Blue ocean metaphor elegantly summarizes their vision of the kind of expanding, markets that are free of competition where innovative companies can boldly navigate. Unlike “red oceans,” which are over explored and crowded with competitors (and filled with blood spewed by battles with competition), “blue oceans” represent “untapped market space” and the “opportunity for highly profitable growth.” The only reason more big companies don’t set sail for them, they suggest, is that “the dominant focus of strategy work over the past twenty-five years has been on competition-based red ocean strategies”-that is finding new ways to cut costs and grow revenue by taking away market share from the competition.
With this groundbreaking book, Kim and Mauborgne-both professors at France’s INSEAD, the second largest business school in the world-aim to repair that bias. Using dozens of examples-from Southwest Airlines and the Cirque du Soleil to Curves and Starbucks-they present the tools and frameworks they’ve developed specifically for the task of analyzing blue oceans. They urge companies to “value innovation” that focuses on “utility, price, and cost positions,” to “create and capture new demand” and to “focus on the big picture, not the numbers.” And while their heavyweight analytical tools may be of real use only to serious strategy planners, their overall vision will inspire entrepreneurs of all sizes, and most of their ideas are presented in a direct, bs free manner. Theirs is not the typical business management book’s vague call to action; it is a precise, actionable plan for changing the way companies do business with one resounding piece of advice: swim for open blue waters.
The blue ocean strategy can be summarized as such:
1. Don not compete in existing market space – Create uncontested market space.
2. Do not beat the competition – Make the competition irrelevant.
3. Do not exploit existing demand – Create and capture new demand.
4. Do not make the value/cost trade-off – Break the value/cost trade-off.
5. Do not align the whole system of a company’s activities with its strategic choice of differentiation or low cost – align the whole system of a company’s activities in pursuit of both differentiation and low cost.
Easy as ABC!