Understanding Blue Ocean Strategy
Blue Ocean Strategy is a business strategy that aims to create uncontested market space by making competition irrelevant. It is a concept that was introduced in 2005 by W. Chan Kim and Renee Mauborgne in their book, "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant." The strategy is based on the idea that companies should not compete in existing market spaces, but rather create new ones.
The concept of Blue Ocean Strategy has gained popularity over the years, and many companies have successfully implemented it to achieve growth and profitability. In this article, we will explore the key concepts and tools for implementing Blue Ocean Strategy.
Key Concepts and Tools for Implementing Blue Ocean Strategy
Value Innovation
Value innovation is the cornerstone of Blue Ocean Strategy. It is the process of creating new and unique value for customers while simultaneously reducing costs. Value innovation is achieved by identifying and eliminating the factors that customers do not value and increasing the factors that they do value. This creates a new market space that is uncontested, and the company can charge a premium price for its unique value proposition.
Four Actions Framework
The Four Actions Framework is a tool that helps companies to identify and eliminate the factors that customers do not value while increasing the factors that they do value. The framework consists of four questions that companies need to answer:
- Which factors should be eliminated that the industry has long competed on?
- Which factors should be reduced well below the industry’s standard?
- Which factors should be raised well above the industry’s standard?
- Which factors should be created that the industry has never offered?
By answering these four questions, companies can create a new market space that is uncontested.
Six Paths Framework
The Six Paths Framework is a tool that helps companies to identify new market spaces by looking at six different angles:
- Look across alternative industries
- Look across strategic groups within industries
- Look across the chain of buyers
- Look across complementary products and services
- Look across functional or emotional appeal to buyers
- Look across time
By looking at these six different angles, companies can identify new market spaces that are uncontested.
Buyer Utility Map
The Buyer Utility Map is a tool that helps companies to understand the factors that customers value and the factors that they do not value. The map consists of six stages that customers go through when they use a product or service:
- Purchase
- Delivery
- Use
- Supplements
- Maintenance
- Disposal
By understanding these six stages, companies can identify the factors that customers value and the factors that they do not value. This helps companies to create a new market space that is uncontested.
Strategy Canvas
The Strategy Canvas is a tool that helps companies to visualize their current strategy and compare it to their competitors’ strategies. The canvas consists of two axes: the horizontal axis represents the factors that customers value, and the vertical axis represents the level of investment that companies make in those factors. By comparing their strategy to their competitors’ strategies, companies can identify the factors that they need to eliminate, reduce, raise, and create to create a new market space that is uncontested.
Tipping Point Leadership
Tipping Point Leadership is a tool that helps companies to overcome the organizational hurdles that prevent them from implementing Blue Ocean Strategy. Tipping Point Leaders are individuals who have the credibility, skills, and relationships to influence others in the organization to embrace Blue Ocean Strategy. By identifying and empowering Tipping Point Leaders, companies can overcome the organizational hurdles that prevent them from implementing Blue Ocean Strategy.
In conclusion, Blue Ocean Strategy is a powerful concept that can help companies to create new market spaces that are uncontested. By using the key concepts and tools discussed in this article, companies can identify the factors that customers value and the factors that they do not value, and create a unique value proposition that allows them to charge a premium price. Blue Ocean Strategy is not only about creating new market spaces, but also about overcoming the organizational hurdles that prevent companies from implementing it. With the right leadership and mindset, any company can implement Blue Ocean Strategy and achieve growth and profitability.
