Some of the following material was extracted from the amazing Wikipedia. I first heard about “Blue Ocean” thinking from my brother who works for a large communications company. He learned about it as part of their internal training program for senior managers. Lets start with a definition from Wikipedia:
Blue Ocean Strategy is a business strategy book first published in 2005 and written by W. Chan Kim and Renée Mauborgne of The Blue Ocean Strategy Institute at INSEAD. The book illustrates what the authors believe is the best organizational strategy to generate growth and profits. Blue Ocean Strategy suggests that an organization should create new demand in an uncontested market space, or a “Blue Ocean”, rather than compete head-to-head with other suppliers in an existing industry.
The book is divided into five parts:
The first part presents key concepts of blue ocean strategy, including Value Innovation – the simultaneous pursuit of differentiation and low cost – and key analytical tools and frameworks.
The second part describes the four principles of blue ocean strategy formulation: how to create uncontested market space by reconstructing market boundaries, focusing on the big picture, reaching beyond existing demand and getting the strategic sequence right.
The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed.
How this represents five parts is a bit confusing but perhaps I can expand on some of these points after I finish reading the book. I did discover that there are two competing strategies. Red Oceans represent all the industries in existence today. Blue Oceans represent all the industries not in existence today.
The “Blue Ocean Strategy”, unlike the “Red Ocean Strategy”, is about creating a new approach to business that differentiates your business. The cornerstone of Blue Ocean Strategy is ‘Value Innovation’. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.
An example of a blue ocean strategy is the Montreal based Cirque de Soleil.