Blue Ocean Strategy

Blue Ocean Strategy / Personal Comment

Traditionally competition has been at the heart of corporate strategy. The key question is usually how can a company outdo its rivals? The fundamental roots of this view of strategy can be traced to military strategy.  Even the vocabulary of companies can be traced to the military with words such as chief executive “officers”, “headquarters”, “troops” and “frontline” often applied within the corporate milieu. The rule of strategy has been that to gain share in a given market place you must take something from the competitor. In other words, you win, they lose. This is known as zero-sum gain.

In this traditional view of strategy, it is presumed that the structure is fixed – the environment and conditions are already determined and cannot be changed by the efforts of a company. In academic terms this is known as the structuralist view or environmental determinism. We admire winners.  But more so, we admire people who create new paradigms, businesses and market spaces. These are what expand the pie of intellectual and creative wealth. In other words, creating a non-zero sum game. This shift from win-lose to a win-win is the essence of Kim and Mauborgne’s Blue Ocean strategy.

According to Kim and Mauborgne, markets are made up of red and blue oceans. The red ocean represents the known market space where all the industries currently exist. In this space all the boundaries are defined and accepted, with companies trying to outperform each other. However, as the market space becomes congested, the potential for profits and growth decrease.

In contrast, blue oceans are untapped market space characterized by demand creation and opportunities for highly profitable growth. Blue Ocean Strategy goes beyond competition by opening up a larger ‘pie.’  It challenges the traditional structuralist view of strategy that regards industry structure as fixed and given. In contrast, Blue Ocean Strategy is based on a reconstructionist view of...