In today’s hypercompetitive business landscape, companies often find themselves trapped in what Chan Kim and Renee Mauborgne call the “red ocean of rivals fighting” for shrinking profits. The blue ocean strategy, one of the most iconic and impactful strategy books ever written, presents a revolutionary approach to making the competitionirrelevant by creating blue oceans of new market space instead of battling over existing demand.
First published in the Harvard Business Review‘s publication and later expanded into a book that spent years of Harvard Business Review’s bestseller lists, this business strategy framework has transformed how organizations approach strategy formulation. The core premise is simple yet powerful: stop competing in crowded **”red ocean”**markets and instead shift from red to blue oceans where competition is irrelevant.
Understanding the Core Concept of Blue Ocean Strategy
The concept of blue ocean strategy is based on creating and capturing blue oceans within industries by reconstructing market boundaries. As Renee Mauborgne and her co-author explain, blue ocean strategy argues that lasting success comes not from battling competitors, but from creating new blue ocean markets where you make competition irrelevant.
This contrasts sharply with traditional approaches where competition results in nothing but bloody waters as companies fight over the same known market space. The blue ocean approach instead focuses on creating new market space and demand, making the competition irrelevant.
The Strategy Canvas: Mapping Your Path to Blue Oceans
One of the key strategy tools introduced in the book is the strategy canvas, a diagnostic framework that helps visualize your current competitive position and identify blue ocean opportunities. This tool enables companies to:
- See how they stack up against competitors in existing markets
- Identify factors the industry competes on that could be eliminated
- Spot underserved customer needs that could be created
- Chart a new strategy path toward unknown market space
How to Read the Strategy Canvas
The horizontal axis shows the range of factors an industry competes on, while the vertical axis shows the offering level across these factors. When you plot your company and competitors, you can clearly see if you’re stuck in the red ocean of competition or charting a course toward creating and capturing blue oceans.
Four Actions Framework: Tools to Shift From Red to Blue Oceans
To help companies make the shift from red ocean to blue ocean thinking, Kim and Renee Mauborgne developed the Four Actions Framework. These tools and frameworks to shift your perspective include:
- Eliminate: Which factors that the industry takes for granted should be eliminated?
- Reduce: Which factors should be reduced well below industry standards?
- Raise: Which factors should be raised well above industry standards?
- Create: Which factors should be created that the industry has never offered?
This set of frameworks to shift from red ocean thinking helps companies break the value-cost tradeoff and open up competition to blue oceans of new opportunity.
Examples of Blue Ocean Strategy in Action
Looking at real-world examples of blue ocean strategy implementation helps illustrate how companies have created blue ocean markets. Some notable examples of blue ocean strategy include:
| Company | Industry | Blue Ocean Innovation |
|---|---|---|
| Cirque du Soleil | Entertainment | Combined circus arts with theatrical storytelling, eliminating expensive animal acts |
| Southwest Airlines | Airline | Created affordable air travel by eliminating hub-and-spoke system and meals |
| Uber | Transportation | Created on-demand ride-hailing by leveraging smartphone technology |
Six Paths Framework: Systematic Approach to Blue Ocean Creation
Blue ocean strategy offers systematic methods for identifying new market space. The Six Paths Framework provides specific directions to explore:
- Look across alternative industries
- Look across strategic groups within industries
- Look across the chain of buyers
- Look across complementary product/service offerings
- Look across functional/emotional appeal to buyers
- Look across time (trends that will change value)
This comprehensive approach shows how ocean strategy offers systematic tools for innovation beyond typical marketing strategy approaches.
Why Blue Ocean Strategy Works: The Economic Logic
Blue ocean strategy is based on sound economic principles that explain its effectiveness:
- Value innovation: Pursuing differentiation and low cost simultaneously
- Noncustomers: Tapping into three tiers of noncustomers rather than fighting over existing customers
- Aligned activities: Creating an integrated system of activities that reinforce each other
As selected blue ocean strategy case studies demonstrate, ocean strategy is the simultaneous pursuit of differentiation and low cost to open new market space. This strategy is the simultaneous pursuit of value and innovation that makes competition irrelevant.
How to Create Your Blue Ocean Strategy
Ready to create your blue ocean? Follow this step-by-step process:
- Start with your current strategy canvas to visualize competition
- Apply the Four Actions Framework to reconstruct market boundaries
- Use the Six Paths method to explore alternative market spaces
- Test your blue ocean idea with potential customers
- Develop a business model that aligns all activities to your value innovation
Remember that blue ocean strategy as one of the most impactful strategy books ever written emphasizes that this isn’t about finding a niche, but creating fundamentally new market space.
Conclusion: Making Competition Irrelevant
The blue ocean strategy offers a comprehensive framework for escaping bloody competition and creating new demand. As we’ve seen through numerous examples of blue ocean success, companies that make competition irrelevant by creating blue oceans of new market space achieve superior growth and profits.
Whether you’re a startup looking to enter a market or an established company seeking renewal, the principles from this business strategy classic can help you shift from red ocean thinking to blue ocean creation. The tools presented – from the strategy canvas to the Four Actions Framework – provide practical methods to ocean of competition to blue ocean opportunities.
As Chan Kim and Renee Mauborgne have shown through their research, the most successful companies don’t just compete better – they redefine the terms of competition entirely through creating new market space where they can thrive unchallenged.
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