Reality: It doesn’t have to be this risky or scary. In a very competitive circus industry, Cirque du Soleil was a blue ocean. If you continue browsing the site, you agree to the use of cookies on this website. By 1924 the price was down to $290. Which user pain points does the current market not yet address? Some disadvantages of using a Blue Ocean Strategy are: 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. The red oceans are all industries and sectors that currently exist: the well-known market. The Tata Nano was a 4-wheeled car costing $2,000 meant to replace more dangerous 2-wheeled motorcycles in India. Blue Ocean Strategy enables a fundamental transformation in mindset. A strong blue ocean strategy is difficult for other companies to imitate and execute well. As the market space becomes full of providers, profits and growth are inhibited. In this summary, we’ll give a synopsis of the key concepts, tools and tips from the book. It therefore requires a great deal of clarity about the considerations that are being made, as well as obstacles. Consider two playing fields: Blue ocean strategy pushes companies to create new industries and break away from the competition. Instead of featuring star clowns and lion tamers, they anonymize the performers, thus preventing performers from gaining leverage and starting a bidding war with competitors. It’s not precisely like this, but it’s kind of funny, anyway. I learned all the main points in just 20 minutes. Think of the factors that require a lot of investment but do not generate a lot of income, or other factors that do not improve the statistics. You want different levels of detail at different times. Blue Ocean Strategy argues that you must reach beyond existing demand and include non-customers. Over time, markets become crowded, products become commodities competing on price, and profits dissipate. Companies have long engaged in head-to-head competition in search of sustained, profitable growth. Goal: Agree on the current state of the industry and how your company fits in. (Kim & Mauborgne, 2005) Differentiating a blue and red ocean provides better appreciation of the blue ocean strategy. You have to be 100% sure of the quality of your product to give a money-back guarantee. Myth: To create blue oceans, you must leave your core business. The rules of the game have yet to be drawn up, there are no large market share holders, and there is sufficient potential. What would your customer not miss if it were gone? My research skills are also very poor. Examining a wide range of strategic moves across a host of industries, Blue Ocean Strategy highlights the six principles that every company can use to successfully formulate and execute blue ocean strategies. But the importance of the people proposition is less obvious, particularly for top-down managers, as employees and partners can sabotage the project without buy-in. Price – Is your price accessible to the target mass of buyers? The blue oceans, on the other hand, are all industries that do not exist or are known today. During the 1920’s ownership of the Ford reflected social status. Here, the market structure is yet to be decided, so the price competition is far less intense. Blue Ocean Strategy Summary This strategic planning model is a departure from the typical management exercise that focuses on number crunching and competitive benchmarking. 1. Knocking out one of these pillars jeopardizes the long-term sustainability of the strategy. How do you prolong the sustainability of your blue ocean to maximize profits? Use the above checklist as a guide through the process and hold internal brainstorming sessions for each point. This raises two challenges: To prolong sustainability of your blue ocean, 1) broaden your defensive moat to ward off competitors, and 2) renew the blue ocean with constant innovation. Upending traditional thinking about strategy, this landmark book charts a bold new path to winning the future. Then look at what existing organizations are doing well (or not so well) to serve that market and determine how you can differentiate (for example, by price point or audience). Learn nuances, key examples, and critical details on how to apply the ideas. In red oceans, borders have long been defined and accepted. Venture strategies are specifically about the technological innovation of companies towards a dynamic market. However, as market saturation sets in, the red ocean becomes overcrowded. Toolshero supports people worldwide (10+ million visitors from 100+ countries) to empower themselves through an easily accessible and high-quality e-learning platform for personal and professional development.

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