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Reading :: Blue Ocean Strategy

Posted by: on May 15, 2014 | No Comments
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
By W. Chan Kim and Renee Mauborgne

Blue Ocean Strategy is an international bestseller on strategically developing new market space. The authors invite us to consider a "marketing universe composed of two sorts of oceans: red oceans and blue oceans" (p.4).

Red oceans are existing, known market spaces in which rules are known; in these spaces, products are commodities, competition is fierce, and margins become thinner (p.4). Here, the rule is incremental improvement and the competition makes it a battlespace (p.7).

Blue oceans, in contrast, are untapped market spaces in which rules are in the process of being made, competition is thin, and margins are consequently fat (p.5). Blue oceans are more profitable (p.7). They require value innovation, in which "instead of focusing on beating the competition, you 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" (p.12).

The authors include multiple examples of blue ocean strategy, most memorably Cirque de Soleil, which made traditional circuses irrelevant by eliminating, reducing, and raising certain aspects of the traditional circus while creating new value in the experience. Another example is [yellow tail], the Australian wine that was marketed in sharp contrast to other wines in the US market. In these and other examples, the authors use analytical tools to demonstrate how the cases contrasted sharply with existing products, allowing them to create blue oceans.

The notion of creating a new market is not especially revolutionary. But the book provides several linked heuristics that allow readers to analyze the current market, see possibilities, develop strategy, and execute it. That, I think, is what made it such a valuable book. Like most bestsellers, this one is now available very cheaply on the used book market (which is where I got my copy). But it's still valuable if you're planning to market a product, or even if you're thinking about analogous ways to distinguish your work from others. (I can imagine academics using some of these heuristics to identify large research holes and gaps in current theory, for instance.) The book is readable, easy to grasp, and well illustrated with examples. If marketing is interesting to you, I suggest picking it up.