Blue Ocean Strategy is a marketing concept and a book by W. Chan Kim and Renée Mauborgne. Wikipedia
It is a powerful tool to assess the strength and validity of a business strategy through the lens of differentiation and value creation.
In a nutshell:
There are two kinds of markets in which a business can try and sell its wares.
Red oceans are overcrowded by the sharks of competition, their waters tainted with blood as everyone is fighting for limited customer dollars. Margins are under constant pressure due to constant price wars and feature inflation which requires increasingly high investments just to keep up.
In blue oceans on the other hand, the fishes are aplenty, and competitors are few and far between. The business operates in a market where its offering is either unique or well differentiated.
The Blue Ocean Strategy consists in looking at what everyone else is doing and figuring out what to eliminate, reduce, raise and create in order to generate a new, untapped market space.
The classic example of applying the Blue Ocean Strategy to great success is Cirque du Soleil. Focusing on adults instead of children allowed them to increase ticket prices. Getting rid of the animals, their associated expenses and logistical challenges helped substantially reduce their operating costs. In so doing, they generated unprecedented margins and created tremendous wealth.
Now, if completely transforming and overtaking an entire industry sounds daunting to you, you’re not wrong. The good news is, you don’t have to! Instead of “big wide and scary” Blue Ocean, think “small and secure” Blue Lagoon™. Find some coral reef, and check if there isn’t a protected cove behind it where the big sharks can’t or won’t go. Use this space to custom-carve a market segment for yourself, then make it the protected base from which you can start building your own, unique and differentiated business.
What will you create today? :-)