where the competition is investing. And given that their recent follow-up book Blue Ocean Shift (2017) was an instant bestseller too, I assume the idea of a blue ocean is still as attractive as it was a decade ago. Four key factors to become a leader in Content and Social Media Hospit… Parts one and two can be found below: Part 1: Blue Ocean Strategy -- Finding and Exploiting Uncontested Markets. The Blue Ocean Strategy is a framework first introduced by W. Chan Kim and Renee Mauborgne in a book bearing the same name. You can reach out to me via jeroenkraaijenbrink.com,  LinkedIn or jk@kraaijenbrink.com or join my online strategy learning platform at betterasstrategy.com, © 2020 Forbes Media LLC. #BlueOceanShift and #BlueOceanStrategy are worldwide business strategy bestsellers, helping you to move beyond competing and start creating your #blueocean. Based on a study of 150 strategic moves spanning more than 100 years and 30 industries, Blue Ocean Strategy addresses this question and provides a systematic approach to drafting and implementing your own Blue Ocean Strategy. Definition Blue Ocean Strategy is referred to a market for a product where there is no competition or very less competition. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Blue Ocean Strategy – Approaches of Blue Ocean Strategy . Red oceans are all the industries in existence today – the known market space. Now is the time for Hotels to be proactive and not think tomorrow will look like today, but anticipate change and implement new innovative Content and Social Media Strategies. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. The frameworks offered in Blue Ocean Strategy, on the other hand (such as the "strategy canvas" and the "four actions framework") are specifically aimed at helping companies to come up with new strategies. In short, you create a blue ocean by focusing on the factors that customers really care about, while discarding factors they don’t. However, there are risks as well, especially when the core idea of creating blue oceans is taken as extreme as it is presented: Although not really new, Blue Ocean Strategy promotes a nevertheless useful idea of moving away from the competition. Worse still, it lost nearly 50% of its value between its 2007 heyday and January 2015 (MarketWatch, 2019). In doing so, they suggest that Porter’s approach is aimed at competing in existing markets whilst their own approach at the creation of new markets. The presentation introduces the audience to the core principles of Blue Ocean Strategy - which comprise of the six steps viz 1) Reconstructing Market Boundaries 2) Focusing on the Big Picture 3) Reaching Beyond Existing Demand 4) Getting the strategic sequence right 5) Overcoming organizational … A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. I write about leadership and strategy in the age of too much, Scuba divers underwater and fishing tour boat, above the Caribbean Sea in Cozumel, Mexico, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation with Forbes Insights. Blue Ocean Strategy is a book published in 2004 written by W. Chan Kim and Renée Mauborgne, professors at INSEAD, and the name of the marketing theory detailed on the book.. Blue Ocean Strategy ends with ten cognitive traps that can deter you from creating blue oceans or that jeopardize your execution. My drive is to bring you and your organization to the next level with new and effective strategy approaches and tools. The strategy aims to capture new demand, and to make competition irrelevant by introducing a product with superior features. The misconception that blue ocean strategy is a low-cost strategy that focuses on low pricing. The goal of a Blue Ocean Strategy is for organizations to find and develop “blue oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped, saturated markets). It is about creating and capturing uncontested market space, thereby making the competition irrelevant. The Profit Model of Blue Ocean Strategy. For many companies—both startups and incumbents—the panacea of strategy is to create an entirely new market without competition. “The key goals of the blue ocean strategy are finding the right marketing opportunity and making the competition irrelevant.” Create and capture new demand. At the same time though, it involves quite some risks that make that it certainly should not be adopted as a universal approach to strategy. The blue ocean idea index helps to keep that systemic vision. As the market space gets crowded, profits and growth are reduced. In their classic book, Blue Ocean Strategy, Chan Kim & Renée Mauborgne coined the terms ’red ocean’ and ‘blue ocean’ to describe the market universe. A blue ocean exists when there is potential for higher profits, as there is now competition or irrelevant competition. The key to a successful blue ocean strategy is finding the right market opportunity and making the competition irrelevant. © Chan Kim & Renee Mauborgne (2004-2020), We use cookies to ensure you get the best experience on our website and continuing implies your consent -. What you need to be is … It does so with an attractive metaphor and it contains a number of practical tools to develop innovative strategies. Blue oceans, where a market space is new and uncontested, and strategy centers around value innovation. A so large change threatens the status quo, and for that reason it may provoke insecurity and resistance among company’s stakeholders. Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption. Blue Ocean Strategy is all about devising and acquiring the uncontested market forum by spawning a new demand. This blog article is a overview of some of the key points of the book by W. Chan Kim and Renée Mauborgne.In this article you will learn how to make your competition irrelevant and have sales and profit … My drive is to bring you, I am a strategy consultant, professor, writer and speaker and founder of Better as Strategy—an online strategy learning platform and community. The belief that blue ocean strategy is the same as innovation. Porter’s five forces framework is helpful for understanding the structure of an industry and the competitive dynamics within it. Creating blue oceans. This suggests that strategy texts before Blue Ocean Strategy were predominantly fostering competition in existing markets, in red oceans. The Profit Model of Blue Ocean Strategy. The strategy bags the new demand by familiarizing unique products with advanced features that stand apart from the crowd. Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. This, though, is not an accurate depiction of the older strategy literature and doesn’t give it sufficient credit.
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