What Is Blue Ocean Strategy?

What Is Blue Ocean Strategy?

Blue Ocean Strategy is a marketing approach developed by W. Chan Kim and Renee Mauborgne, professors at INSEAD, a private university with locations around the world. Kim and Mauborgne published their ideas in their 2004 book, Blue Ocean Strategy. Since then, their ideas have become an industry of their own, with books, websites, courses and numerous studies dedicated to the theory.

Before tackling so much information, you likely want to know the basics. What are the success stories and limitations? And is Blue Ocean Strategy right for your business endeavors? Let’s take a look.

The Basics of Blue Ocean Strategy

Blue Ocean Strategy requires more than rethinking your business strategy. It is a first principles reset of your entire approach to business and marketing.

No, that does not mean that if you are an expert in website design, you would transform your company into a microbrewery. It does mean employing your expertise and materials in new, untapped ways.

Red Ocean Strategy, in contrast, serves as the antithesis of Blue Ocean Strategy. And it is how most businesses compete. A Red Ocean approach means carving out existing market space among rivals. So you compete to get a bigger slice of that pie. But why not bake a new pie?

Blue Ocean Strategy implores the entrepreneur to seek unmet demand in uncontested spaces. That is, rather than attempt to out-compete your business rivals on their terms, you seek unexploited areas where demand is yet unmet. In some cases, consumers may not even know that they want something. Here, in fact, create demand with your unique offering.

Consider the iPhone. Prior to 2007, few of us knew we wanted a device with a touch screen that could take calls, send messages, play music and offer multitudes of apps. Apple competed largely in the personal computer space. But rather than remain in that limited space, Steve Jobs and Apple used existing resources to create an entirely new market space. In doing so, competitors have for more than a decade had to compete in a space Apple has staked.

Blue Ocean Strategy does not necessarily require learning new skills or even needing to find new resources. Rather, it means using your existing skills and resources to tap into unmet—or possibly, as-yet non-existing—consumer demand. It requires creativity and much deep planning. But it can open new horizons for your venture.

Blue Ocean Strategy Success Stories

Numerous, big-name corporations have successfully employed Blue Ocean Strategy.

Take, for instance, Bloomberg Business. Although a leader in financial news today, few had heard of it a few decades ago. Entities such as Reuters and Dow Jones occupied the digital financial news space. They catered their offerings largely to IT managers. Bloomberg saw that an untapped demand existed among traders. Traders needed information quickly to make real-time decisions. That is, Bloomberg saw an entirely untapped demand for information. By taking advantage of this uncontested market place, Bloomberg L. P. has grown from its inception in 1990 to one of the largest financial news organizations in the world.

In an entirely different arena, consider the story of Peirce College. Founded in Philadelphia in 1865, Peirce provided technical and business training to returning Civil War veterans. But by 1990, its growth had floundered. In 1991, college president Arthur J. Lendo employed Blue Ocean style strategic thinking. He sought uncontested marketing areas that aligned with unmet needs. In this case, it meant tapping into working adults seeking education. In doing so, they shifted focus to associate degree programs and online learning.

Although either of these two examples seem common sense today, they weren’t at the time. The change required innovation. That is, they needed to shift from attempting to out-compete others in existing spaces. By transitioning to largely uncontested markets, they met demand not currently met by competitors.

Blue Ocean Strategic Moves offers many more success stories. Read them carefully and consider what demand is currently unmet in your own business sphere.

Blue Ocean Strategy: Critical Evaluation

Blue Ocean Strategy leads to many new innovations. Some products and services we depend on did not even exist a decade ago. But that does not mean it is for everyone? There is risk. If you are a business owner or entrepreneur already succeeding in your industry, do you really want to make a drastic change?

A deep SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis may be one tool to employ. Perhaps, if you are risk-averse, dedicating just 10% or less of your available resources to innovation outside existing market space will be right for you. If the competition can routinely out-price and out-service you, you might invest more time and expense. Either way, you want to move with optimism tempered by cautious evaluation.

For instance, some competitors may have left market spaces untapped for a reason. That is, they are simply not profitable or in low demand. And in other cases, the timing simply is not right. Your brilliant idea may be too ahead of its time. The first to pave the way for others does not necessarily reach their goal. The market space may be murky, or your product differentiation unclear. And people are often resistant to change. Explaining a new product or service to them will likely require ninja-level marketing skills.

Consider LaserDisk. The home entertainment platform was arguably far ahead of its time in an era of VHS. It paved the way to CDs, Blu-ray, and other data-storage technologies. But the DiscoVision brand does not exist today, and the Pioneer Corporation took an enormous cost hit.

Next Steps for Success

A Blue Ocean Strategy has not only taken many companies to the top. It has allowed companies to create their own territory. It has enhanced all of our lives through innovations we maybe didn’t know we needed… and today, can barely live without.

With the basics in mind, you may be ready to take the next steps with Blue Ocean Strategy. To do so, we have several recommended resources to get you started.

The Blue Ocean Strategy website offers in depth-materials and courses to learn more.

Proceed with caution, and ride the ocean wave to success.

Photo by Jacob Lund/Shutterstock

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Bryan Lindenberger loves a challenge. He served as the first communications specialist for the Arrowhead Entrepreneurial Institute at the New Mexico State University business college with SBA funding. He has since worked in marketing, communications, and development for science, engineering, and business projects. His clients have included NASA, Disney, state education institutions, and multiple corporations and nonprofits. A former PC gamer, Bryan enjoys hiking, amateur photography, and delving into history books.

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