Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne

This article was inspired by VW. Chan Kim and Renée Mauborgne's Blue Ocean Strategy . If you enjoy this article then consider purchasing or borrowing the book.


How to Develop a “Blue Ocean Strategy”

“Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant.”

Attempting to beat out other companies in a fixed market, most business people fail to recognize another viable corporate strategy – a “blue ocean strategy.” Rather than competing in a cutthroat battle for the top spot in an established market, create an entirely new market. From aircraft to cell phones, new industries develop over time.

Today, “existing competitive business” generated 86% of the business expansion 108 companies underwent. This type of expansion was responsible for 62% total revenues, and blue ocean businesses produced 38% of the total revenues. However, businesses in fixed markets made only 39% of total profits, while blue ocean businesses accounted for 61% of total profits.

Regardless of size and money, any company can generate a “value innovation.” Take The Body Shop’s reasonably priced, natural cosmetics for example. This simple invention gave a company an edge in a competitive industry. With globalization and technology giving companies the opportunity to make similar products easily, a blue ocean strategy is more important than ever before.

Follow the six following steps to create a blue ocean plan:

  1. “Reconstruct Market Boundaries” – Develop a “strategy canvas,” which graphically represents the different aspects of your industry. What do consumers want, and what can you change to completely set yourself apart from competitors? Identity the limitations of competing companies. Find an irreversible trend and always be forward thinking.
  2. “Focus on the Big Picture, Not the Numbers” – Keep an open mind and look for new opportunities. Don’t let statistics bog you down and distract you from observing the direction of your company and your competitors’. Consumers want to see innovation that will provide them with new benefits.
  3. “Reach Beyond Existing Demand” – Don’t simply focus on today’s customers. Consider the desires and motivations of the future’s consumers.
  4. “Get the Strategic Sequence Right” – Understand that a new technology is not necessarily a best-selling technology. Does your product entertain, have a practical benefit or benefit the environment? Will consumers be able to use it easily? Ensure that you create a product that you can manufacture at a practical cost and sell at a price that pleases customers.
  5. “Overcome Key Organizational Hazards” – Assuage the fears of managers in your company by utilizing “tipping point leadership.” In other words, introduce your product at the opportune time.
  6. “Build Execution into Strategy” – Get all levels of your company onboard with your blue ocean plan. Make your blue ocean strategy a part of your organization’s daily routines, minimizing risk.

QR Code
QR Code how_to_develop_a_blue_ocean_strategy (generated for current page)