An Overview of Blue Ocean Strategy

The Blue Ocean Strategy, a term coined by W. Chan Kim and Renée Mauborgne in their seminal book, refers to the creation of innovative business arenas devoid of competition. Unlike the traditional competitive strategy that involves battling competitors in existing market space, the Blue Ocean Strategy emphasizes creating uncontested market space, making the competition irrelevant.

The Red Ocean Vs. Blue Ocean

In a red ocean scenario, companies compete in existing market spaces. This often leads to a bloody competition, hence the term ‘red’ ocean. On the contrary, blue oceans represent untapped market spaces, demand creation, and the opportunity for highly profitable growth. Although some blue oceans are created well beyond existing industry boundaries, most are created from within red oceans by expanding existing industry boundaries, as seen in the case of Cirque du Soleil in the circus industry.

The Four Actions Framework and Strategy Canvas

The implementation of the Blue Ocean Strategy involves the Four Actions Framework and the Strategy Canvas. The Four Actions Framework includes eliminating and reducing the factors an industry competes on while raising and creating factors the industry has never offered. This process leads to the creation of a value innovation, a cornerstone of the Blue Ocean Strategy.

The Strategy Canvas, on the other hand, captures the current state of play in the known market space. This analytical tool allows companies to understand where the competition is currently investing and what customers receive from existing competitive offerings on the market.

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Blue Ocean Strategy in Practice

• Cirque du Soleil: Cirque du Soleil reinvented the circus industry by eliminating star performers and animals, reducing the importance of aisle concessions, and raising the level of the artistic theme. They also created a unique venue of high-end production value.

• iTunes: Apple’s iTunes transformed the music industry by offering legal, easy-to-use, and inexpensive song downloads, making illegal downloads and traditional music stores irrelevant.

• Tesla Motors: Tesla didn’t just make electric cars; it created desirable and high-performance vehicles that happen to be electric. It disrupted the auto industry by creating a blue ocean of eco-friendly luxury vehicles.

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In conclusion, the Blue Ocean Strategy offers companies a chance to break free from traditional competitive business strategy and redefine their market boundaries. By creating uncontested market spaces, businesses can not only capture new demand but also make the competition irrelevant. The Blue Ocean Strategy, with its innovative approach, is a testament to the fact that strategic creativity often leads to success in the business world.