Don’t Let the Competition Dictate Your Business

Value Innovate and let the competition worry about you

Blue ocean strategy never asked companies to “avoid competition.” Rather, we urge companies to not let competition drive their strategies. A focus on the competition too often anchors companies in the red ocean, and puts the competitors, rather than the customer, at the core of strategy.

Our research shows that companies that break away from the competition pay little heed to matching or beating rivals or carving out a favorable competitive position. Their aim is not to outperform competitors, but to offer a quantum leap in value that makes the competition irrelevant.

Rather than trying to avoid the competition, we ask companies to stop looking to the competition.

While blue ocean strategy does not see competition as bad, it also does not see competition as always good. Historically, economists argued that absent competition, companies have no incentive to improve their product or service, and that competition pushes companies to up their game, lower their prices, and improve their products and services. At the level of the firm, however, competition is only good up to a point. When supply exceeds demand, as it does in an increasing array of industries, the intensity of competition tends to slow or stunt the profitable growth of organizations, as more and more firms fight to win a slice of a given pool of customers, triggering intense price pressure, razor-thin margins, commoditization of offerings, and slower growth. This is why blue ocean strategy argues that firms need to go beyond competing and the mere improvement of products or services in overcrowded industries and instead pursue value innovation to open up new market space and make the competition irrelevant.

Hence, while understanding how to compete in existing market space is important, blue ocean strategy addresses the critical challenge of how to redefine industry boundaries and create new market space when structural conditions are working against you.

Visit www.blueoceanstrategy.com to learn more

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