The Blue Ocean Strategy |
| Credit: TurningPoint Boston |
What is the Blue Ocean Strategy?
• The Blue Ocean Strategy focuses on creation of low cost and disruptive market places, that are unique from the existing ones, thereby making the competition irrelevant
• The strategy was coined by W. Chan Kim and Renee Mauborgne in an attempt to illustrate how market boundaries, structures can be redefined
• Blue Ocean Strategy teaches how to set your business apart and eliminate the sea of competition in 'red Oceans'
Understanding the Blue Ocean Strategy
• Red oceans are the market spaces existing today where companies try to acquire a larger market share of the pie
• The term comes from the existing market spaces getting overcrowded with several firms fighting for marginal profits and growth, leading to a 'bloody' competition
• Whereas, Blue oceans indicate at the non-existent markets that are unknown and untainted by competition
• They are the 'clean' spaces where demand is created and the firm witnesses rapid growth and profitability
• Model T introduced by Ford in 1908 is a classic example of a company utilizing this strategy and challenging the norms of the existing automotive industry
• Ford made cars accessible to the common man and thereby created a new market space for itself. The car offered standardised quality at historically low costs
• Model T thus replaced the common horse drawn carriages as the primary means for transport for the general masses in the US
Recent Examples of Blue Ocean Strategy
• Globally the startup ecosystem is a testament to the fruition that comes with successful implementation of the Blue Ocean Strategy
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