[Study] [HBR] Blue Ocean Strategy - Chan Kim and Reneé Mauborgne

Blue vs Red Ocean:

Red Ocean: Known market region where industry and rules are well defined. In order to survive, company tends to apply Operation Effectiveness (OE) to outperform rivals. The space is getting overcrowded and the prospects for profits and growth are dropped.  A bloody ocean.

Blue Ocean: Unknown, but an uncontested market region where everything is unclear. Prospects for opportunities are unlimited.  Supply is overtaking demand.

Products and Services become more and more alike and customers increasingly make choices based on price like promotions.

The Paradox of Strategy:

Companies, when thinking about Strategies, focus on competitions and consider them as the key of success. Competitions happen in Red Ocean. They almost forget about finding new lands for growth and how to protect these prospects.

Toward Blue Ocean Strategy:

Technology Innovation does not lead to Blue Oceans. In fact, the strategic usage or application of  emerging technologies leads to Blue Oceans and technology itself is just the used tool (Tiwana, 2014).

Incumbents often create blue oceans - and usually within their core businesses. Therefore, incumbents are not at a disadvantage in making new lands. Especially these new lands are often just next to the incumbent's red oceans.

Company and industry are not the unit of Blue Ocean analysis. In fact, the only strategic move is the right one. The creation of blue ocean is the product of strategy. Allocating large amount of budget in R&D is not the key, the right moves are the one.

Should Strategy be about beating up rivals or Should Strategy be about creating an uncontested land with unlimited prospects for profits and growth?

Blue Ocean Characteristics

- Never use the competition as a benchmark
- Reject the logic of the fundamental conventional strategy: trade-off exists between value and costs.
- Pursue the strategy of differentiation and low cost simultaneously.

• Cost savings are made from eliminating and reducing the factors an industry competes on.
• Differentiation by creating values the industry has never offered

References:

Kim, C. and Mauborgne, R. (2004) 'Blue Ocean Strategy', Harvard Business Review, , pp. 71-79. Available at: http://www.syv.pt/login/upload/userfiles/image/Reinventing%20Your%20business%20model%20HBR.pdf#page=71 (Accessed 15 September 2015)

Tiwana, A. (2014) 'Separating Signal from Noise: Evaluating Emerging Technologies', MIS Quarterly Executive, 13(1), pp. 45-61. Available at: http://misqe.org/ojs2/index.php/misqe/article/view/518 (Accessed 15 September 2015).