Have you ever wondered why some businesses seem to effortlessly thrive while others struggle to survive? One reason may be their approach to strategy. Traditional business strategies focus on outperforming competitors in existing markets, but what if you could create a market space with little to no competition? That’s where the blue ocean strategy comes in.
What is the Blue Ocean Strategy?
The blue ocean strategy is a business theory developed by W. Chan Kim and Renée Mauborgne, professors at INSEAD, that emphasizes creating a market space with little or no competition. According to the theory, firms should enter a “blue ocean” with unmet customer demands and distinctive value propositions in order to generate fresh demand and open up new growth prospects rather than competing for market share in an existing market (a “red ocean” crowded with rivals).
How Does the Blue Ocean Strategy Work?
The blue ocean strategy is all about innovation and creating new value for customers. To successfully implement the blue ocean strategy, businesses must follow these four steps:
Eliminate: Identify and eliminate factors in the industry that are no longer relevant or add little value to customers. This could be features, services, or products that customers don’t need or care about.
Reduce: Determine which factors can be reduced without sacrificing customer value. This could be cost, complexity, or even the number of features offered.
Raise: Identify which factors should be raised above the industry standard to offer customers greater value. This could be product quality, customer service, or even the level of customization offered.
Create: Identify new factors that the industry has never offered before and create something truly unique that provides exceptional value to customers.
By following these steps, businesses can create a unique market space that has little or no competition. This strategy allows them to differentiate themselves from competitors, attract new customers, and unlock new growth opportunities.
Real-Life Examples of the Blue Ocean Strategy
Many companies have successfully applied the blue ocean strategy. Here are a few examples:
- Cirque du Soleil: Cirque du Soleil is a circus company that created a new market space by combining traditional circus acts with theater and music. They eliminated the use of animals, reduced the emphasis on star performers, raised the level of artistic and acrobatic performance, and created a brand-new form of entertainment that had never been seen before.
- Yellow Tail Wine: Yellow Tail Wine, an Australian wine company, created a blue ocean by offering a new style of wine that was easy to drink and affordable. They eliminated the traditional “snobbery” associated with wine, reduced the complexity of wine selection, raised the level of approachability and fun, and created a brand-new market space in the wine industry.
- Nintendo Wii: Nintendo created a blue ocean by targeting non-gamers with their Wii console. They eliminated the need for complex controllers, reduced the emphasis on graphics and processing power, raised the level of interactivity, and created a brand-new market space that included customers who had never played video games before.
Conclusion
The blue ocean strategy is a powerful tool that can help businesses create a market space with little or no competition. By focusing on creating new value for customers, businesses can differentiate themselves from competitors and unlock new growth opportunities. The key to success is to think creatively and take calculated risks to offer something truly unique that customers have never seen before.