Blue Ocean Strategy, Expanded Edition and Blue Ocean Shift: Beyond Competing
By W. Chan Kim and Renée Mauborgne, Professors of Strategy at INSEAD
What Is Blue Ocean Strategy?
Imagine you’re at the beach and own a boat. You have strategic choices to make about where to fish. The onshore area and certain offshore areas are full of fishers, and it’s so crowded that everyone is bumping into each other and competing for the same fish. This is what the authors call a “Red Ocean” because it’s full of competition and it’s tough to fish there. Now, imagine another part of the ocean that’s calm and clear, and you’re the only one there. That’s the “Blue Ocean,” and it’s a much nicer place to fish because you have it all to yourself.
Written in 2016 to enhance the original 2004 publication, the book “Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant” is about finding those quiet, peaceful parts of the ocean in business. Instead of fighting with others over the same customers or products (like in the crowded Red Ocean), we should be creating new spaces (Blue Oceans) where you can be alone without any competition. This is a business strategy book that has sold over 4 million copies because it inverts business strategy thinking away from traditional SWOT analysis credited to A. S. Humphrey in the 1960s and M. E. Porter’s 1979 Five Forces Strategy.
How Do You Find a Blue Ocean?
To find a Blue Ocean, you need to think differently. Instead of trying to beat others at the same game, you create a new game that only you can play. You do this by making something unique that people really want but don’t have yet. It’s like if you were the first person to fish with bait, or used technology to find more fish faster, or simply fished where no one else was fishing. Everyone would want your business because it had better unit-based economics from innovation.
Why Is This Important?
Finding a Blue Ocean is important because it means you can have the most profitable customers and not have to worry about fighting with others over discounting. It’s a way to be successful without having to be better than everyone else at the same old things, only to lose out due to scale and volume.
Conclusion:
“Blue Ocean Strategy” teaches us that it’s not always about being the best at what everyone else is doing. Sometimes, it’s about finding a new thing, place, or twist that no one else has thought of yet. It’s about being creative and looking for those quiet spots in the ocean where you can fish freely and happily.
Most people are fishing in one part of the ocean where there are lots of fish, but also lots of other fishermen, so it’s super crowded and hard to catch fish. That’s like most businesses that are all trying to do the same thing and fighting over a finite group of customers. This crowded part is called the Red Ocean because everyone is fighting so much that it’s like a battle. This book considers the reality of hybrid models and the difficulty of reimagining commoditized products. This expanded version also speaks to the pitfalls of stakeholder buy-in and provides ideas about how to adapt, overcome, and avoid them.
The theories proscribed in Blue Ocean Strategy were so successful they spawned a second book, Blue Ocean Shift: Beyond Competing. Originally published in 2017, it acts as the treasure map that helps the boat’s Captain find his way to the Blue Ocean. It gives you practical steps and technical worksheets to follow, like ingredients for a recipe. Here are the steps:
- Start Thinking Differently (Pioneer-Migrator-Settler Map): Stop worrying about the other fishermen. Think about where you can go to find your fish.
- Find Out What People Need (As-Is Strategy Canvas): Look for what kind of fish people want at what time or which place and aren’t getting from the crowded part of the ocean.
- Plan Your Trip (Buyer Utility Map / 3 tiers of Noncustomers): Make a good plan on how you’ll go to the new part of the ocean at a reasonable cost and what you’ll need to catch the fish to enjoy better profits.
- Get Everyone on Board (6 paths framework / Four Action Framework / ERRC Grid): Tell your crew and other stakeholders about your plan and how it will help you all get more fish.
- Go Fishing in the Blue Ocean (Fair and Rapid Tests / Target Costing): Take your boat to the new part of the ocean, start fishing, analyze, and continue to improve.
Remember, the Blue Ocean is not just about being different; it’s about finding a special place where you can catch fish in a way that no one else has thought of before. It’s about making your customers truly happy by understanding where they have pain points and giving them the fish they really want, where and when they want them. Corporate examples from the book include Marvel, Nintendo’s Switch, Casella Wines Yellow Tail, Uber, and Cirque de Soleil amongst others.
If you are interested in evaluating your company and conducting research on how you can lower costs and increase value, Blue Ocean can be your guide.
