“Blue Ocean Strategy” by W. Chan Kim and Renée Mauborgne

Synopsis

Blue Ocean Strategy is premised on the idea that companies can create extraordinary value if they follow a strategic framework to develop ″blue oceans″ of uncontested market space. This, in turn, makes competition irrelevant. Blue oceans are defined by untapped market space, demand creation, and the opportunity for highly profitable growth. Authors Kim and Mauborgne base their argument on a study of 150 strategic moves spanning more than a hundred years and thirty industries.

I enjoyed the book and agree with the “blue ocean” argument around value innovation but I’d like to have seen a more in-depth analysis and examples of companies that tried this strategy but failed.

Lessons

On creating blue oceans…

The Four Actions Framework (Figure 1) is used to reconstruct buyer value elements in crafting a new value curve. To break the trade-off between differentiation and low cost and to create a new value curve, the framework poses four key questions, shown in the diagram, to challenge an industry’s strategic logic.

Figure 1: The Four Actions Framework

On reconstructing market boundaries…

The authors state that by thinking across conventional boundaries of competition, you can see how to make strategic moves that reconstruct established market boundaries and create blue oceans. Figure 2 shows the difference in thinking between head-to-head competition (red ocean strategy) and blue ocean creation.

Figure 2: Head-to-head competition vs. blue ocean creation

Quotes

“The distinctive strength of the business world [is] the capacity to create new market space that is uncontested.”

Something interesting

Guy Lalibert, the CEO of Cirque du Soleil, started out busking as an accordion player, stilt-walker, and fire-eater.

The Nickelodeon theatre of the early 1900s was aptly named because the price of admission was five cents. “Nickelodeon” was concocted from nickel, the name of the U.S. five-cent coin, and the ancient Greek word odeion, a roofed-over theater.

Links

The original 2004 Harvard Business Review Blue Ocean Strategy article

Blue Ocean Strategy Canvas

W. Chan Kim

Renée Mauborgne

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