Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
by W. Chan Kin and Renee Mauborgne
This book was recommended to me. I must admit that I probably wouldn’t have read it otherwise. I’m still torn as to whom I might recommend it to. On one hand, I found it to be far too deep for me. I found lots of rhetoric about strategy analysis and formulation, the importance of using solid empirical data and rigorous analysis, and the development of heavyweight analytical tools to assist them in the realization of their goals. If that previous sentence left you dumbfounded and doubting whether you want to read on, fear not and bear with me.
I often felt as though this book was intended only for serious strategy planners, MBA students, Business Development Managers, readers of the Harvard Business Review and the professors who write for those readers. Needless to say, I don’t fall into that group. In fact, I don’t fall anywhere near that group. However, at other times, I felt as though trusted peers were offering me a set of very practical frameworks and models that allowed me to grasp what appeared to be very obvious points. However, in reality, these points were profound insights and breakthrough contributions to business strategy literature.
The authors put my mind at ease as they shared information about several outstanding companies that have dominated (if not rendered irrelevant) their competition by penetrating previously neglected market space. At this point, they were talking my language as I love to learn what makes successful companies stand head and shoulders above their competition. The examples included the Body Shop, Callaway Golf, Cirque du Soleil, Dell, NetJets, the SONY Walkman, Southwest Airlines, Starbucks, the Swatch watch, and Yellow Tail wine. Focusing on familiar organizations made it much easier for me to understand their precise, actionable plan for changing the way companies do business.
Kim and Mauborgne chose a colorful metaphor as the title of their book—one not normally associated with strategy. As a result, they have provided us with a very simple and memorable way of distinguishing their approach from more traditional ones. Let’s start with a simple definition:
A Blue Ocean is simply a market space that is created by identifying an unserved set of customers, then delivering to them a compelling new value proposition.
This is as opposed to a Red Ocean, where the market is well-defined and heavily populated by the competition. All parties in these markets are engaged in an intense competitive struggle for the same customers, with different value propositions.
Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, the authors argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth.
- DO NOT compete in existing market space. INSTEAD you should create uncontested market space.
- DO NOT beat the competition. INSTEAD you should make the competition irrelevant.
- DO NOT exploit existing demand. INSTEAD you should create and capture new demand.
- DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off.
- DO NOT align the whole system of a company’s activities with its strategic choice of differentiation or low cost. INSTEAD you should align the whole system of a company’s activities in pursuit of both differentiation and low cost.
The authors elaborate on six basic principles that define and separate Blue Ocean strategy from competition-based strategic thought. These principles are introduced and then discussed in great detail, presented in a direct, jargon-free manner. You’ll learn to reconstruct market boundaries, focus on the big picture, reach beyond existing demand, get the strategic sequence right, overcome organizational hurdles, and build execution into strategy.
This Blue Ocean Strategy seems so obvious and easy to understand you might wonder why everyone doesn’t adopt this approach. The answer is quite simple. To do so requires a broad set of multi-disciplinary skills as well as fresh thinking about even the most mundane options. It requires both discipline and inspiration, which is indeed a rare combination in today’s marketplace.
As much as I enjoyed this book, I must admit that there was much I simply didn’t understand. However, I learned enough to know that I must schedule a re-read in hopes of grasping even more insight into this intriguing strategy. It provides a precise, actionable plan for changing the way companies do business with one resounding piece of advice: SWIM FOR OPEN WATERS!
(This book review was originally published in 2007 as one of the Top 10 Books – Edition 15.)