Blue Ocean Strategy: A Small Business Case Study

Brian Halligan

Updated: August 26, 2017

Published: September 15, 2006

I read " Blue Ocean Strategy " by Kim & Mauborgne recently and thought it was compelling. I thought I'd give you some excerpts from the book and use my current startup as a case study to explain some of the Blue Ocean concepts. I'm hoping it will spur thinking and feedback from you. The theme of the book reminds me a lot of what my strategy professor from MIT Sloan (Arnoldo Hax) used to talk about when he quizzed us on cases. He repeated over and over again that we should "watch our competitors, but never follow them" and that we should "play a different game on the same field as the competition." This professor used to stress that within marketplaces, conventional wisdom about the rules of competition build up and that over time, those rules become irrelevant to potential customers.

blue ocean strategy case study

Blue Ocean Strategy Synopsis

Rather than summarize, I thought I would give you a few quotes that lay out the theme in the authors' words:

"The only way to beat the competition is to stop trying to beat the competition. In red oceans, the industry boundaries are defined and accepted, and the competitive rules of the game are known. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. ...The companies caught in the red ocean followed a conventional approach, racing to beat the competition by building a defensible position within the existing industry order . The creators of blue oceans, surprisingly, didn't use the competition as their benchmark. ...Instead of focusing on beating the competition, they focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. …Value innovation is based on the view that market boundaries and industry structure are not 'given' and can be reconstructed by the actions and beliefs of industry players. …To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives , and from customers to non-customers of an industry. As you shift your strategic focus from current competition to alternatives and non-consumers, you gain insight into how to redefine the problem the industry focuses on and thereby reconstruct buyer value elements that reside across industry boundaries" The first example in "Blue Ocean Strategy" is Cirque de Soleil. The criteria/boundaries/rules for the circus industry that were "taken for granted" for decades included: animal shows, star/famous performers, multiple shows at the same time (i.e. 3 rings), and pushing concession sales. Rather than keeping a high emphasis on all the existing rules and then creating new ones, they either eliminated or reduced many of those rules and created a bunch of new ones. In the process, they increased value for their target market while lowering their own costs. A key thing they did at Cirque de Soleil was that they looked across market boundaries to alternatives to the circus. It ended up being part circus and part theatre. Rather than focus on the market boundaries, they focused on the job the customer was hiring for -- in this case, it was adults looking for sophisticated entertainment. Another key thing they did was not targeting the existing market (i.e. children), rather they targeted non-consuming adults. Blue ocean strategy is all about creating and capturing net new demand by ignoring boundaries defined by traditional competitors. The authors are big on stressing that new technology rarely turns into a great company. They state that unless the technology makes buyers lives dramatically simpler, more convenient, more productive, less risky, or more fun/fashionable, it will not attract the masses.

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What Is Blue Ocean Strategy — and Where Does It Go Wrong?

Hint: remember to include your non-customers in your market research.

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Blue ocean strategy is a landmark business idea – first introduced in 2004 in an HBR article . But its co-creator Renée Mauborgne , a professor of strategy and management at INSEAD, tells IdeaCast host Sarah Green Carmichael that it’s not a guaranteed win.

“What we’ve found is that managers’ existing mental models, the assumptions about what works in competing in existing industry space — they often apply to their efforts to create new markets. And that creates the failure,” Mauborgne explains.

They discuss what specifically can go wrong when you try to implement blue ocean strategy, including the common traps managers fall into. And why it’s so important to know who your non-customers are and include them in your market research.

Key topics include : blue ocean strategy, competitive strategy, growth strategy, and innovation, Ralph Lauren, Salesforce, product and service design, making your own market, innovation, sector growth, and strategy canvas.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

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HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. What do Ralph Lauren, Salesforce.com, and Cirque du Soleil have in common?  Give up? They’re all brands that have successfully created “blue oceans” – uncontested, new markets where success is all about differentiation and lower costs. Blue ocean strategy is a landmark business idea, first introduced in 2004 right here at HBR. But its co-creator Renée Mauborgne says it’s not a guaranteed win. Today, we bring you a conversation about what can go wrong when you try to implement blue ocean strategy. You’ll learn about some of the common traps managers fall into – like trying to please existing customers OR focusing on adjacent market niches. AND why knowing who your non-customers are is as valuable as knowing your customers. This episode originally aired on HBR IdeaCast in March 2015. And just a note — we recorded this by phone. While the audio quality isn’t great, the conversation is. I think you’ll enjoy it. Here it is.

SARAH GREEN: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green. Today I’m talking with Renee Mauborgne. Professor at INSEAD and co-author with W. Chan Kim of the bestselling and newly updated and reissued Blue Ocean Strategy. They’re also the authors of a new article in HBR called Red Ocean Traps. Renee, thank you so much for talking with us today.

RENEE MAUBORGNE: Thanks, Sarah.

SARAH GREEN: So many of those listening may already know, but some may not know, what is blue ocean strategy?

RENEE MAUBORGNE: So Blue ocean strategy is about how can any company or organization break out of the red ocean of bloody competition or existing market space, which tends to be very crowded and competitive these days, and create uncontested market space where you make your competition irrelevant. So it’s really about how do you create uncontested market space and align your value profit and people proposition to achieve that around differentiation and low cost, and thereby you create a win for the market, a win for the company, and a win for your employees as well.

SARAH GREEN: So in the article especially, you’re identifying several traps that managers fall into when they’re trying to do this, to create and execute a blue ocean strategy. And it seems like one of the common ones is trying to focus on making existing customers happier. So tell me a little bit about why is that a problem? Why does that not help you reach the blue ocean?

RENEE MAUBORGNE: So in the expanded edition of Blue Ocean Strategy, we’ve actually added about two, really almost three new chapters to it. And one of the critical ones is what we call this red ocean traps, which is also the focus of the new Harvard article. And what we found is that many managers increasingly recognize obviously, the need to break out of red oceans of bloody competition. But that despite putting funding behind it, and having an intent to do it, they often find that they’re unsuccessful in that achievement. And what we’ve found is that managers’ existing mental models, the assumptions about what works in competing in existing industry space, they often apply to their efforts to create new markets. And that creates the failure. The issue is, creating new markets isn’t about better satisfying, necessarily your existing customers, it’s about creating all new demand. And to create all new demand, your aim is, of course, talking to noncustomers of the industry. So, if you look at the case of e-readers, Sony came out and they thought, you know this new e-reader technology, let’s unlock the mass of buyers to start using e-readers for reading books. And they went to the existing early adopters of e-readers, who were the customers of that small industry. And they said, how can we make you happier? And what they said is, the device is a bit clunky and the reading screen, it doesn’t work very well. Can you make it have a slicker image, a slicker look and be better to handle. And they did that and they actually made existing customers very happy. The problem is, that wasn’t the reason the majority of people didn’t come to the industry. And as we know, Kindle then went with Amazon, looked to noncustomers and they found out the real reason wasn’t the screen of the existing e-readers. It’s just that there were no titles and you couldn’t download them effectively. And so what did Kindle do? Of course they created a lot more titles, today of course, over 2 million titles and they made it very easy to download. And today, Kindle sets the standard of the industry and has exploded the amount of e-reader users for books as we all know. And unfortunately, in the case of Sony, they have exited that industry. So that’s the kind of insights you get by looking to noncustomers.

SARAH GREEN: So do most companies even know what their noncustomers want and how might you get a better handle on what noncustomers want?

RENEE MAUBORGNE: Well, the truth is you’re right. I think most companies really aren’t clear on who their noncustomers are. And when they think of noncustomers, it’s sort of a big blob out there of everyone else. But that’s not true. So in our book, the first critical thing is, how do you define your noncustomers? And in the expanded edition, we have a chapter focused on defining the three tiers of noncustomers out there. And the first tier is people that occasionally use their product. How can I get them to use it much more? Second tier is people who refuse your industry. So they’ve thought about patronizing it, but they choose against it. And the third tier, unexplored. So the book really provides a strong conceptual framework any company can look at or organization to define who are the nontiers. That’s the first thing, who they are. Then the second is that your rightful point is, how do I then know what to do to unlock them. And in our book as well, we have two analytic tools that empower executives in terms of finding those pain points, blind spots, and points of intimidation. And one is called the buyer utility map. And that really allows you to map out and identify those points that keep people away from the industry. But beyond that, we have a supplementary tool called the Six Paths Framework. And that allows us to reframe the question from existing customers to noncustomers and think about, could I take a functional industry and make it emotional, to pull in young people that care about cool, hip things for example. So really to empower executives to act on that concept, the book goes beyond the red ocean traps to the three tiers to help you identify who they are, and then provides two very powerful and practical analytics that you can work with your executives or your team around to start to find these pain points. And I think, usually it creates an exciting conversation and a lot of insights in its application.

SARAH GREEN: So when some companies are sort of working through this and trying to identify those blue oceans, it seems like one of the things that they try to do is try to find an adjacent niche. Companies are always talking about adjacent niches. But one of the things that I sort of picked up on in the revised edition of the book and the article is that that’s not actually always a safe bet. So maybe just walk us through some of the dangers there.

RENEE MAUBORGNE: Yeah. I think that first of all, carving out a niche is how you create a unique space in the existing market space. But that’s not the same thing as creating new market space and growing all new demand for an industry. And what you find is that when companies think of new markets, they often do think of niche intuitively. Because that’s how you create small safe havens within an existing industry space. But the issue is, the more that you think about a niche, and the more we look for differences, the more we tend to find them, which leads to smaller and smaller segments of the industry. And the second thing as well as often, especially when higher fixed costs are involved to go after the niche, the niche is too small to support it and you can not only not create a niche, but you can’t justify the cost. So if you look at Delta Airlines, for example, they launched Song Airlines. And it was a concept, and they said, well, no one has looked at high-moving, fast-advancing professional women. What do they want? They fly more. What are they looking for? No one in the industry has focused on that distinct segment of fliers. And they created a product and a service with Kate Spade uniforms and designer cocktails on the flight and they gave exercise bands for women. And while in the low cost segment, that did well, the size of the market wasn’t big enough to support the cost structure. And in the end, I think it was after 36 months, they had to close that airline down. And so the issue is, has the niche become too small to support the cost? And the second thing is, are we really growing it? And what we found, companies that create new markets, what they do is, instead of looking for differences across segment customers, they look for commonalities. And in doing that thinking about not segmentation or niching, but desegmenting and industry. And that is what we found is how you create these broader market segments and grow demand for an industry.

SARAH GREEN: That’s really interesting. And I find that Delta Song example one that’s sort of really puzzling and perplexing. Because on the one hand, I think you’re totally right. It seems like they were focused on this niche that wasn’t necessarily big enough to support what they were doing. On the other hand, when you sort of hear that what their big plan was of the flight attendants were going to be wearing Kate Spade uniforms, I mean as a woman who travels for business, I don’t think I particularly care what my flight attendant is wearing. I mean, so I wonder to what extent is that really an execution problem and to what extent is it really a strategy problem?

RENEE MAUBORGNE: Well, I think that the airline, it was not– of course, Kate Spade is something I’m mentioning now, is much more than just Kate Spade to be fair to the airlines. So they had a number of different elements which I think were interesting. And I think the airline was fairly well-received by people that used that airline. It was just too small a segment for them in and a bit too focused at that price point that they were after.

SARAH GREEN: So I guess one of the questions that I think I’ve heard people ask in regard to this idea is, like wait a minute, when you’re talking about market creation, is that the same thing as differentiation or are they different themselves?

RENEE MAUBORGNE: That’s a great question. That’s a point of confusion sometimes. So market creation is not the same thing as differentiation, just as it’s not the same thing as a niche strategy. If you think about it in academic terms, differentiation is really a position, what economists call the productivity frontier, which is the range of value cost trade offs available to any company. Given the industry structure and best known practices at the time. And basically, differentiation is really about offering premium value on that curve. And when you do, your cost structure tends to go up and so that’s the price point of an industry. Market creation however, market creating strategies, are really about breaking the trade off by reconstructing industry boundaries. So if you think about Yellow Tail, one example in the book, or part of our database, is it the most differentiated wine out there? Is it a differentiated wine? You bet it is. But is it low cost? Yes, it is. Salesforce.com, is it differentiated in what they did in the software industry? Yes, it is. But is it also low cost? Yes, it is as well. And the issue with differentiation alone, which is a very effective strategy in existing market space, is that it tends to allow you to carve out a premium position in the existing industry. And what you tend to do is focus only on what you can raise and create, which is what lifts your price structure, your cost structure. And you forget about what you can eliminate and reduce simultaneously to drop your cost structure as well and really shift that productivity frontier as opposed to positioning on it. So they are not the same. Market creation is about differentiation and low cost at any price point in the marketplace, market creating strategies, versus being a premium player in the existing market as well.

SARAH GREEN: OK. So I just want to sort of hover over this topic for just another moment here because I think it’s interesting to think about the need to be differentiated and cost competitive. I guess I’m wondering is it possible, if there’s someone listening who’s in, say a business that’s a premium product or a high end business, is it possible for that person to be doing blue ocean strategy or are they doing something different according to different rules?

RENEE MAUBORGNE: So you can– the same logic applies, whether you want to create a blue ocean at the high end of the market or low end of the market, so you can think of Cirque de Soleil, right, listed as the price point of circuses multiple times versus a Ringling Brothers Circus. And what they did effectively– it’s one of those Six Paths I was talking about to pull in noncustomers. –is they looked across alternative industries of theater, opera, and ballet versus circus, they priced against it. Are they the most differentiated player? Yes, of course, they’re out there. But to drop their cost structure, in doing that of course, they eliminated animals, which has insurance implications, food implications, travel implications, and star performers as well. So they were high priced, differentiated low cost. Ralph Lauren did the same thing. They created a whole new blue ocean at the high end by taking the best of haute couture, which is a designer name, not the name of a house, using fine materials and they had a higher price point as well, and not a low cost price point. Ralph Lauren, to keep his cost structure reasonable at the time, of course, unlike an haute couture house, which is having seamstresses, he, of course, used more factory manufacturing and the details of course, might have been some done touched by hand in the very higher price points, but most of it was done lower cost via factory. So he had a price point of a Brooks Brothers at the time and of course the name brand, the allure, the image, all of that of a high end and the beautiful fabrics, creating at the high end of the market. So if you look at expanded edition of Blue Ocean Strategy, you’ll find we are talking about companies that create blue oceans at the high end of the market using the logic, at the low price point of the market, and the right smack in the middle price points of an industry.

SARAH GREEN: So, Renee, one of the things I’m kind of noticing as we’ve walked through a number of examples and talked about this is that I don’t think any of these examples so far has been technological examples. And I find that remarkable, just because so often when people are talking about strategy today, they’re sort of talking about innovation and technology innovation. And people seem to sort of conflate all these things together. And yet it seems like here we’re not really talking about break through technologies, so why when we’re talking about the need to create new markets, do we so often end up focusing on technological innovation instead of actually just strategy?

RENEE MAUBORGNE: Well, I think you make a great point. So the key to opening up new markets, it can be with or without technology. And technology’s purely a huge trend in the marketplace today that a lot of companies can act on to open up new market space. But what matters systematically is whether we lock it to value. And that’s where the discrepancy often occurs. So if you look at Apple, why do we love their products and services? They have highly technologically advanced products and services. It’s not because of the technology per se, it’s because actually they’ve made those products so stylish, fun, easy to use, reliable, they make us productive, that we love them. In fact, they make the technology almost disappear. Salesforce.com is a technology company that created a blue ocean, but again, the software very effectively linked to value. And I think the problem for organizations becomes when they see this technology and they think that’s a trend in the market you can act on to create a blue ocean, but it’s not what unlocks the blue ocean per se. What unlocks it is whether or not a company systematically unlocks and links it to value for the buyer groups that you’re going for in the marketplace. So we always say it’s value innovation, not technology innovation. And in our book, we have the buyer utility map which I mentioned earlier, which really allows you to assess, am I linking that technology to value to what people care about. And in essence, I think most ionization, technology innovations which unlock value they almost make the technology disappear from buyer’s mind. It’s so seamlessly done from a customer’s perspective. Intuit’s Quicken, it has such a wonderful user interface. And it even mimicked the initial checkbook when they came out, making it so intuitive for people to use, people fell in love with it. And so that’s the challenge for organizations.

SARAH GREEN: So I’m wondering, this idea of blue ocean strategy has become one of the classic ideas that HBR has ever published. The book sells ridiculously well. Why update the book? I mean, what was your sort of process like? Why come back to this idea? Why keep fleshing it out? There are many, many, many business books out there that don’t get updated and people continue to refer back to them. So why did you guys decide to sit down and do that and how did you do it?

RENEE MAUBORGNE: Well, thanks for that question. First, we’ve never stopped our research on blue ocean strategy. It’s a very long journey for us. If anyone wants to visit our blueoceanstrategy.com website, we have videos on there and we have an e-library with all companies around the world that have been applying the ideas. So obviously it’s a passion. We don’t see the idea of blue oceans going away at all. In fact, we’re growing. And really our research has not stopped. So we’ve been talking with companies around the world. And whether they were applying blue ocean or just in this space wanting to, we were documenting what their struggles were in trying to create new markets. What were the areas? Were there questions they had left unanswered? So, we went much more in the new book about, how do you align the organization, the people proposition, to execute on that? So, it’s not just about the analytics of strategy. We had a part about humans and execution in the initial book. But we really wanted to go much more in that to create sustainability. So this value profit in people, we really developed more. And then we saw companies putting the money behind this red ocean trap idea. But they would go in it to apply blue ocean strategy or any idea and they were talking to the same customers. And they were coming back with modified versions or improved of the existing offering of the industry and not breaking out or not going to too small niches. So this whole idea, as you just last questioned, technology innovation, they’re getting so excited about technology, they’re winning awards, but they’re not unlocking markets because it’s not linked to value for buyers. We don’t understand how to use it or there’s no ecosystem. So that was obviously a really critical impetus for us as well in thinking about it. And the third is people are saying to us, well, what if I create a blue ocean? Many them, like JCDecaux, the blue ocean that was created and has expanded since, some of them have lasted 50 years. Now some of them 30, some of them 20. So the companies have all done quite well, even though our unit of analysis strategic move that company.

That said however, people are saying well, what? Because imitation occurs for everybody, right? Every blue ocean eventually becomes red. So they said, can you expand on how do I, as an organization, institutionalize this as a systematic process? And we thought, that’s very valid. So, we talked more about barriers to imitation, how do you build those? But more also at the corporate level, for a multi-business firm and at the individual level, how do you know when to reach for a new blue ocean? What kind of tool and framework can you, to channel and have discussions with your head business leaders on doing it? So, the book really came out to our continuing conversation and our growing database of companies applying the ideas and governments, nonprofits, in action, and our curiosity to understand what were their stumbling blocks and where could we add further value. So it’s just sharing some of the conversations and our passion and our growing research database made us want to do this.

SARAH GREEN: Well, Renee, thanks again for talking with us today.

RENEE MAUBORGNE: Well, thank you very much for having us. And I’m sorry my colleague, Chan Kim, could not be a part it, but it is long career journey we’ve gone on together and we look forward to continuing that with passion. So thank you for the time and thank you for every one that has been interested in Blue Ocean Strategy.

HANNAH BATES: That was Renée Mauborgne, co-author of Blue Ocean Strategy – in conversation with Sarah Green Carmichael on the HBR IdeaCast . If you liked this episode, check out HBR IdeaCast wherever you get your podcasts.  We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. If you’re looking for another weekly dose of hand-curated business and management expertise, check out HBR On Leadership to help you unlock the best in those around you. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, be sure to subscribe to HBR at HBR.org. This episode was created and produced by Anne Saini, Ian Fox, and me, Hannah Bates. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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Strategic Management Insight

Blue Ocean Strategy

Blue ocean strategy guide

This article is a comprehensive exploration of the Blue Ocean Strategy that provides organizations with the frameworks and analytical tools to create and capture uncontested markets and unlock vast growth opportunities.

The term Blue Ocean Strategy (BOS) was first coined by Professors Chan Kim and Renée Mauborgne, who set out to understand what it takes in a competitive, global environment for business to not just to cope and survive but thrive.

Over three decades of their combined research culminated in the book called “ Blue Ocean Strategy ”, first published in 2005.

By definition, “Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players.” [1]

What is Blue Ocean Strategy

What are oceans.

Businesses operate in two kinds of market space called oceans – Red and Blue.

Red oceans denote the known market space in which all industries currently operate. This is where industry boundaries are defined and accepted, and competitive rules are set. Companies try to outperform rivals to grab a greater share of existing demand.

This market space is crowded with competition and prospects for profits and growth are limited. Products are commoditized, and cut-throat competition turns the ocean “bloody” – hence the word Red.

Blue Oceans , in contrast, denote the unknown market space – all the industries that are not currently in existence. This is an untapped area where demand is yet to be created and opportunities for highly profitable growth exist.

In blue oceans, competition is irrelevant as the rules of the game are waiting to be set. Any business that enters this space can address the market without competition.

Blue ocean and red ocean

How effective is the blue ocean strategy?

Professors Kim and Mauborgne, in their study spanning over three decades, quantified the impact of creating blue oceans on a company’s growth in both revenues and profits.

Their analysis covering 108 companies showed that 14% of the launches that aimed at creating blue oceans contributed to 38% of the revenue and 61% of the total profits.

BOS launches

Netflix as an example of BOS

Blue ocean examples show around us all the time. Consider Netflix’s initial years. In an age where streaming movies was unheard of, Netflix entered a blue ocean by offering just that. It was able to create a new market space for itself by going beyond the conventional DVD rental market (red ocean).

By simultaneously offering low prices and the convenience of streaming with a vast content library, Netflix quickly become the dominant player in an uncontested market space. By the time competition followed, it was already a dominant player with an established name.

In contrast, Blockbuster – Netflix’s primary competitor swam too long in the red ocean (DVD rental market) and eventually headed towards bankruptcy.

Netflix blockbuster blue ocean strategy

A history of blue oceans

Though BOS is a new term, it has been a feature of business for a very long time. A hundred years ago, some of the most basic industries of today didn’t exist. Many of these started as blue ocean strategic move at some point before the boundaries disappeared and competition took over.

Ford’s Model T, introduced in 1908, is a classic example of a market-creating blue ocean strategic move that challenged the conventions of the automotive industry.

Same can be said about the future. As industries continuously evolve, operations improve, markets expand, and players come and go. In future, many of the industries unknown today will come into existence. These are the blue oceans waiting to be explored.

Why is BOS more important than ever?

Accelerated technological advances substantially improve industrial productivity. While suppliers can produce an unprecedented array of products and services, limited demand raises the bar for competition.

As globalization shrinks trade barriers between nations and regions, information on products and prices become instantly available. This breaks down niche markets that were once havens for monopoly. As brands tend to become more and more similar, consumers increasingly select based on price.

The business environment in which most strategy and management approaches of the twentieth century evolved is increasingly disappearing. As red oceans become increasingly bloody, businesses will need to focus on blue ocean strategies than competing within the saturated existing markets.

Value innovation – cornerstone of BOS

Traditionally, companies choose to either differentiate their products or services from the competition (by offering higher quality, more features, or better customer service) or to compete on price. This is known as the value-cost trade-off.

Value innovation challenges this convention by creating a new value curve that offers both higher value and lower costs than the competition.

Value innovation

By the simultaneous pursuit of differentiation and low cost, Value Innovation creates a leap in value for both buyers and the company.

Red and Blue Ocean – the key differences

Competition-based red ocean strategy assumes that an industry’s structural conditions are given and that firms are forced to compete within them.

Blue Ocean’s Value Innovation-based approach assumes that market boundaries and industry structure are not given and can be reconstructed by the actions and beliefs of industry players.

Analytical Tools And Frameworks

The strategy canvas.

Strategy Canvas is a one-page visual analytic that depicts the way an organization configures its offering to buyers in relation to those of its competitors.

It communicates four key elements for a given business:

  • The factors of competition
  • The offering level buyers receive across these factors,
  • Business’s strategic profiles and cost structures
  • Competitors’ strategic profiles and cost structures

The Strategy Canvas of Apple’s iPhone from the early 2000s (in the figure below) shows the state of play in the handset industry (at the time). The horizontal axis shows key competitive factors the handset phone industry competed on.

Strategy canvas

In the Strategy canvas, it can be seen how Apple’s value curve differed from its competitors.

Red ocean players follow a similar profile competing on the established norms while blue ocean players stand out by creating new value areas for their customers.

The early iPhone combined PC-like performance with internet connectivity in a stylish design. It was easy to use and did not confuse buyers with too many buttons or models. It offered value in the areas the buyer cared about most and hence commanded a higher price.

Four Actions Framework

Having developed the strategy canvas, a business can use the four actions framework to challenge its strategic logic and business model.

This framework is used to reconstruct buyer value elements in crafting a new value curve or strategic profile. It poses four key questions, shown below and challenges an industry’s strategic logic.

Four actions framework

Eliminate : This question forces to consider eliminating factors that companies in the industry have long competed on. Often, these are factors taken for granted even though they no longer offer value. Sometimes there is a fundamental change in buyer’s value perception, but companies focused on benchmarking each other fail to notice the change.

Reduce : This question forces to determine whether products or services have been overdesigned in the race to match and beat the competition. Are companies overserving customers in areas they do not care about and increasing costs for little to no gain?

Raise: The third question pushes to uncover and eliminate the compromises customers are forced to make because of the way the industry is set up.

Create: This question helps to discover entirely new sources of value for buyers and create new demand and shift the strategic pricing of the industry. (Until the company Novo Nordisk invented NovoPen, administering insulin required a visit to the doctor)

By pursuing the first two questions (eliminate and reduce), companies gain insight into how to drop cost structure vis-à-vis competitors while the last two questions (raise and create) provide insight into how to lift buyer value and create new demand.

Eliminate-Reduce-Raise-Create grid

Eliminate-Reduce-Raise-Create (ERRC) grid is a supplementary analytic to the Four Actions Framework that pushes companies not only to ask four questions in the framework but also to act on each to create a new value curve. It offers four immediate benefits:

  • It pushes to simultaneously pursue differentiation and low costs to break the value-cost trade-off.
  • It immediately flags companies that are focused only on raising and creating and thereby lifting their cost structure and often overengineering products and services.
  • It is easily understood by managers at any level, creating a high level of engagement in its application.
  • It drives companies to robustly scrutinize every factor the industry competes on, thus discovering the range of implicit assumptions made unconsciously in competing.

An example of the Eliminate-Reduce-Raise-Create grid for Netflix’s early days when DVD rental was the norm:

Characteristics of a Good Strategy

A strategy formulated using the tools discussed thus far should exhibit three characteristics – Focus, Divergence, and a Compelling Tagline. These three criteria serve as an initial litmus test of the commercial viability of blue ocean ideas.

Focus : Every great strategy must have focus and a company’s value curve should clearly show it.

For example, Southwest Airlines emphasize only three factors: friendly service, speed, and frequent point-to-point departures. By maintaining its focus, it doesn’t make unwanted investments in meals, lounges, and seating choices and keeps its prices competitive.

Divergence : On a strategic canvas, the value curves of blue ocean strategies must stand apart.

For example, Southwest pioneered point-to-point travel between midsize cities in an industry that mainly operated through hub-and-spoke model.

Compelling Tagline : A good strategy must have a clear-cut and compelling tagline that not only delivers a clear message but also advertises an offering truthfully.

For Southwest Airline, it could be – “The speed of a plane at the price of a car – whenever you need it.”. A regular airline with a conventional offering cannot come up with such a tagline unless there is focus and divergence.

Formulating Blue Ocean Strategy

The six-path framework to reconstruct market boundaries.

Blue Ocean Strategy is about reconstructing market boundaries to break from the competition and create blue oceans. The challenge is to successfully identify, out of the haystack of possibilities that exist, commercially compelling blue ocean opportunities.

There are six basic approaches to remaking market boundaries – called the six paths framework. They are:

Path 1: Look at alternative industries:

Company competes not only with the other firms in its own industry but also with companies in those other industries that produce alternative products or services. Alternatives are broader than substitutes and include products and services that have different forms but offer the same functionality or core utility.

For example, to address their financial planning, customers could buy a financial software package, hire a professional, use a mobile app or simply use pencil and paper. Each of these have very different forms but serve the same function.

Path 2: Look across strategic groups within industries:

Strategic groups refer to a group of companies within an industry that pursue a similar strategy. Fundamental differences among industry players are captured by only a small number of strategic groups.

For example, in the US fitness industry of 1995, there were only two kinds of health clubs.

First were high-end clubs that offered both men and women a full range of exercise and sporting options at high prices. Second were low-cost home exercise programs that offered exercise videos, books, and magazines.

This changed when Curves [5] , a women-focused fitness company introduced reasonably priced clubs and built a blue ocean market for itself.

Path 3: Look Across the Chain of Buyers

Challenging an industry’s conventional wisdom about which buyer group to target can lead to the discovery of a new blue ocean.

For example, Novo Nordisk [6] , the Danish insulin producer created a blue ocean in the insulin industry by shifting their buyers from doctors to the patients themselves. With the creation of its NovoPen, the first user-friendly insulin delivery solution, patient could easily self-administer insulin safely.

Similarly, Bloomberg [7] found a blue ocean by shifting its focus from the IT managers to whom it sold trading software to actual traders and analysts.

Path 4: Look Across Complementary Product and Service Offerings

Products and services are seldom used in a vacuum. In most cases, other products and services affect their perceived value. But in most industries, rivals tend to stay within the bounds of their industry’s product and service offerings.

For example, in the airline industry, ground transportation time after flight can affect customer’s choice of whether to fly or to drive.

By thinking in terms of solving the major pain points in customers’ total solution, there could be an opportunity to create a blue ocean.

Dyson, for example, leapfrogged the competition by eliminating the need for vacuum cleaner bags and all the cost and hassle of buying new bags [8] .

Path 5: Look Across Functional or Emotional Appeal to Buyers

Some industries compete principally on price and function largely on calculations of utility – their appeal is rational. Other industries compete largely on feelings; their appeal is emotional.

Over time, functionally oriented industries become more functionally oriented and emotionally oriented industries become more emotionally oriented. When companies challenge this functional-emotional orientation of their industry, they often find blue oceans.

Japan’s QB House (Quick Beauty) [9] for example, did just that. When it started in 1996, the time it took for a haircut was over an hour due to a long process of ritualistic activities. This also led to higher prices, typically between 3,000 to 5,000 yen ($27 to $45).

QB recognized that many, especially working professionals, did not wish to waste an hour on haircut. By stripping away the emotional (ritualistic) elements, and staying focused on speed, it saw immense success for decades. Prices too dropped to 1,000 yen ($9).

Likewise, Starbucks [10] did the reverse and turned the commoditized coffee industry (rational) into an emotional experience. Customers now choose Starbucks to spend quality time and socialize over a good cup of coffee.

Path 6: Look Across Time

By looking across time from the value a market delivers today to the value it might deliver tomorrow, businesses can actively shape their future and enter a new blue ocean. Usually, these are driven by a discontinuity in technology, rise of a new lifestyle, or a change in regulatory or social environment.

For example, in the late 1990s, Apple observed the flood of illegal music on file sharing platforms like Napster. [11] With the technology allowing anyone to digitally download music free instead of paying $19 for an average CD at the time, the trend toward digital music was clear.

In response, Apple launched iTunes [12] which offered legal, easy-to-use, and flexible à la carte song downloads. With a collection of over two hundred thousand songs, consumers could download an individual song for as low as 99 cents or an entire album for $9.99. For Apple, this was a blue ocean that shaped consumer habits.

Likewise, using this path, CNN created the first real-time twenty-four-hour global news network based on the rising tide of globalization.

Summary of the Six Paths

Six paths framework

The process of discovering and creating blue is a structured process of reordering market realities in a fundamentally new way. By reconstructing existing market elements across industry and market boundaries, businesses can free themselves from head-to-head competition in the red ocean.

Focus on the big picture, not the numbers

While most managers have a strong impression of how they and their competitors fare within their scope of their responsibility, they often fail to see the overall industry dynamics. BOS provides a four-step strategy visualization tool that serves to unlock people’s creativity.

Step 1: Visual Awakening

This involves comparing a business with its competitors by drawing “as is” strategy canvas and finding where the strategy needs to change. Asking executives to draw the value curve of their company’s strategy brings home the need for change. It serves as a forceful wake-up call for companies to challenge their existing strategies.

Step 2: Visual Exploration

This step is about going into the field to explore the six paths to create blue oceans. By observing the distinctive advantages of alternative products and services, businesses can realize what factors to eliminate, create, or change.

Sending a team into the field puts managers face-to-face with what they must make sense of and helps realize how customers use or don’t use their products or services. A company must avoid outsourcing this step or substituting it with intelligence reports.

Step 3: Visual Strategy Fair

This step involves drawing the “to be” strategy canvas based on insights from field observations and getting feedback on alternative strategy canvases from customers, competitors’ customers, and noncustomers. This feedback will then be used to build the best “to be” future strategy.

Step 4: Visual Communication

This last step involves distributing the before-and-after strategic profiles on one page for easy comparison. The new strategic profile should become the reference point for all investment decisions. It is important to support only those projects and operational moves that allow a business to close the gaps to actualize the new strategy.

The Pioneer-Migrator-Settler (PMS) Map

Assessing a company’s portfolio offerings according to the innovative value they offer to buyers lets a company see how strategically vulnerable or healthy its portfolio is. The pioneer-migrator-setter map helps achieve this by dividing a company’s offerings into three segments: Pioneers, Migrators, and Settlers.

Pioneers are businesses that offer unprecedented value. These are the blue ocean offerings that are the most powerful sources of profitable growth. These businesses have a mass following of customers and their value curve diverges from the competition on the strategy canvas.

Settlers are the other extreme businesses whose value curves conform to the basic shape of the industry’s. As me-too businesses, Settlers will not generally contribute much to a company’s future growth. They are stuck within the red ocean.

Migrators lie somewhere in between. These businesses extend the industry’s curve by giving customers more for less, but they don’t alter its basic shape. These businesses offer improved value, but not innovative value. These are businesses whose strategies fall on the margin between red oceans and blue oceans.

If a company’s current portfolio and planned offerings consist mainly of settlers, the company has a low growth trajectory, is largely confined to red oceans. If it consists of a lot of migrators, reasonable growth can be expected.

Companies must strive to push their businesses toward pioneers.

Reach Beyond Existing Demand

Challenging the conventional strategies.

Maximizing the size of a newly created blue ocean requires reaching beyond the existing demand. This requires challenging the two conventional strategies:

(1) Focus on existing customers: Instead of concentrating on existing customers, companies need to look to noncustomers.

(2) Drive for finer segmentation to accommodate buyer differences: Instead of creating finer segmentations, companies must build on powerful commonalities around what customers value. That allows them to reach beyond existing demand to unlock a new mass of customers that did not exist before.

For example, when the US golf industry fought to win a greater share of existing customers, Callaway [13] created a blue ocean by asking why sports enthusiasts and people in the country club set had not taken up golf as a sport. It found that hitting the golf ball was perceived as too difficult with the small size golf club.

By offering a golf club with a large head, it converted noncustomers of the industry into customers. Even the existing customers, who took the norm for granted were pleased with the new offering.

The three tiers of Noncustomers

The three tiers of Noncustomers

Noncustomers fall under three categories.

Tier 1 : “Soon-to-be” noncustomers who are on the edge of the market, waiting to jump ship. These are the closest to the current market. They sit on the edge of the market and are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself.

However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand.

For example, Pret [14] , a British fast-food chain (with focus on fresh food) expanded its blue ocean by tapping into the huge latent demand of tier-1 noncustomers who were professionals frequenting restaurants for lunch. The appeal of fresh food served in under 90 seconds and at a reasonable price captured the restaurant-goers’ attention who otherwise did not consider fast food.

Tier 2 : “Refusing” noncustomers who consciously choose against the market. These are people who either do not use or cannot afford to use the current market offerings because they find the offerings unacceptable or beyond their means. But, harboring within these is an ocean of untapped demand waiting to be released.

For example, JCDecaux [15] , a vendor of French outdoor advertising space pulled the mass of refusing noncustomers into its market by creating a new concept in outdoor advertising called “street furniture”. Up until then, the outdoor advertising industry was about billboards (usually installed on city outskirts) and transport advertisement that exposed people for a very short time to get influenced by advertisements.

JCDecaux realized this was the key reason the industry remained unpopular and small. It found that municipalities could offer stationary downtown locations, such as bus stops, where people tended to wait a few minutes and hence had time to read and be influenced. It introduced street furniture with integrated advertising panels that were offered free to municipalities including maintenance and upkeep. Mass of refusing noncustomers flocked towards JCDecaux and the idea took-off as a profitable medium of advertisement.

Tier 3 : “Unexplored” noncustomers who are in markets distant from the one in question. These are the farthest from the market and have never thought of the current market’s offerings as an option.

Typically, these unexplored noncustomers have not been targeted or thought of as potential customers by any player in the industry. This can be because their needs and the business opportunities associated with them have somehow always been assumed to belong to other markets.

For example, for a very long time, tooth whitening was a service provided exclusively by dentists and not by oral care consumer-product companies.

While there is no hard-and-fast rule as to which tier of noncustomers a company should focus on and when, companies must focus on one that represents the biggest catchment and is close the capability to act on.

Getting the strategic sequence right

Buyer utility, price, cost, and adoption.

Companies need to build their blue ocean strategy in the sequence of buyer utility, price, cost, and adoption.

commercially viable blue ocean idea

Buyer Utility is the starting point. Does the offering unlock exceptional utility? Is there a compelling reason for the target mass of people to buy it? Without this, there is no blue ocean potential to begin with. In this case, either park the idea, or rethink it until an affirmative answer is reached.

Arriving at the right strategic Price is the second step. A company does not want to rely solely on price to create demand. The key question here is this: Is the offering priced to attract the mass of target buyers so that they have a compelling reason and ability to pay? If it is not, they cannot buy it.

Together, these first two steps address the revenue side of a company’s business model.

Cost is the third step. Can the company produce its offering at the target cost and still earn a healthy profit margin?

Costs should not drive prices, nor should the utility be scaled down because high costs block the company’s ability to profit at the strategic price. If the target cost cannot be met, the company must either forgo the idea or innovate its business model to hit the target cost.

The last step is to address Adoption hurdles. What are the adoption hurdles in rolling out the idea? Are they addressed up front? Because blue ocean strategies represent a significant departure from red oceans, it is key to address adoption hurdles up front.

Buyer utility map

The buyer utility map helps to think from a demand-side perspective. It outlines all the levers companies can pull to deliver exceptional utility to buyers as well as the various experiences buyers can have with a product or service. This mindset helps managers identify the full range of utility spaces that a product or service can potentially fill.

It has two dimensions: The Buyer Experience Cycle (BEC) and the Utility levers.

Buyer utility map

The six stages of the buyer experience cycle

A buyer’s experience can usually be broken into a cycle of six stages, running sequentially from purchase to disposal. At each stage, managers can ask a set of questions to gauge the quality of buyers’ experience.

For example:

The six utility levers

Cutting across the stages of the buyer’s experience are six utility levers: Productivity, Simplicity, Convenience, Risk Reduction, Fun & Image, and Environment friendliness.

Together, these help companies explore ways to unlock exceptional utility for customers.

Simplicity, fun and image, and environmental friendliness are self-explanatory. A product must reduce a customer’s financial, physical, or credibility risks. It must also offer convenience by being easy to obtain, use, or dispose of.

The most used lever is that of customer productivity, in which an offering helps a customer do things faster or better. Companies must check whether their offering has removed the greatest blocks to utility across the entire buyer experience cycle for customers and noncustomers. The greatest blocks to utility often represent the greatest and most pressing opportunities to unlock exceptional value.

From exceptional utility to strategic pricing

To secure a strong revenue stream for its offering, a company must set the right strategic price. This step ensures that buyers not only will want to buy its offering but also will have a compelling ability to pay for it.

Companies can also take a reverse course, first testing the waters of a new product or service by targeting novelty-seeking, price-insensitive customers and drop prices later on to attract mainstream buyers. (Example: Tesla electric vehicles)

There are two reasons for this change.

First, companies discover that volume generates higher returns than it used to. For knowledge-intensive products (like software), companies bear most of their costs in product development than in manufacturing which makes volume the key.

A second reason is that to a buyer, the value of a product or service may be closely tied to the total number of people using it. Online auction / networking sites fall under this category.

If a company’s offering belongs to the category of knowledge-intensive products, the pricing must also consider the potential for free riding.

In some cases, free riding can be protected by the nature of the goods/services (difficult to replicate, investment heavy etc.) or by the legal systems like patent protection, but most business innovations cannot eliminate free riding. Strategic price must not only attract buyers in large numbers but also help to retain them. Earning a reputation quickly is also a key. Companies must therefore start with an offer that buyers can’t refuse and keep it that way to discourage any free-riding imitations.

Setting the strategic price

Price corridor of the target mass is a tool managers used to determine the right price to unlock the mass of target buyers. When setting a strategic price for a product or service, it is important to evaluate the trade-offs that buyers consider when making their purchasing decision, as well as the level of legal and resource protection that will block other companies from imitating its offering.

Price corridor of the target mass

Source: SlideTeam.net [16]

Step 1: Identify the price corridor of the target mass.

In setting a price, companies look first at the products and services that most closely resemble their idea in terms of form. While looking at other products and services within own industries is a necessary exercise, by itself, it is not sufficient. Customers will compare the new product or service with a host of very different-looking products and services offered outside the group of traditional competitors.

A good way to look outside industry boundaries is to list products and services that fall into two categories:

Category 1 : Those that take different forms but perform the same function. For example, the horse-drawn carriage had the same core utility as the car: transportation for individuals and families. But it had a very different form: a live animal versus a machine.

Category 2 : Those that take different forms and functions but share the same overarching objective. For example, bars and restaurants have few physical features in common with a theater but might compete for customers’ time.

Step 2: Specify a level within the price corridor.

How high a price a company can set within the corridor without inviting competition depends on two principal factors.

The degree to which the product or service is protected legally through patents or copyrights and the degree to which the company owns some exclusive asset or core capability, such as an expensive production plant or unique design competence that can block imitation.

Companies with their offerings falling under this category can use upper-boundary strategic pricing to attract the mass of target buyers. As for companies that have no such protection, lower-boundary strategic pricing becomes necessary.

From strategic pricing to target costing

To maximize the profit potential of a blue ocean idea, a company must start with the strategic price and then deduct its desired profit margin from the price to arrive at the target cost.

This price-minus costing, and not cost-plus pricing, is critical to arrive at a cost structure that is both profitable and hard for potential followers to match. This also forces a company to strip out unnecessary costs.

To achieve the cost target, companies have three principal levers:

First – streamline operations and introduce cost innovations from manufacturing to distribution.

The second – partnering with other companies to secure needed capabilities by leveraging other companies’ expertise and economies of scale.

The third – achieve the desired profit margin without compromising on the strategic price. NetJets, for example, changed the pricing model of jets from complete ownership to time-share based to profitably deliver on its strategic price. Freemium is another pricing strategy that companies use (typically for a digital offering such as software, media, games, or web services) where a service is provided free of charge to pull in the target mass, but a premium is charged for proprietary features, functionality, or virtual goods.

The profit model of the blue ocean strategy

The profit model of the blue ocean strategy

From Utility, Price, and Cost to Adoption

Before companies go public with an idea and set out to implement it, making a concerted effort to communicate to employees is crucial. It is important that employees are aware of the threats posed by the execution of the idea.

When Netflix was transitioning from a DVD-by-mail business to providing video streaming, great emphasis was put on engaging employees by explaining the necessity of the shift, what it means to them, and preparing them for the change.

Business Partners

Potentially even more damaging than employee disaffection is the resistance of partners who fear that their revenue streams or market positions are threatened by a new business idea. Openly discussing the issues with partners and convincing them to see the value in the shift is equally crucial to ensure business co-operation.

The General Public

Opposition to a new business idea can also spread to the public, especially if the idea threatens established social or political norms. The effects can be dire. For example, when Monsanto [17] , (An agrochemical and agricultural biotechnology corporation, now part of Bayer) introduced genetically modified crop seeds, debate on genetically modified foods intensified around the globe, with Monsanto often at the heart of the attacks.

Executing Blue Ocean Strategy

Compared to red ocean, blue ocean strategy represents a significant departure from the status quo. It hinges on a shift from convergence to divergence in value curves at lower costs thus raising the bar of execution challenge.

Overcoming organization hurdles

The four organizational hurdles to strategy execution.

Cognitive hurdle : The challenge of waking employees up to the need for a strategic shift. While red oceans may not be the paths to future profitable growth, they feel comfortable and have served organizations well thus far. Hence rocking the boat becomes difficult.

Resource hurdle : The greater the shift in strategy, the greater is the need for resources to execute it. But resources are often cut and not raised.

Motivation hurdle : How to motivate key players to move fast and tenaciously to carry out a break from the status quo? Sometimes it takes years, and companies don’t have that time.

Political hurdles : Getting shot down before you stand up.

Use of tipping point leadership

Tipping point leadership builds on the rarely exploited corporate reality that in every organization, there are people, acts, and activities that exercise a disproportionate influence on performance. The key is conserving resources and cutting time by focusing on identifying and then leveraging the factors of disproportionate influence in an organization.

Tipping point leadership

Breaking the Hurdles:

Build execution into strategy.

A company needs to invoke the most fundamental base of action – the attitudes and behavior of its people. This creates a culture of trust and commitment that motivates people to execute the agreed strategy not just in letter, but in spirit. In blue ocean, this challenge is heightened.

Fair Process

Fair process is a key variable that distinguishes successful blue ocean strategic moves from those that failed. The presence or absence of a fair process can make or break a company’s best execution efforts.

Fair process builds execution into strategy by creating people’s buy-in up front. By exercising fair process in the strategy formulation phase, people develop trust that a level playing field exists, inspiring voluntary cooperation during the execution phase.

Three mutually reinforcing elements define the fair process:

Engagement : Involve individuals in the strategic decisions that affect them by asking for their input and allow them to refute the merits of one another’s ideas and assumptions. This communicates management’s respect for individuals and their ideas.

Explanation: Everyone involved and affected should understand why final strategic decisions are made as they are. This allows employees to trust managers’ intentions even if their own ideas have been rejected. It also serves as a powerful feedback loop that enhances learning.

Clarity of expectation: After a strategy is set, managers must clearly state the new rules of the game. Employees should know up front what standards they will be judged by and the penalties for failure. It is important to clearly communicate the goals of the new strategy, its targets, and milestones and who is responsible for what.

The consequences of the presence and absence of fair process:

The consequences of the presence and absence of fair process

Aligning Value, Profit, and People Propositions

At the highest level, there are three propositions essential to the success of strategy: the value proposition , the profit proposition , and the people proposition .

Figure below explains each of these propositions and how they play out differently in a blue ocean strategy vs a red ocean strategy.

Aligning Value, Profit, and People Propositions

Source: http://kimboal.ba.ttu.edu [19]

In red ocean strategy, the three strategy propositions need to be aligned with the distinctive choice of pursuing either differentiation or low cost within given industry conditions. Here, differentiation and low cost represent alternative strategic positions in an industry.

In a blue ocean strategy, an organization achieves high performance when all three strategy propositions pursue both differentiation and low cost. It is this alignment in support of differentiation andlow cost is critical to success and sustainability.

For example, consider Napster and Apple’s iTunes in the digital music industry. Both started out to create and capture uncontested market space with digital music. Napster had a clear first-mover advantage, pulled in over 80 million registered users, and was generally loved for its value proposition, but its strategy ultimately failed. It had no sustainability.

In contrast, iTunes achieved sustainable success and both dominated and grew the blue ocean of digital music.

What was lacking in Napster was its failure to align external people – its partners to support the compelling value it unlocked. When the record labels approached Napster to work out a revenue-sharing model, Napster balked while Apple partnered with major music companies.

Renew Blue Oceans

Creating a blue ocean is a dynamic process. Once a company creates a blue ocean and its powerful performance consequences are known, imitators appear on the horizon. If the imitators succeed and expand the blue ocean, competition intensifies and eventually turns the ocean red.

Hence renewal is key to ensure that the creation of blue oceans is not a one-off occurrence but is institutionalized as a repeatable process in an organization.

A blue ocean strategy brings with it considerable barriers to imitation that effectively prolong sustainability. These are:

Eventually, almost every blue ocean strategy will be imitated. If the company is obsessed with hanging on to existing market share, it tends to fall into the trap of focusing on the competition, and not the buyer. With time, the shape of its strategic canvas will begin to converge with those of the competition.

To avoid this trap, monitoring value curves on the strategy canvas is essential. These value curves signals when to value-innovate and when not to. It alerts a company to reach out for another blue ocean when its value curve begins to converge.

For more details on Blue Ocean Strategy, refer the author’s published book and official website. An online course is also available on the official website.

1. “WHAT IS BLUE OCEAN STRATEGY?”. Chan Kim & Renée Mauborgne, https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/ . Accessed 03 Jun 2023

2. “ABOUT THE BOOK: BLUE OCEAN STRATEGY”. Blueoceanstrategy.com, https://www.blueoceanstrategy.com/books/blue-ocean-strategy-book/ . Accessed 03 Jun 2023

3. “Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study”. Strategyjourney.com, https://strategyjourney.com/winning-the-customer-journey-battle-netflix-vs-blockbuster-case-study/ . Accessed 02 Jun 2023

4. “The Strategy Canvas of Apple iPhone”. Blueoceanstrategy.com, https://www.blueoceanstrategy.com/blog/strategy-canvas-examples/ . Accessed 03 Jun 2023

5. “Women’s Health & Fitness Clubs”. Curves, https://www.curves.com/ . Accessed 06 Jun 2023

6. “What we do”. Novonordisk, https://www.novonordisk.com/about/what-we-do.html . Accessed 06 Jun 2023

7. “Bloomberg Terminal”. Bloomberg, https://www.bloomberg.com/professional/solution/bloomberg-terminal/ . Accessed 06 Jun 2023

8. “vacuum-cleaners”. Dyson, https://www.dyson.com/vacuum-cleaners . Accessed 06 Jun 2023

9. “SERVICES”. QB House, https://qbhouseusa.com/ . Accessed 06 Jun 2023

10. “Our Heritage”. Starbucks, https://www.starbucks.co.id/about-us/our-heritage . Accessed 06 Jun 2023

11. “Napster”. Wikipedia, https://en.wikipedia.org/wiki/Napster . Accessed 06 Jun 2023

12. “iTunes”. Wikipedia, https://en.wikipedia.org/wiki/ITunes . Accessed 06 Jun 2023

13. “Homepage”. Callawaygolf, https://www.callawaygolf.com/ . Accessed 07 Jun 2023

14. “About Pret”. Pret, https://www.pret.com/en-US/about-pret . Accessed 07 Jun 2023

15. “OUT-OF-HOME ADVERTISING”. Jcdecaux, https://www.jcdecaux.com/group/activities . Accessed 08 Jun 2023

16. “BUYER UTILITY MAP”. SlideTeam.net, https://www.slideteam.net/blue-ocean-strategy-price-corridor-of-the-target-mass-ppt-powerpoint-presentation-icon-guidelines.html . Accessed 07 Jun 2023

17. “Monsanto”. Wikipedia, https://en.wikipedia.org/wiki/Monsanto . Accessed 07 Jun 2023

18. “TIPPING POINT LEADERSHIP”. Blueoceanstrategy.com, https://www.blueoceanstrategy.com/tools/tipping-point-leadership/ . Accessed 07 Jun 2023

19. “Align Value, Profit, and People Proposition”. Danielle Bodette, Cole Tacker, D’Vonta Hinton, Joey King, http://kimboal.ba.ttu.edu/MGT%204380%20Fall%2008/New_Folder2/Team2_10am_BOS_10222018.pdf . Accessed 07 Jun 2023

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The Strategy Story

The Blue Ocean Strategy Behind Yellow Tail

Ever imagined how could a potentially “new” Australian brand conquer the American wine market and become so big that it got exports demanded from Japan and the UK?

Yellow Tail, an Australian wine brand that started really small and humble back in 2001, managed to become one of the world’s most profitable brands in the industry. How did that happen?

Well, this article takes you through the story of Yellow Tail, which shows that, sometimes, the most interesting strategic branding case studies (in this case Blue Ocean Strategy) are just about understanding how to create a successful brand from scratch.

The history

Yellow Tail is an Australian Wine brand founded in 2001 by the Casella family from Sicily, who immigrated to New South Wales, Australia, in 1957. In 2001, the family decided to launch a new brand called “Yellow Tail” with a very innovative brand positioning.

Due to the difference in Wines’ reputation from Italy and France, the family decided not to compete with French or Italian wines on characteristics such as quality, product complexity, or vineyard prestige. Instead, they presented their brand as fun and approachable and targeted a new type of wine consumer, the United States.

blue ocean strategy case study

Yellow Tail’s marketing strategy

blue ocean strategy case study

The foundation of Yellow Tail is laid on the crevices of Blue Ocean strategy which is avoiding all the sharks of an overcrowded market and laying your fishnet at a place where there is no one to scout. In blue oceans, demand is created rather than fought over.

According to The Wine Economist, Yellow Tail was able to identify and answer the needs of a specific and new market in the US by applying the four actions framework of the Blue Ocean Strategy, as used to help create value innovation which were-

  • Reduce:  Which factors should be reduced well below the industry’s standards? Is it Wine complexity or Wine range, or even Vineyard prestige?
  • Create : Which factors should be created that the industry has never offered? For example, easy drinking.
  •  Raise:  Which factors should be raised well above the industry’s standards? Let’s say taking into consideration Price versus budget wines and
  • Eliminate:  Which factors that the industry has long competed on should be eliminated? For example, Aging qualities

Yellow Tail’s brand positioning in the US (creating a blue ocean)

blue ocean strategy case study

Yellow Tail’s first objective was not to compete with premium wines. The quality is not the same. Instead, what Yellow Tail did was to create a wine that people would purchase because it tastes good without getting their head into a thinking process of purchasing wine’s complicated rules.

Casella created a kind of social drink accessible to everyone: beer drinkers, cocktail drinkers, and other drinkers of non-wine beverages. Yellow Tail is easy to drink, easy to select, fun, and adventurous. It puts a non-traditional twist on a traditional product, it tastes good, and it’s made for everyday occasions, representing the Australian culture with its bold yet laidback image that thrives on adventure and fun.

Yellow Tail’s clever Marketing Mix:

Reflecting on the four Ps of marketing: product, price, promotion, and place for Yellow tail.

The success story of Yellow Tail is first derived from its product innovation strategy: the brand offers wine that is produced without tannin and acid to appeal to consumers who don’t like wine or who don’t drink it, which represents 85% of the population in America.

It developed a soft and sweet wine in taste and as approachable as beer and ready-to-drink cocktails.

It resulted in an easy-drinking wine that did not require years of experience to develop an appreciation for it.  The product can also be consumed immediately, so you can save on the expensive wine fridges or underground cellars for them to age.

The best part: it simplifies the consumption process! Besides tasting different, being easy to choose and to consume, Yellow Tail developed other qualities that would make it more appealing to non-wine drinkers

Packaging :

The best part about packaging is that it comes with “no wine jargon”.

The brand understood that many customers feel intimidated by traditional wine bottles covered with an elitist and sophisticated wine terminology that is often not easy to understand.

This led the idea to design a simple and unintimidating packaging with some cool text and vibrant colors.

Consumers can read the name of the grape variety, which is important to American consumers, on a simple label featuring an orange Kangaroo on a black background. The brand was also the first to use the same bottle packaging for both red and white wines, which allowed the company to simplify both the manufacturing and purchasing processes.

This clearly helped the wines to stand out from the extensive choice of intimidating wines

Promotion/Place :

Yellow Tail managed to lead the market without promotional campaigns, mass media, or above-the-line advertising.

The company focused on in-store promotion with great creative events. For example, the brand used the help of retail shop employees who acted as ambassadors and felt comfortable with the idea of promoting such a simple wine composition.

The brand organized wine-tasting events for consumers to discover and sample the product. Finally, Yellow Tail’s clever packaging allows the brand to create an easily identifiable colorful “brand block” in-store that stands out from their competitors’ classic white labels, sorted by countries, alphabetical order, or by grape variety.

The price is coherent with the rest of the marketing mix and represents a wine of this category with a value of less than $10.  

Although it remained a little bit more expensive than budget wines, this was justified because the brands offer a new type of value.

 Yello Tail: Reaping the benefits of Blue Ocean

As a result of this clever and coherent marketing mix, the company sold 1 million bottles in the US in just a year, which far exceeded the predicted 25,000 sales.

Yellow Tail became the fastest growing wine brand in the US, and in 2003 it became the number one red wine in a 750ml bottle sold in the US.

The brand went on to be named Australia’s most powerful family-owned wine brand in the 2012 Power 100 report by one of the British consultancy firm.

Yellow Tail has learned how to position itself in an unexploited market segment by creating value and differentiating itself from well-established competitors.

Yellow Tail also managed to become a leader in the wine market by creating new business opportunities.

It didn’t steal the market; it created a new one. That’s what Blue Ocean Strategy is all about.

Although the success of the brand is explained by good use of marketing tools and product innovation, one of the major factors for its success was that it remained a family affair; the company created an alliance with a US local wine distributor and insisted on high-standard irrigation solutions in their vineyards

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Blue Ocean vs. Red Ocean Strategy (Overview with Examples)

Download our free Blue Ocean Strategy Template Download this template

Plenty more fish in the sea? It depends on the ocean. Or at least that’s what companies that use the blue ocean strategy would tell you.

In 2004, Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne, caused waves in the business world. Their idea was simple: why compete for market share when you can create your own?

This guide will cover everything you need to know about the blue ocean and red ocean strategies, provide real examples, and show you how to execute these strategies in your organization.

  • Blue ocean is a business strategy focusing on creating new market spaces rather than competing in existing ones.
  • A red ocean is an existing market with many competitors, while a blue ocean is a market yet to be discovered with no competitors.
  • Best for companies with a serious commitment to aligning their efforts and prioritizing transparency
  • Blue ocean redefines how businesses can look at success and offers a unique approach to growth.
  • Companies must consider a large amount of risk with blue ocean initiatives.

Free Template Download our free Blue Ocean Strategy Template Download this template

Blue Ocean vs Red Ocean: Main Differences

The analogy of red and blue oceans describes markets and industries.

Red oceans are existing industries with demand and cutthroat competition. The color red denotes the bloody battle for revenue, existing market space, and success between companies. For example, the fashion industry.

Blue oceans are industries that don’t exist yet, with untapped potential for growth and success, which companies must find or create. For example, personal computing in the 1970s.

Captura de pantalla 2022-12-07 142847

Five main differences between the red ocean and the blue ocean strategy. Image source: blueoceanstrategy.org

What Is Blue Ocean Strategy?

The blue ocean strategy aims to shift strategic imperatives from outperforming competitors in existing markets to creating new industries, thereby making the competition irrelevant. Companies may use this strategy when the current supply in their existing market exceeds demand or if turnover has increased and profit margins are diminishing.

Blue ocean companies focus on creating uncontested market space with new demand for products or services that don’t exist yet by simultaneously pursuing the following:

  • Differentiation

Blue Ocean Strategy (1)

Value innovation is the process of reducing costs and increasing buyer value by creating elements that were not previously available in the industry.

Advantages of blue ocean strategy: 

  • Businesses can create uncontested markets that have new opportunities.
  • This framework offers a new perspective and encourages unorthodox thinking about creating consumer value.
  • The Blue Ocean process helps companies understand customer needs and desires more deeply.
  • It moves strategic imperatives away from competition and towards differentiation.

Disadvantages and possible limitations of the blue ocean strategy: 

  • There is a risk that efforts won’t result in the creation of a blue ocean. This strategy's success depends on an organization’s resources, talent, and position in the market.
  • Balancing dual strategic imperatives (cost reduction and buyer value) can take time and effort for organizations.
  • Organizational hurdles, such as scarcity of resources and a lack of strategic alignment, can impact the outcomes of the blue ocean strategy.
  • Businesses must attract enough customers to generate economies of scale and dissuade immediate competition.
  • Blue ocean markets will eventually become red oceans as competitors appear.

What Is Red Ocean Strategy?   

Red ocean strategies are the opposite of the blue ocean strategy. They describe business strategies organizations use to grow and succeed in established markets.

However, there are significant pitfalls to pursuing a red ocean strategy:

  • Red oceans are filled with businesses competing for the same customers.
  • Maintaining growth becomes increasingly tricky as profits diminish in red oceans.
  • Red ocean markets force enterprises to choose between cost leadership or differentiation.
  • Success in red ocean markets requires simultaneous exploitation of demand and beating your competitors.
  • Red ocean markets need greater resources and scale to compete effectively. 

But before you start despairing, it’s important to note that red ocean strategies aren’t always a bad move. Red ocean companies can and still do experience great success in red ocean markets with high levels of competition. 

Some examples of when a red ocean strategy may be a better choice include when:

  • A company has experience, knowledge, or skills that it can leverage in the existing market.
  • There are limited resources, and they can’t afford to spend significant capital on finding blue oceans or capitalizing on them. 
  • An organization has a low-risk tolerance or is in a period of stabilization.
  • A company has a good position and level of profitability in an existing market.

How to Make the Shift From Red Ocean to Blue Ocean (in 6 Steps)

Adopting a blue ocean strategy can have significant long-term benefits when done correctly. But, to get the red-blue shift right, you’ll need to approach the process systematically. 

Blue Ocean Strategy-2

The steps and concepts below are just a summary of the approach created by the authors of Blue Ocean Strategy. We’ve included an additional sixth step because it’s crucial but often overlooked.

1. Start planning your blue ocean initiative 

Begin by defining the scope of your blue ocean initiative. Next, identify which SBUs, services, or products will benefit the most from a blue ocean shift. 

To assist in this process, Chan Kim and Renée Mauborgne suggest using a pioneer-migrator-settler map to rank multiple strategic business units (SBUs) on value and innovation.

PMS-map-1280x720

Image source: blueoceanstrategy.org

  • Pioneers: SBUs offering unprecedented value.
  • Migrators: SBUs offering better value than the market.
  • Settlers: SBUs offering the same value as other competitors.

If you want a more comprehensive picture, you can combine this analysis with other strategic frameworks such as SWOT analysis , Porter’s Five Forces , or GE Matrix .

Use this information to identify which SBUs to target and create a team of people to carry out the blue ocean initiative. This step is vital to ensure you aren’t overambitious with your plans and that they fit your broader portfolio goals.

“ When you are bringing on new team members, it's not just about bringing folks on so that they can do the job today. It's about bringing folks that can adapt and change into the strategy and the decisions that you will make six months, nine months down the line. ” - Div Manickam , Portfolio Marketing Leader, Lenovo.

2. Understand the current situation

Create an overview of the competitive landscape by filling out a strategy canvas. A strategy canvas is a visual representation of the factors an industry competes on (Competing Factors), what consumers get (Offering Level), and the strategic profile of major players (Industry Value Curve).

Strategy-Canvas-1280x720

List factors that businesses in your industry compete on for a share of the market. For example, a mobile phone manufacturer could list ease of use, design, performance, business applications, camera quality, product range, etc.

Remember, the strategy canvas serves two purposes: to capture the current competitive landscape and propel your organization into action. This step will inform your organization how it currently competes and give a baseline for competition in your industry. 

💡Tip: As an alternative, you can also use a strategic group analysis. You can read more about it in our in-depth overview of six competitive analysis frameworks .

3. Imagine where you could be

Next, it’s time to consider the assumptions and limitations in your current industry. These factors are the springboards you’ll need to find to envision a better target market and break past industry boundaries.

If you don’t know where to begin, the blue ocean strategy suggests creating a Buyer Utility Map to think about your industry from a demand-side perspective.

Buyer-Utility-Map-1280x720

A Buyer Utility Map visually represents how companies provide utility for their customers through various stages of the buying experience. 

Utility levers are how businesses unlock utility for their customers with their products or services:

  • Productivity
  • Convenience
  • Risk Reduction
  • Fun and Image
  • Environmental Friendliness

The Buyer Experience Cycle outlines the consumer experience in six stages:

  • Maintenance

Use your team’s knowledge, experience, and other strategic analysis tools to identify opportunities to break away from competitors, provide pioneering value, and open up new customer bases.

“Co-creation is a really important one I think for all businesses. It’s about getting the right people in the right room and creating that space. And, ultimately, the reason we see it as most important is a lot of these people are going to be the ones executing the strategy.” - Jordan Colreavy , Head of Category Strategy, L'Oréal.

4. Formulate your business strategy

You’ll need to bring this vision to reality. This part of the process can be likened to “opportunity solving.” It’s about figuring out how your business will get from A (red ocean) to B (blue ocean).

For example, your company may need more capital or resources to achieve specific improvements, or there may be several steps you need to do first before you can realize a larger goal. 

The authors of Blue Ocean Strategy suggest using a Four Actions framework. It will help you identify how factors must change to shift your product, service, or business and prescribes four types of actions for businesses.

  • Eliminate: Which factors that the industry has long competed on should be eliminated?
  • Create: Which factors that the industry has never offered should be created?
  • Raise: Which factors should be well above the industry’s standard?
  • Reduce : Which factors should be reduced well below the industry’s standard?

By answering these questions, companies can refine and build new offerings and set objectives that will put them in a class of their own.

For example, if a company were to go back in time and use the blue ocean in developing personal computers, their Four Action Framework might suggest: Price → Reduce

Size → Reduce

Features → Create

Business-only applications → Eliminate

User Experience → Raise

5. Launch your blue ocean strategy

With your potential opportunities and paths in place, it's time to begin executing your blue ocean strategy. The creators of the Blue Ocean Strategy suggest using an iterative three-phase approach to do this:

  • First, select your move, goal, and direction. Make sure you are specific and clear. 
  • Prioritize speed over perfection. Rapidly test new products or features in the market. 
  • Finally, refine it to maximize potential. Adapt your strategy based on the results.

6. Maintain execution momentum

The blue ocean strategy offers businesses a unique perspective on opportunity, growth, and competition. If executed correctly, it can lead to impactful shifts that will help your organization grow to new levels. 

However, the blue ocean strategy requires the simultaneous pursuit of multiple strategic initiatives. This can be extremely tricky if you’re using tools like Excel, Google Sheets, and PowerPoint. Your teams don’t have access to the latest data and you don’t have a real-time overview of what’s happening with your strategy. This usually results in delayed results, wasted resources, and failed strategies. 

You need a single place where you can keep track of all initiatives, align cross-functional teams, and hold them accountable for progress. 

A better way is to supplement your blue ocean strategic planning with a powerful strategy execution platform like Cascade . It has all the tools and features you’ll need to track progress , maximize the impact of your strategy, and maintain consistent performance across the organization.

Blue Ocean Strategy Example: Spotify

The majority of profits from the music industry have come from the physical sales of CDs, tapes, and records. However, the introduction of digital shifted this trend in the early 2000s, with companies like Napster, The Pirate Bay, Apple iTunes, and Pandora dominating the digital music industry.

However, a small startup from Stockholm had other plans. When Spotify launched in 2006, it had a specific vision of what the music industry should be. Up until then, consumers had to:

  • Purchase songs and albums to listen to them.
  • Own specific devices, such as iPods, to use certain platforms
  • Illegally download or copy songs.

Spotify looked at these pain points and built a strategy around them. They came up with a better way of listening to music by offering:

  • An affordable subscription-based business model that allowed consumers to legally listen to unlimited amounts of music on any device with an internet browser. And they compensated the artists for their work.

The result wasn’t just out-competing existing companies. Instead, Spotify leap-frogged them and created a blue ocean by:

  • Redefining the level and kinds of utility and value.
  • Offering a new way of commercializing music streaming.
  • Pricing their streaming service to make the current competition irrelevant.

📚 Recommended reading: 

Strategy study: How Spotify Became The Standard In Convenience And Accessibility

Strategy study: How Amazon Conquered the E-Commerce and Tech Industries Worldwide

Lead Transition with Strategy Execution Software

All companies need a healthy balance of innovators, migrators, and settlers to ensure continued stability, growth, and success.

If most of your SBUs operate in industries with high levels of competition and decreasing profit margins, it’s time for a change, and you should consider using the Blue Ocean Strategy to make it happen.

If you’re busy creating your own blue ocean, a robust strategic planning and execution platform like Cascade will fuel your success. 

Focus on impact, improve your execution, and deliver business results with the No. 1 strategy execution platform in the world. Take it for a spin for free or book a call with Cascade expert.

FAQs about Blue Ocean Strategy 

What is the difference between the blue ocean strategy and the differentiation strategy.

Differentiation strategy focuses on gaining a competitive advantage in the current market with no focus on cost. Blue ocean strategy focuses on creating an entirely new market through differentiation and cost leadership.

What is Strategy Canvas in the Blue Ocean? 

A strategy canvas is a strategic planning tool designed to help strategic thinkers visualize the competitive landscape of an industry and inspire role players to take action.

What is Blue Ocean Strategy's Four Actions Framework?

The Four Actions Framework is a simplified approach to turning pain points, conditions, and existing constraints into opportunities. According to the Four Actions Framework, each factor from your vision should be either raised, reduced, created, or eliminated.

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Blue ocean pedagogical materials, used in nearly 3,000 universities and in almost every country in the world, go beyond the standard case-based method. Our multimedia cases and interactive exercises are designed to help you build a deeper​ understanding of key blue ocean concepts, from blue ocean strategy to nondisruptive creation, developed by world-renowned professors   Chan Kim and Renée Mauborgne . Currently, with over 20 Harvard bestselling cases .

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TEACHING GUIDE

How Apple’s Corporate Strategy Drove High Growth

Author(s): KIM, W. Chan, MAUBORGNE, Renée, KOO, Oh Young

Case study trailer

This case introduces the application of blue ocean strategy in the context of managing a business portfolio at the corporate level. Apple created future profits and growth not by exploiting existing demand, but by reconstructing industry boundaries to create new market space and unlock latent demand. As a result, the company’s value grew exponentially as the total market value of a firm reflects not only today’s performance but also its future profitability. The case examines a series of   blue ocean strategic moves   at Apple, Inc. that transformed the company from a computer manufacturer into a consumer electronics powerhouse.

Pedagogical Objectives:

To illustrate how future growth and untapped demand can exist in an uncontested market space and that a company should break and reconstruct the industry boundaries to create it.

To implement   blue ocean strategy balanced with red ocean strategy   in managing business portfolios within a corporation.

English: HBSP  |  Case Centre  |  INSEAD

Chinese: Case Centre  |  INSEAD

Spanish: Case Centre  |  INSEAD

Teaching Note

HBSP  |  Case Centre  |  INSEAD

English: Available to download for free in the Educators’ Space

Lecture Slides

Press Articles

IMAGES

  1. Blue Ocean Strategy: 5 Critical Points And Free Templates To Download

    blue ocean strategy case study

  2. What Does Blue Ocean Strategy Mean

    blue ocean strategy case study

  3. Blue Ocean Strategy: Review and Summary of main contents

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  4. blue ocean strategy case study of Xiaomi

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  5. Blue Ocean Strategy: The Ultimate Guide

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  6. Blue Ocean Strategy + Story + Video + Case Study

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VIDEO

  1. The Blue Ocean Strategy's Restaurant

  2. BLUE OCEAN STRATEGY BOOK DISCUSSION

  3. Our submission for the Blue Ocean Strategy Competition

  4. Blue Ocean Strategy

COMMENTS

  1. Blue Ocean Strategy Examples

    ☆☆☆☆☆ Browse a selection of examples and case studies of blue ocean strategic moves from a variety of different industries and sectors.

  2. Blue Ocean Strategy & Shift Cases

    TEACHING GUIDE BLUE OCEAN STRATEGY | BLUE OCEAN SHIFT CASES Explore our full collection, including more than 20 award-winning and bestselling cases, by clicking on each image. Explore our collection of bestselling blue ocean strategy and blue ocean shift cases. Your students will love them!

  3. 7 Powerful Blue Ocean Strategy Examples That Left the Competition Behind

    1. Marvel - a super-powerful blue ocean strategy example 2. Nintendo 's switch to a blue ocean 3. Stitch Fix - a blue ocean example in the fashion retail industry 4. HealthMedia - a blue ocean strategy example in healthcare 5. Nickel - a blue ocean in the fintech industry 6. Yellow Tail - a blue ocean example in the wine industry 7.

  4. Amazon

    Blue ocean strategy concepts are applied to analyze Amazon's market-creating strategic logic for future growth. The case comes with a teaching note and a lecture slide pack. Case Study English: HBSP | Case Centre | INSEAD Chinese: Case Centre | INSEAD Korean: Case Centre | INSEAD Teaching Note English: HBSP | Case Centre | INSEAD One Page Summary

  5. Blue Ocean Strategy

    Renée Mauborgne From the Magazine (October 2004) Kike Calvo/Getty Images Summary. Despite a long-term decline in the circus industry, Cirque du Soleil profitably increased revenue 22-fold over the...

  6. PDF Blue ocean Strategy

    4 Blue Ocean Strategy Core Principles 5. Provides Step-by-Step Process Provides a stepped process for implementation Gives management an alternative to traditional strategies 6. Maximizes Opportunity/Minimizes Risk Mitigates risk Increases odds of success 7.

  7. The Blue Ocean Strategy Summary (With 4 Examples)

    January 9, 2024 Strategic Planning Of the many strategic planning models that exist, the Blue Ocean Strategy could be considered the pacifist of the group. Based on an eponymously titled book, this strategy argues that "cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool."

  8. Blue Ocean Strategy: A Small Business Case Study

    Blue Ocean Strategy: A Small Business Case Study Brian Halligan Updated: August 26, 2017 Published: September 15, 2006 I read "Blue Ocean Strategy" by Kim & Mauborgne recently and thought it was compelling. I thought I'd give you some excerpts from the book and use my current startup as a case study to explain some of the Blue Ocean concepts.

  9. What Is Blue Ocean Strategy

    Details Transcript May 31, 2023 Blue ocean strategy is a landmark business idea - first introduced in 2004 in an HBR article. But its co-creator Renée Mauborgne, a professor of strategy and...

  10. INSEAD Blue Ocean Strategy Institute

    The INSEAD Blue Ocean Strategy Institute (IBOSI) is dedicated to extending the research on Blue Ocean Strategy, Blue Ocean Shift, Blue Ocean Leadership and Beyond Disruption by Chan Kim and Renée Mauborgne and disseminating it to professors, researchers, and practitioners around the globe. ... The case study "The Marvel Way: Restoring a Blue ...

  11. Case-based Blue Ocean Strategy

    Abstract Environmental impact, saving natural resources and ecological behavior are important factors for European manufacturing industry. Industry must concentrate production processes which are environment-friendly. The case company of this study supplies a wide range of wood processing equipment tailored to customers' needs.

  12. Wawa Case Study

    Summary Customers are gaga for Wawa, the restaurant / convenience store / gas station that inspires people to tattoo the firm's logo. Founded in 1803, Wawa morphed over time from an iron foundry to a textile mill, to a dairy farm, dairy delivery business, grocery store, then convenience store. Dark clouds descended with the 2008 financial crisis.

  13. Zerodha's Blue Ocean Strategy: A Case Study

    The curious case study of Zerodha's blue ocean strategy Founded by Nithin Kamath, the online discount brokerage company has changed the dynamics of retail stock investment in India....

  14. Gillette

    Summary This case illustrates how new demand is created by looking to noncustomers instead of just competing for a share of the existing customers of an industry. The case prompts the students to consider how new demand was created in the cell phone, computer and air travel industries by unlocking the three tiers of noncustomers.

  15. Blue Ocean Strategy: The Ultimate Guide

    By definition, "Blue Ocean Strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.

  16. The Blue Ocean Strategy Behind Yellow Tail

    According to The Wine Economist, Yellow Tail was able to identify and answer the needs of a specific and new market in the US by applying the four actions framework of the Blue Ocean Strategy, as used to help create value innovation which were- Reduce: Which factors should be reduced well below the industry's standards?

  17. Blue Ocean vs. Red Ocean Strategy (Overview with Examples)

    Blue ocean is a business strategy focusing on creating new market spaces rather than competing in existing ones. A red ocean is an existing market with many competitors, while a blue ocean is a market yet to be discovered with no competitors. Best for companies with a serious commitment to aligning their efforts and prioritizing transparency

  18. Apple Case Study

    This case introduces the application of blue ocean strategy in the context of managing a business portfolio at the corporate level. Apple created future profits and growth not by exploiting existing demand, but by reconstructing industry boundaries to create new market space and unlock latent demand.

  19. PDF The Marvel Way

    IN1182 The Marvel Way: Restoring a Blue Ocean This case study was written by Michael Olenick, Institute Executive Fellow at the INSEAD Blue Ocean Strategy Institute, under the supervision of W. Chan Kim and Renée Mauborgne, Professors at INSEAD.

  20. (Pdf) Blue Ocean Strategy in The Educational Sector: Creation of A

    2.2 Case Study . Our initial research phase, desk research and focus groups, shows tha t teachers experience four m ain . ... By means of the principles of Blue Ocean Strategy (BOS), this research ...

  21. Blue Ocean Sprint

    The only official blue ocean strategy and shift online course endorsed by the #1 Management Thinkers in the World. Your indispensable guide to learning the fundamentals of new market creation. ... Take a quiz to help you focus on and retain the salient learning points brought out in each case study. The Companion Workbook.

  22. PDF LG Electronics: The Blue Ocean Strategy

    W. Chan Kim and Renee Mauborgne studied over 150 companies. A strategic thinking behind the creation of new markets and industries was observed and named by the authors as the Blue Ocean Strategy. "Blue ocean donate all the industries not in existence today -the unknown market space, untainted by competition.

  23. Blue Ocean Strategy + Story + Video + Case Study

    Based on 'Blue Ocean Strategy', a book published in 2005 and written by W. Chan Kim and Renée Mauborgne, Professors at INSEAD and Co-Directors of the INSEAD Blue Ocean Strategy Institute W. Chan Kim. 4. Explanation of Blue Ocean Strategy with self made Story. 12.