So you ask, What is Blue Ocean Strategy?
Well, it all started in the late 1990’s when two INSEAD professors (W. Chan Kim and Renee Mauborgne) started talking about these concepts of blue oceans and red oceans and creating uncontested market spaces that rendered the competition irrelevant. Eventually they wrote Blue Ocean Strategy in 2005, which was published by Harvard University Business School, and since then, it has sold over one million copies, is an international best seller and been translated into a record-breaking 41 different languages.
Based on a decade-long study of 150 successful market creating strategic moves, Professors Kim and Mauborgne argue that tomorrow's leading companies will succeed NOT by battling existing competitors, but rather by creating new "blue oceans" of uncontested market space.
For example, rather than battling Barnum & Bailey and Ringling Brothers in the declining and unprofitable circus industry, Cirque de Soleil created a new "blue ocean" by reinventing the circus as artistic live entertainment. Instead of targeting children, Cirque de Soleil targets adults. Instead of rolling out a series of unrelated clown and animal acts, each Cirque de Soleil production has a theme and a storyline that features acrobats artistically performing to live music. Instead of selling cheap tickets around the 3-ring circle, Cirque de Soleil sells high-end cushioned stadium seats (complete with seatside cocktail service) in a huge air-conditioned tent with a price tag to match. You get the picture. You don't drop peanut shells on the Cirque de Soleil tent floor.
If you're still reading, you must be interested in learning more. So we will arm you with several key terms that you will need to know and understand to speak "Blue Ocean" speak.
Red Ocean: Markets or industries where competition is competing for greater share of existing demand that is typically stagnant or declining (the bloody battle).
Blue Ocean: Markets or industries where there is no competition because it is an untapped market space. The rules of the game are waiting to be written.
Value Innovation: Creating a blue ocean by creating a leap in value for buyers of your company's products and/or services, thereby making the competition irrelevant.
Strategy Canvas: An analytical framework or tool that helps you to determine Value Innovation by looking at the factors the industry current competes on and plotting your product/service against your key competitors. Got all that? Of course, there's much more to know and learn, but you've got the basics.
Blue Oceans are opening up all around us all the time. Consider these examples: mutual funds, cell phones, express package delivery, minivans, Wii gaming. Consider these companies: Southwest Airlines, Starbucks, Curves, CNN, IKEA, Apple Computer, Research In Motion (Blackberry), Redbox.
To learn more, read the book, read our blogs, and soon you'll be looking at your business the blue ocean way.
