Blue Ocean Strategy in Action: From Idea to Execution SM Insight

A market that already exists and has several competitors is known as red ocean strategy, while an untapped market that has no competitors is known as a blue ocean theory. By seeking to create new market spaces, businesses are compelled to think creatively and develop groundbreaking products or services. This culture of innovation not only sets companies apart from their competitors but fosters a dynamic and forward-thinking organisational environment. An innovative culture can lead to continuous improvement, employee engagement, and a proactive approach to market changes and opportunities. While blue oceans represent untapped market spaces with potential for growth, their scope may be limited compared to established red oceans.

The bank expanded from 20 to 60+ users, breaking down silos across business units and providing executive reporting that impressed the President enough to recommend bank-wide adoption. This is a full tour of Spider Impact 5.7, focusing on how different types of people use the software. University of Sharjah reduced reporting time from two months to instant generation, saving hundreds of staff hours while managing 1,000+ performance indicators across 14 colleges and 49 departments. But you didn’t have a place, a Restaurant, where you could sit and have a Diverse Menu that was delivered quickly at very affordable prices. A Platform that was much better than illegal platforms with a very competitive price. We say high-speed internet because in the past, other companies tried to create something similar.

A classic example of a blue ocean shift that Kim and Mauborgne detail in their strategy book is the entertainment company Cirque du Soleil. By blurring the lines between the circus and the theater, Cirque du Soleil was able to redefine an art form and create a new market. It’s easy to get caught up in the existing norms and conventions of the industries in which we operate.

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This is precisely what the blue ocean strategy suggests, though household-name brands used this approach long before a 2004 book gave it a name. We’ll explore how creating your own market has helped many businesses grow and share how your business can also benefit. Companies under Red oceans strive to outperform their rivals by grasping a higher proportion of existing market share at another company’s loss. In order to keep themselves afloat in the marketplace, proponents of the Red Ocean Strategy concentrate on creating competitive advantages by examining the blueprints of their peers/competitors. A Blue Ocean Analogy is utilized to unlock the wider, unfathomable, powerful, and vast potential in the unexplored market space in terms of profitable growth. This strategic planning theory is an escape from the general notion of benchmarking the competition and focusing on lump sum figures.

• The framework poses four key questions, namely, Raise, Reduce, Eliminate & Create.
• This culture of innovation not only sets companies apart from their competitors but fosters a dynamic and forward-thinking organisational environment.
• It states that for any business to make an entry into a brand new market and be able to generate adequate new demand, it must pursue the ideas of differentiation and low-cost offering, simultaneously.

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Ford’s Model T, introduced in 1908, is a classic example of a market-creating blue ocean strategic move that challenged the conventions of the automotive industry. The battle for market share often takes place within a relatively saturated and competitive environment. So you might assume that business success and competitiveness go hand in hand—the more market share a company wants to win, the more it’ll have to fight for it.

Discover the significance of HR marketing in today’s competitive landscape. Learn how to create a winning HR marketing strategy, enhance talent attraction, engage employees, and the importance of HR m… By following this strategic sequence, companies can ensure that their Blue Ocean Strategy is effectively executed and delivers the intended value to customers and the organisation. The main benefit of Blue Ocean Strategy is that a business can establish a first-mover advantage in a space that has minimal or no competition. Here are a few examples of companies whose strategies Kim and Mauborgne studied to develop their Blue Ocean Strategy theory.

Blue Ocean’s approach shuns the ideology of outperforming the competition and asserts to recreate the market boundaries and operate within the nascent. These days, the Blue Ocean Strategy becomes the need of the hour when supply surpasses the demand in a market. Due to the acquaintance with the competition rules and acceptance of the drawn boundaries, the market space gets crowded and there is a consequent reduction in growth and blue ocean strategy meaning profitability. When the product comes under the burden of pricing pressure there is always a chance that a firm’s operations could come under notable menace.

From Utility, Price, and Cost to Adoption

As a result, iTunes cut down the practice of illegally downloading music while simultaneously catering to the demand for single songs versus entire albums in a digitalized version. It is a ridesharing service that enables customers to book their rides with the ease of swipes and taps. It also permits users to trace a  driver’s progression toward the pickup point in real time through the medium of a smartphone application called the Uber App. This strategy targets six principles that can be used in every organization so that they can arrive at a successful development and fulfilment of new markets. Venture strategies are specifically about the technological innovation of companies towards a dynamic market. Blue Ocean Strategy is about value innovation in general, in which no emphasis is put on reducing the speed to market.

• It is all about devising and acquiring the uncontested market forum by spawning a new demand.
• This price-minus costing, and not cost-plus pricing, is critical to arrive at a cost structure that is both profitable and hard for potential followers to match.
• In fact, learning the blue ocean strategy helps people step into leadership roles as it allows them to implement value innovation and drive exponential business growth.
• While suppliers can produce an unprecedented array of products and services, limited demand raises the bar for competition.

But in most industries, rivals tend to stay within the bounds of their industry’s product and service offerings. For example, Novo Nordisk6, the Danish insulin producer created a blue ocean in the insulin industry by shifting their buyers from doctors to the patients themselves. With the creation of its NovoPen, the first user-friendly insulin delivery solution, patient could easily self-administer insulin safely. As industries continuously evolve, operations improve, markets expand, and players come and go. Their analysis covering 108 companies showed that 14% of the launches that aimed at creating blue oceans contributed to 38% of the revenue and 61% of the total profits. American automobile company Ford Motors is one of the perfect examples of the blue ocean technique.

Blue Ocean Strategy vs Red Ocean Strategy

Her ultimate advice for businesses is to stop competing and start creating. When household-name automotive company Ford launched its now-legendary Model T series, most manufacturers were customizing cars to each buyer’s needs. Instead of viciously competing with other companies, find a way to work in a marketplace free of competitors. Thus BOS is all about minimizing risks due to competition threat and maximizing opportunities by exploring new boundaries. Many attributes that had long defined the circus were simply no longer trendy.

Step 1: Define your current market space

The greatest blocks to utility often represent the greatest and most pressing opportunities to unlock exceptional value. Costs should not drive prices, nor should the utility be scaled down because high costs block the company’s ability to profit at the strategic price. If the target cost cannot be met, the company must either forgo the idea or innovate its business model to hit the target cost.

Companies must first distance themselves from conventional methods to enter the Blue Ocean Market. It points out the areas of an organization’s product or, service which foreplays a crucial character in the industry but is not absolutely essential in nature. Therefore,  the proportion of the products can be curtailed without entirely eradicating them. In order to find and identify an attractive  Blue Ocean, one needs to take into consideration the “Four Actions Framework” to devise the aspects of buyer value in creating a new value curve.

The key lies in embracing a mindset of value innovation, challenging existing market boundaries, and continuously seeking opportunities to deliver exceptional value to customers. In conclusion, Blue Ocean Strategy is a powerful tool that enables businesses to create new and uncontested market spaces. Blue Ocean Strategy allows companies to differentiate themselves from competitors and unlock untapped demand, which can help drive growth and increase profits.

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The unique value propositions offered by Blue Ocean’s strategies resonate well with customers, fostering strong brand loyalty. A strong brand built on innovation and unique value can command premium pricing and enjoy a loyal customer base, contributing to long-term profitability and market leadership. BLUE OCEAN STRATEGY is the simultaneous pursuit of differentiation and low cost to open up a new market space where there is no competition. It is about creating and capturing uncontested market space, rather than competing head-on with existing industry players. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed. In a saturated market, young companies frequently face daunting challenges.

This strategy allowed the airline to achieve high profitability and customer loyalty in a highly competitive industry. Implementing a Blue Ocean Strategy requires strategic focus and resource allocation away from existing business activities. This strategic shift may divert attention and resources from core operations and established revenue streams, impacting short-term financial performance and operational stability. Companies must balance exploring new opportunities in Blue Oceans and maintaining profitability and growth in existing markets.