Blue Ocean Strategy

What's Blue Ocean Strategy about?

• Creating Uncontested Market Space: Blue Ocean Strategy by W. Chan Kim focuses on creating new market spaces, termed "blue oceans," where competition is irrelevant.
• Value Innovation: It emphasizes value innovation, which involves simultaneously pursuing differentiation and low cost to create a leap in value for both the company and its customers.
• Strategic Frameworks: The book introduces tools like the strategy canvas and the four actions framework to help businesses systematically identify and pursue blue oceans.

Why should I read Blue Ocean Strategy?

• Innovative Business Insights: The book offers a fresh perspective on strategic thinking, encouraging businesses to move beyond traditional competition-focused strategies.
• Practical Tools and Frameworks: It provides actionable frameworks that can be applied across various industries, making it a valuable resource for business leaders.
• Real-World Success Stories: Numerous case studies, such as Cirque du Soleil and Southwest Airlines, illustrate the successful application of blue ocean strategies.

What are the key takeaways of Blue Ocean Strategy?

• Shift from Competing to Creating: Focus on creating new market spaces rather than competing in existing ones, redefining industry boundaries.
• Importance of Buyer Utility: Ensure offerings provide exceptional value to attract both existing customers and noncustomers.
• Strategic Sequence Matters: Follow a strategic sequence of buyer utility, price, cost, and adoption to ensure commercial viability of blue ocean ideas.

How does Blue Ocean Strategy define "value innovation"?

• Core Concept: Value innovation is the cornerstone of blue ocean strategy, focusing on making competition irrelevant by creating a leap in value.
• Differentiation and Low Cost: It involves pursuing both differentiation and low cost simultaneously, breaking the traditional value-cost trade-off.
• Real-World Examples: Companies like Cirque du Soleil achieved value innovation by redefining their industry offerings.

What is the strategy canvas in Blue Ocean Strategy?

• Visualizing Market Position: The strategy canvas is a diagnostic tool that visually captures the current state of play in the market.
• Identifying Key Factors: It helps companies plot key competitive factors and their relative performance, identifying gaps and opportunities for innovation.
• Facilitating Strategic Discussions: The canvas serves as a common reference point for evaluating and refining strategies.

What is the four actions framework in Blue Ocean Strategy?

• Eliminate, Reduce, Raise, Create: This framework consists of four key questions to help businesses rethink their offerings and reconstruct buyer value.
• Reconstruct Buyer Value: By addressing these questions, companies can offer new experiences that attract customers and differentiate themselves.
• Practical Application: The framework is designed to be applicable across various industries, identifying opportunities for value innovation.

What are the three tiers of noncustomers in Blue Ocean Strategy?

• First Tier - Soon-to-be Noncustomers: These are customers who minimally use current offerings and are ready to switch for better alternatives.
• Second Tier - Refusing Noncustomers: This group consciously avoids current offerings due to perceived inadequacies or high costs.
• Third Tier - Unexplored Noncustomers: Individuals who have never considered the industry’s offerings, representing untapped market potential.

How can companies reach beyond existing demand according to Blue Ocean Strategy?

• Focus on Noncustomers: Prioritize understanding and targeting noncustomers to identify latent demand.
• Identify Commonalities: Look for shared needs among noncustomers to create offerings that appeal to a broader audience.
• Avoid Over-Segmentation: Simplify value propositions to aggregate demand, leading to larger market opportunities.

What is the significance of getting the strategic sequence right in Blue Ocean Strategy?

• Ensuring Commercial Viability: The strategic sequence of buyer utility, price, cost, and adoption is crucial for ensuring blue ocean ideas are viable.
• Focus on Buyer Utility First: Assess whether the offering provides exceptional buyer utility before considering pricing and cost.
• Addressing Adoption Hurdles: Identify and address potential adoption hurdles upfront to ensure successful market implementation.

What are the six paths framework in Blue Ocean Strategy?

• Framework Overview: The six paths framework provides a systematic approach to discovering blue oceans by exploring different market dimensions.
• Path Examples: Includes looking across alternative industries and redefining the buyer group to uncover new opportunities.
• Strategic Insights: Helps companies identify opportunities for value innovation that may not be immediately apparent.

What are the barriers to imitation discussed in Blue Ocean Strategy?

• Operational Barriers: Factors like brand image conflict and natural monopolies prevent easy replication of blue ocean strategies.
• Cognitive Barriers: Conventional strategic logic often leads to ridicule of new ideas, slowing down imitation efforts.
• Long-Term Sustainability: These barriers contribute to the sustainability of blue oceans, maintaining competitive advantage.

How does Blue Ocean Strategy address the issue of execution?

• Strategic Sequence: Outlines a sequence including buyer utility, strategic pricing, and target costing for successful execution.
• Overcoming Organizational Hurdles: Discusses overcoming cognitive, resource, motivational, and political hurdles for effective implementation.
• Fair Process: Emphasizes fair process in building trust and commitment among employees, crucial for executing the strategy.