Industry Insights

What is Blue Ocean Strategy?

Posted by Philippe Latapie on Mar 4, 2015 6:00:00 AM

How to Create Uncontested Market Space and Make Competition Irrelevant!

This was the compelling and bold promise made on the cover page of the book Blue Ocean Strategy when it was first published in 2005.

In the book, the authors, Professors Chan Kim and Renee Mauborgne from INSEAD business school, captured the findings from their extensive research on value innovation. In order to win in the marketplace, they found, companies should stop obsessing over the competition. Focus on the competition leads to extensive benchmarking and rapid imitation between competitors. This leads to a commoditization of the market place and creates further head-to-head competition. In a vivid metaphor, the authors called this type of market a Red Ocean, evoking the idea of shark-infestation, the risk of someone getting hurt and the waters turning red with blood …

Instead, their research of winning strategic moves across thirty industry sectors suggested that companies should spend more time focusing on creating value for noncustomers as well as customers. By increasing customer value through innovation and at the same time decreasing costs to the company, firms can unlock new pools of customers in a profitable, market expanding move. Among the many powerful examples in the book, the story of Cirque du Soleil stands out. They reinvented the circus by removing animals from their shows, thus reducing costs, while increasing value to noncustomers of the traditional circus (people concerned about animal cruelty). It was a powerful illustration of the value up and cost down principle.

The book also contained practical process steps and tools to guide the reader through a systematic way of thinking differently about their market place

For more on the essential principles of Blue Ocean Strategy, check out this video:

Innovation Training with Blue Ocean Strategy

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