Must-Read Book: Blue Ocean Strategy
How to Create Uncontested Market Space and Make the Competition Irrelevant
In this book, you learn
- How to think differently from your competition
- Why not to invest time and resources into developing products that already exist or serve similar needs
- How to develop your blue ocean strategy and market a blue ocean product
“Red ocean strategies imagine finite markets. To expand your market boundaries into the wide blue ocean, consider your main competitors and think through their limitations.”
Red Ocean versus Blue Ocean Strategy
In a red ocean strategy, companies focus on existing customers and compete in existing market space. Their goal: beat the competition. How do they do that? By exploiting existing demand.
In a blue ocean strategy, companies focus on new customers and create uncontested market space. By creating and capturing new demand, they make the competition irrelevant.
Value Innovation
Value innovation is the cornerstone of a blue ocean strategy. It is created when a company’s differentiation and low cost intersect.
Cost savings occur by eliminating or reducing the factors on which an industry competes.
Buyer value is lifted by raising and creating elements the industry has never offered.
Develop a Blue Ocean Strategy And Achieve Value Innovation
Being an innovator and launching a new technology doesn’t mean that you have a blue ocean product. Chart the experience you want your buyers to have at several stages. Assess your product’s usefulness, ease of use, safety, value, benefits, and environmental friendliness based on how each factor affects the customers buying it, using it, adding to it, keeping it working, and, eventually, disposing of it.
To develop your blue ocean strategy, answer these questions in this order:
- Why should anyone buy your product? Does it have exceptional utility? If yes, go on; if not, rethink.
- Is your price accessible to the target mass of buyers? If yes, go on; if not, rethink.
- Can you attain your cost target to profit at your strategic price? If yes, go on; if not, rethink.
- Do any impediments discourage the market from accepting your product? If yes, you have a commercially viable blue ocean idea; if not, rethink.
Take-Aways
- A blue ocean strategy is all about being able to capture new markets by ignoring the artificial boundaries defined by your competitors.
- Value innovation means you need to identify how you can benefit currently unserved markets and customer groups and offer them greater value.
- Your strategy must be tested and tweaked adequately to ensure that you are serving a need that is not being effectively addressed by your competitors.
About the Authors
W. Chan Kim is a Korean-born business theorist, professor of strategy and management at INSEAD, and co-director of the INSEAD Blue Ocean Strategy Institute. Renée Mauborgne is an American economist and business theorist. Co-author of Blue Ocean Strategy, she is also professor at INSEAD and co-director of the INSEAD Blue Ocean Strategy Institute.
