Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, first published in 2004, is a business nonfiction book that presents a groundbreaking new approach to marketing strategy. Written by two professors at the Institut Européen d’Administration des Affaires (INSEAD) business college in France—Renee Mauborgne and W. Chan Kim—Blue Ocean Strategy introduces the concept of value innovation, which encourages businesses to break away from the traditional economic model of competition and toward uncontested “blue ocean” spaces by expanding the boundaries of existing industries, providing products and services with unbeatable buyer value, and creating new demand. To this end, the book discusses not only theory, but also emphasizes planning and execution as crucial steps in the successful implementation of blue ocean strategies.

Blue Ocean Strategy is designed to help organizations—such as businesses, nonprofits, and governments—create uncontested market spaces conducive to profitable growth by growing demand, maximizing opportunity, and minimizing risk. Its contents are the result of over 15 years of research, which makes use of historical and new data alike. Since its publication, Blue Ocean Strategy has influenced the strategic planning of small businesses, large multinationals, nonprofit organizations, and government organizations alike. It has been adopted as a core part of management curriculums by over 2800 universities across the globe. A commercial and global success, it has sold 3.5 million copies since its first printing in 2005 and has been translated into 43 languages.

Blue ocean designates new market spaces ripe with potential growth while red oceans are characterized by bloody competition. Businesses who find their profit margins shrinking due to intense competition in red ocean markets can get out of this bind by finding blue ocean market spaces to capture. They do so by focusing on the customer rather than the competition—instead of strategizing methods to bottleneck the competition, they work to offer an exponential increase in value to the buyer through making key innovations in their products, and thus inherently make the competition irrelevant.

This summary guide follows the latest expanded 2015 edition, which includes a reworked Chapter 9 and two extra subsequent chapters addressing the issue of strategy renewal and listing common misconceptions that prevent the successful planning and implementation of blue ocean strategies.

Summary

The book is sectioned into three parts. The first explains what blue ocean strategy is, the second provides specific methods for organizations to plan a successful blue ocean strategy, and the third discusses how companies can execute blue ocean strategies in practice while avoiding falling back into the habit of using red ocean strategies. In other words, it is structured logically, first describing blue ocean strategy in theory, and then also offering systematic and actionable plans for executing it in practice.

Part 1 includes Chapters 1 and 2, which explain, using concrete examples, what blue oceans are, why they are important for generating exponential profit growth, and the tools the book will use to help companies reach for blue ocean spaces. Chapter 1 focuses on defining blue oceans and explaining why they are relevant in the current economic setting. Chapter 2 introduces the Four Actions Framework, designed to help companies reduce and eliminate unnecessary costs while creating or increasing values in their product that will attract new customers.

Part 2 includes Chapters 3 to 6 and discusses, in order, the adequate steps to take for successful strategic planning. Chapter 3 introduces six methods to reconstruct market boundaries, a process that allows companies to evaluate the current state of the industry and avoid competing along the same lines as their rivals. Chapter 4 proposes four steps to drawing a new strategy canvas, which allows companies to think outside existing market boundaries and find new means to generate buyer value, a process called value innovation.

Chapter 5 explores how businesses can generate new demand and reach the masses by not only expanding their existing customer base but attracting buyers in adjacent industries and even noncustomers. Chapter 6, the final step in planning, asks businesses to balance buyer utility, price, cost, and ease of adoption so that their product or service is commercially viable in practice. Once all these steps have been addressed, companies can move on to the final step of blue ocean strategies, which is execution.

Part 3, which encompasses Chapters 7 to 11, explains how to successfully execute the strategy formulated in Part 2. Chapter 7 argues that blue ocean strategies are particularly difficult to implement when there are organizational hurdles, such as resistance to change or miscommunication, which prevent employees or key executives from approving of the plan. It offers solutions to overcome these hurdles because they directly influence the success of blue ocean strategies and therefore must be addressed. Chapter 8 underlines the importance of considering execution as part of strategic planning and discusses how fair process can facilitate communication at all levels of the organization so that employees become inclined to adapt to the new strategy. Chapter 9 explores how balancing value, profit, and people is crucial to a successful execution of blue ocean strategy.

Chapter 10 is a new addition in the 2015 edition of the book and addresses the topic of what to do when blue oceans turn red. Chapter 11, another new addition, lists 10 common misconceptions people have about blue ocean strategy, which are in fact traditional strategies used in red oceans that prevent explosive growth, and how to avoid them.