Thinking Differently

Blue Ocean Strategy shows how business strategy can be developed to make competition irrelevant. Companies can succeed by redefining markets and products.

Blue Ocean Strategy was published in 2005 and has been a major best seller since. It is with good reason as it sets out a way of thinking about market strategies to produce major success through differentiation. It argues that fighting for incremental growth in a company’s share of established markets is not the way to achieve business success, even for the existing players in such markets.

What is Blue Ocean Strategy?

In the first of its three parts, Blue Ocean Strategy explains what the authors mean by blue oceans as opposed to the red oceans of existing competitive markets. There are two chapters:

• Creating Blue Oceans. It provides examples of businesses that have created and entered new markets through value innovation. It explains the characteristics and principles of a “blue ocean” and sets out the structure of the rest of the book.
• Analytical Tools and Frameworks. The authors W. Chan Kim and Renee Mauborgne walk the reader through a set of tools and analysis process to identify and define a blue ocean strategy. The ideas are deceptively simple in concept and easy to understand. In particular the key is the strategy canvas, a simple idea that properly executed will give real insights.

However although the ideas are straightforward the work involved in using them is challenging. That said no one expects innovation to be easy. The authors make a strong case that diligent effort will be worthwhile.

Formulating Blue Ocean Strategy

The second part moves on to practicalities of working therough the process of developing a blue ocean strategy. It is here where the effort need becomes clear but again it is well explained and makes so much sense. The principal steps are:

• Reconstruct Market Boundaries
• Focus on the Big Picture, Not the Numbers
• Reach Beyond Existing Demand
• Get the Strategic Sequence Right.

The approach will take many managers away from their comfort zone and require them to understand their market in completely new ways. They will not be able to hide behind the easy assumption but the benefits could be substantial.

Executing Blue Ocean Strategy

Finally Blue Ocean Strategy addresses the questions around implementing the newly defined blue ocean strategy. The last three chapters provides a quick overview of the important factors in making the strategy happen:

• Overcome Key Organzational Hurdles
• Build Execution into Strategy
• Conclusion: The Sustainability and Renewal of Blue Ocean Strategy

All business managers with responsibility for strategy, especially any who wish to make the competition irrelevant, should read Blue Ocean Strategy. Traditionally military leaders have always wanted to choose the field of battle to play to their strengths. In Blue Ocean Strategy business leaders are shown how they can do the same be redefining the marketplace to compete on their own terms.

The ideas and approach will work equally well for new or established businesses of any size. Blue Ocean Strategy is an easy read with powerful ideas that belie their apparent simplicity. It will take a rigorous approach to use the ideas but when well executed should deliver considerable rewards.

The Authors

W. Chan Kim and Renee Mauborgne are professors of strategy and management at INSEAD and co-directors of INSEAD Blue Ocean Strategy Institute in Fontainebleu, France.

Blue Ocean Strategy, How to Create Uncontested Market Space and Make the Competition Irrelevant (2005, ISBN: 978-1-59139-619-0) by W Chan Kim and Renee Mauborgne is published in hardback by Harvard Business Review Press at $29.95.

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