BLUE OCEAN STRATEGY | HOW TO MAKE THE COMPETITION IRRELEVANT

Understanding Blue Ocean Strategy

Introduction to Blue Ocean Strategy

• The concept of Blue Ocean Strategy is introduced by authors W. Chan Kim and Renée Mauborgne, challenging the traditional view of competition in business.

• They differentiate between two strategic approaches: Red Ocean Strategy (cutthroat competition) and Blue Ocean Strategy (uncontested market space).

Red Ocean vs. Blue Ocean Strategies

• In a Red Ocean, businesses aim for marginal improvements to capture market share from competitors.

• Conversely, the Blue Ocean strategy focuses on creating new market spaces rather than competing in existing ones.

Four Actions Framework

• The authors present the Four Actions Framework as a method to implement a Blue Ocean strategy:

• Eliminate: Identify factors that are taken for granted and should be removed.

• Reduce: Determine which factors can be lowered below industry standards.

• Raise: Ascertain which factors should be elevated above industry standards.

• Create: Introduce new elements that have never been offered before in the industry.

Value Innovation

• Utilizing the Four Actions Framework leads to "value innovation," which combines differentiation with low cost, unlike regular innovation focused solely on product creation.

Case Study: Cirque du Soleil

Application of Blue Ocean Strategy

• Cirque du Soleil exemplifies value innovation by eliminating costly elements like wild animals and underappreciated performers from traditional circuses.

Steps Taken by Cirque du Soleil

• Eliminate: Removed wild animals due to high costs and public backlash against their use in performances.

• Reduce: Shifted focus away from attracting children, recognizing changing entertainment preferences towards video games and technology.

Targeting New Audiences

• Raise: Increased appeal towards adults and corporate clients who were willing to pay higher prices for sophisticated entertainment experiences.

• Create: Developed premium seating options and themed events, incorporating elements typical of theater but novel for circuses.

Results of Implementing Blue Ocean Strategies

Success Metrics

• A study of 108 companies revealed that only 16 adopted a blue ocean strategy; these companies generated 61% of total profits over time compared to those using red ocean strategies.

Longevity in Market Dominance

• Companies employing blue ocean principles maintained dominance in their markets for an additional 10 to 15 years after implementation.

Conclusion & Call to Action

Exploring Adjacent Markets

• View your own industry critically; identify adjacent markets where you can create uncontested space using the Four Actions Framework.

Final Thoughts