Blue Ocean Strategy - Review

Key Points From
Blue Ocean Strategy - Review
by W. Chan Kim and Renee Mauborgne



THE MARKETPLACE CONSISTS OF RED AND BLUE OCEANS

Red Oceans

Red Oceans are all the industries in existence today. The red oceans are today's market and are highly competitive. Each player in the space is striving to capture the greatest market share. As more players enter the same market, competition gets tighter, and prices are inevitably driven downward. In other words, the playing field becomes cutthroat or a "red ocean."


Blue Oceans

Blue Oceans are those industries that don't exist today. It is the new, unknown markets where profitable opportunities abound.

Blue Ocean Strategy

Blue Ocean Strategy

Read Ocean Strategy

New market space

Existing market space

No competition

Intense competition

New demands

Fighted for limited demands

Six Principles of Blue Ocean Strategy

  1. Reconstruct market boundaries. Identify the direction that leads to blue ocean opportunities. Look across industries, groups, buyer groups, product and services, and time.
  2. Focus on the big picture, not the numbers. Use a visualizing approach to focus on the big picture.
  3. Reach beyond existing demand. Business concentrate on their current customers. Real growth can lie beyond your existing customers. Focus on potential future customers. Identify the similarities in what the customers and noncustomer value.
  4. Get the strategy sequence right.
    Strategy Sequence
  5. Overcome key organizational hurdles. Identify how your leaders can overcome the cognitive, resource, motivational, and political hurdles in executing your blue ocean strategy.
    Organization Hurdles
  6. Build execution into strategy. Reduce your risk by beginning blue ocean implementation into your ongoing processes.

    Blue Ocean Strategy Tools

    Value Innovation
      Value Innovation is the cornerstone of blue ocean strategy. It pursues both differentiation and low cost. It makes the competition irrelevant.
    Four Action Framework
    Four action framework
    • Eliminate: Which of the factors that the industry takes for granted should be eliminated
    • Reduce: Which factors should be reduced well below the industry's standard?
    • Raise: Which factors should be raised well above the industry's standard?
    • Create: Which factors should be created that the industry has never offered?
    Strategy Canvas
      An assessment tool that helps you to develop a blue ocean strategy. It identifies:
      • Where the competition is investing
      • How the players current compete
      • The value the current customers receive
    Other Blue Strategy Tools Include:
    • ERRC Grid
    • PMS Map
    • BEC / BUM
    • 3-Tiers of Noncustomers


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    Blue Ocean Strategy - Review