This requires deep market research and customer insights to identify pain points and desires that traditional competitors have overlooked. By addressing these unmet needs, companies can attract new customers and expand the market base. By prioritizing value innovation, sound strategic moves, and systematic tools and frameworks to guide decision-making, companies can create new demand in the market and differentiate themselves from competitors (or peers). The blue ocean strategy is predicated on the notion that market boundaries and industry structure are not fixed and can be reconstructed. The blue ocean strategy requires companies to strategically outmaneuver the risk of competition, which can be achieved by circumventing the competition entirely.

What are Blue Oceans?🔵

Unlike many conventional approaches to strategy formation, Chan Kim and Mauborgne chose not to focus on the competition, but on the customer. In their logic, as much attention is paid to value creation as to innovation. Furthermore, it is surprising that ‘blue oceans’ are already used and applied unconsciously by strategists in the current strategies.

• It requires the courage to move away from familiar ground, the discipline to follow a proven framework, and the vision to see potential where others see only risk.
• American automobile company Ford Motors is one of the perfect examples of the blue ocean technique.
• However, key differences arise due to geographical, socio-economic and governance contexts.
• When your company hits growth limits in current markets, Blue Ocean Strategy becomes essential.
• Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.

This blue ocean strategy sold over 100 million units and redefined the console market. By blending theater, music, and acrobatics, it created a sophisticated form of live entertainment that appealed to adults as much as children, a premium market space with no direct competition. While Kim and Mauborgne propose approaches to finding uncontested market space, at the present there are few success stories of companies that have actively applied their theories. One success story that does exist is Nintendo, who applied the blue ocean strategy to the Nintendo DS, Wii, and Nintendo Switch. The Wall Street Journal recommends Blue Ocean Strategy for the top manager. They use technology not only to work more efficiently, but to truly help customers.

One of the primary concerns with creating a blue ocean is the risk of imitation by competitors once the strategy proves successful. As competitors observe the new market space and the benefits reaped by the innovating company, they may quickly move to replicate the strategy. This imitation can erode the initial advantage gained by the innovator, leading to increased competition and potential commoditisation of the once-unique offering. Companies must continually innovate and defend their position in the blue ocean to maintain their competitive edge.

You can’t sell in a blue ocean without a strong way to communicate what your product does and how that makes a difference in your customers’ lives. There are very few (if any) people actively looking for your product, so you need to give them reasons to be interested in the first place. Larger businesses managed customer data with expensive on-premises software and smaller companies that couldn’t afford it simply didn’t have a solution at all.

Blue Ocean Strategy — Key Takeaways

This step ensures that buyers not only will want to buy its offering but also will have a compelling ability to pay for it. The most used lever is that of customer productivity, in which an offering helps a customer do things faster or better. Companies must check whether their offering has removed the greatest blocks to utility across the entire buyer experience cycle for customers and noncustomers. The greatest blocks to utility often represent the greatest and most pressing opportunities to unlock exceptional value.

Key Points

Airbnb turned ordinary homes into unique accommodation options outside traditional hotel districts. Blue Ocean Strategy works best during major planning cycles when you’re already rethinking direction. Whether developing a three-year innovation roadmap or responding to market disruption, these frameworks provide structure to your pivot. The Eliminate-Reduce-Raise-Create Grid forces leadership teams to make concrete choices about what to change, preventing vague “innovation initiatives” that go nowhere. This timing allows blue ocean thinking to influence budgets, talent allocation, and goals while they’re still being set. Many companies develop brilliant blue ocean ideas but fail when putting them into practice.

Step 1: Understand the current landscape

Together, these help companies explore ways to unlock exceptional utility for customers. Together, these first two steps address the revenue side of a company’s business model. For example, for a very long time, tooth whitening was a service provided exclusively by dentists and not by oral care consumer-product companies. However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand.

• Furthermore, it is surprising that ‘blue oceans’ are already used and applied unconsciously by strategists in the current strategies.
• By simultaneously offering low prices and the convenience of streaming with a vast content library, Netflix quickly become the dominant player in an uncontested market space.
• Enter Blue Ocean Strategy – a revolutionary approach that contrasts crowded “red oceans” of competition with wide-open “blue oceans” of new market space.
• The 4 Actions Framework / BOS Framework from the Blue Ocean Strategy is particularly valuable when an entrepreneur is trying to achieve value innovation and break up the cost trade-off between value and cost.
• The bottom line is it provides a step-by-step framework that helps innovators and entrepreneurs balance product innovation with utility and cost while creating value for their customers.

Instead of competing in video rental stores, Netflix created mail-order rentals and later pioneered streaming video subscriptions. A red ocean is an environment of cutthroat competition among numerous industry players. Because the marketplace is crowded with rivals, new companies must fight fiercely for a share of any profits. Overall, blue ocean markets have several characteristics that innovators and entrepreneurs love.

These three criteria serve as an initial litmus test of the commercial viability of blue ocean ideas. This framework is used to reconstruct buyer value elements in crafting a new value curve or strategic profile. It poses four key questions, shown below and challenges an industry’s strategic logic. Blue Ocean’s Value Innovation-based approach assumes that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players. By the simultaneous pursuit of differentiation and low cost, Value Innovation creates a leap in value for both buyers and the company.

A car, on the other hand, can provide comfort during muddy patches or bumpy roads. Thus, Ford Motors applied the blue ocean strategy, identified the unknown market areas (comfort cars), and applied the same. Thus, by the launch of Model T, customers could use them for everyday use. Another example of a blue ocean firm is Netflix, a company that reinvented the entertainment industry in the 2000s.

Enter the Blue Ocean Strategy, a transformative approach that encourages businesses to explore uncharted waters and blue ocean strategy meaning create new markets, making competition irrelevant. The Blue Ocean Strategy offers a pathway to unparalleled success and growth by focusing on value innovation and unmet customer needs. This blog post delves into the core principles of the Blue Ocean Strategy, highlighting its significance, implementation steps, potential drawbacks, and real-world examples of its successful application.

Apple Inc.

This step involves drawing the “to be” strategy canvas based on insights from field observations and getting feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers. This feedback will then be used to build the best “to be” future strategy. While most managers have a strong impression of how they and their competitors fare within their scope of their responsibility, they often fail to see the overall industry dynamics. BOS provides a four-step strategy visualization tool that serves to unlock people’s creativity. In response, Apple launched iTunes which offered legal, easy-to-use, and flexible à la carte song downloads.

Up until then, the outdoor advertising industry was about billboards (usually installed on city outskirts) and transport advertisement that exposed people for a very short time to get influenced by advertisements. For example, Pret, a British fast-food chain (with focus on fresh food) expanded its blue ocean by tapping into the huge latent demand of tier-1 noncustomers who were professionals frequenting restaurants for lunch. The appeal of fresh food served in under 90 seconds and at a reasonable price captured the restaurant-goers’ attention who otherwise did not consider fast food. If a company’s current portfolio and planned offerings consist mainly of settlers, the company has a low growth trajectory, is largely confined to red oceans. By looking across time from the value a market delivers today to the value it might deliver tomorrow, businesses can actively shape their future and enter a new blue ocean.

Rather than competing with existing taxi companies on their terms, Uber carved out a new market space by leveraging mobile technology to address customers’ pain points around booking a taxi. It can reach profitability sooner and achieve a greater market share than if it stayed in a more competitive space. To make competition irrelevant, companies must create unique and innovative products. This business development strategy allows them to avoid the pressures of pricing strategies. The blue ocean strategy has unique benefits and, if done right, can reward businesses with profitable growth.