Blue Ocean
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Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market space
Create uncontested market space
Beat the competition
Make the competition irrelevant
Exploit existing demand
Create and capture new demand
Make the value/cost
trade-off
Break the value/cost trade-off
Align the whole system of a companys activities with its strategic choice of differentiation or low cost
Align the whole system of a companys activities with its strategic choice of differentiation and low cost
Assumes Structuralist or Environmental determinism. Industry structural conditions are given and firms are forced to compete within them. Companies are at the mercy of economic forces greater than themselves
Reconstructionist view.
Assumes market boundaries and industries can be reconstructed by actions and beliefs of industry players.
Creating a Blue Ocean of Innovation Part One:
Blue Ocean Strategy: Competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.
Step one: Find a Blue Ocean. A Blue Ocean can be created (1) by creating all
new industries (eBay) or (2) when a firm alters the boundaries of an
existing industry (Cirque du Soleil)
Step Two: Exploit and protect Blue Oceans
Value: offering something not offered before.
Value Pioneering: Cost savings are made from eliminating and reducing factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.
Technological Pioneering is not a necessary ingredient in business strategy.
Creating a Blue Ocean of Innovation Part Two:
Water, water, everywhere: You dont have to compete in a red ocean of bloody competition. Even exhausted industries- like the circus – can be reinvented.
Dont swim with the school: Quit benchmarking the competition or setting your strategic agenda in the context of theirs.
Find new ponds to fish: Dont assume your current customers have the insights you need to rethink your strategy. Look to noncustomers instead.
Cut bait on costs: Put as much emphasis on what you can eliminate as on what you create.
Blue Ocean Strategy
Four factor Framework
Reduce: