Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renée A. Mauborgne is about how businesses can uniquely set themselves apart from their competition with a strategy that opens up new market spaces.
Pairs With: Peanut Butter M&M’s because they innovated to melt in your mouth, not in your hands 😉
Overview
Blue Ocean Strategy by W. Chan Kim and Renee A. Mauborgne is about how businesses can uniquely set themselves apart from their competition and no longer find themselves competing. Kim and Mauborgne explain that competition is a Red Ocean strategy where “companies try to outperform their rivals to grab a greater share of the demand.”
Military strategy has largely influenced corporate strategy and businesses find themself continuing to focus on red ocean strategies. “The very language of strategy is deeply imbued with military references—chief executive “officers” in “headquarters,” “troops” on the “front lines.” Described this way, strategy is about confronting an opponent and fighting over a given piece of land that is both limited and constant.” However, blue ocean strategy is about creating a new playing field and tapping into a new market space where competition is irrelevant.
“Although some blue oceans are created well beyond existing industry boundaries, most are created from within red oceans by expanding existing industry boundaries…”
Eliminate, Reduce, Raise, and Create
One of the steps to creating a blue ocean strategy is to see what can be eliminated, reduced, raised, or created.
“It is by pursuing the first two questions (of eliminating and reducing) that you gain insight into how to drop your cost structure vis-à-vis competitors. Our research has found that rarely do managers systematically set out to eliminate and reduce their investments in factors that an industry competes on.”
Kim and Mauborgne use Cirque du Soleil as an excellent example of how that company created a blue ocean. They explain how Cirque du Soleil eliminated the use of animals and reduced the danger in the circus.
“The second two factors (of raising and creating), by contrast, provide you with insight into how to lift buyer value and create new demand. Collectively, they allow you to systematically explore how you can reconstruct buyer value elements across alternative industries to offer buyers an entirely new experience, while simultaneously keeping your cost structure low.”
Cirque du Soleil raised having a unique over-the-top venue and created cohesion to the acts. This new circus was theater-like and opened the door to a new market space.
Similar to most businesses I hadn’t thought of removing something as a way of innovation. Typically we think we need to add more but it was great to think about innovation in a new way.
Conclusion
Blue Ocean Strategy is an incredibly interesting book that will get you thinking about how any industry could be innovated.
However, at times it was a bit hard to read. The writing style made me feel as though I was back in high school reading a textbook. I enjoyed the concepts in the book but noticed my interest petered out about halfway through. Most likely this is not a book you’ll want to read cover to cover in one sitting. It’s more of a one-chapter-a-day type of book.
Have you read this one or any other books you’ve loved on business strategy?? The business book world is pretty massive!
P.S. If you like this one you might enjoy Predictably Irrational by Dan Ariely!
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