The services and content provided by red ocean blue are for educational purposes only, and should not be considered investment advice in any way. Red ocean and blue ocean approach to industry boundaries. This is a very competitive tough market, while a blue ocean. Red ocean markets are large and the rate of product innovation is low. We will introduce the aspects of red ocean strategies that most of the companies use around the world, and then we will compare the advantages and. To understand red ocean strategy let us begin by defining blue ocean strategy. We owned a 14% market share with red box and 15% market share with blue box. When thinking about your strategy you need to decide whether you want to operate competing with other charities as best you can red ocean or instead to create a whole new space for yourself where the competition is. Blue ocean strategy is an increasingly popular strategy theory created by insead professors w. Chan kim and renee mauborgne, professors at insead. Let me try to explain this in simple terms for the benefit of everyone. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking. The chart above summarizes the distinct characteristics of competing in red oceans red ocean strategy versus creating a blue ocean blue ocean strategy.
The insead blue ocean strategy institute is dedicated to extending the research on blue ocean shift, blue ocean strategy, and blue ocean leadership by chan kim and renee mauborgne and disseminating it to professors, researchers and practitioners around the globe. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was. Blue ocean strategy is based on over decadelong study of more than 150. Red ocean blue is not a registered investment or trading adviser. You must keep in mind that there is a deeper potential of the marketplace that hasnt been explored yet. In their 2017 new york times bestselling book, blue ocean shift, kim and mauborgne share how to put these practical marketcreating tools into practice to move from red to blue oceans and to do so in a way that people own and drive the process. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. The goal of a blue ocean strategy is for organizations to find and develop blue oceans uncontested, growing markets and avoid red oceans overdeveloped. Just as blue ocean strategy claims that a red ocean strategy does not guarantee success, funky business. The blue ocean idea index is part of the overarching strategy and lets companies test the commercial viability of ideas. History and background a video game console is just a computer that is made only. They help us where we need helpwhich is important to a company that is our size gary v. The authors of the blue ocean concept insist that their strategy is different from porters five forces, which they reckon is all about battling the sharks in the red oceans.
It is argued that rather than a theory, blue ocean strategy is an extremely successful attempt to brand a set of already existing concepts and frameworks with a highly sticky idea. In a red ocean there is blood in the water as firms are constantly fighting and competing for market share and customers. The research focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. In short, you create a blue ocean by focusing on the factors that customers really care about, while discarding factors they dont. However red oceans do have a higher revenue impact on. Jul, 2018 these new spaces are described as blue oceans, compared to the struggle for survival in bloody red oceans swarming with vicious competition.
Chapter 1 summary this is the first chapter of blue ocean strategy. Learn about red ocean strategy and how it differs to blue ocean strategy. In this article you will learn how to make your competition irrelevant and have sales and profit growth in excess of anything you thought was even possible. An introduction to blue ocean strategy mba knowledge base.
The insight for blue ocean leadership, created by chan kim and renee mauborgne, is that leadership, in essence, can be thought of as a service that people in an organization either buy or dont buy. Chan kim and renee mauborgne in their book titled blue ocean strategy. Blue ocean strategy the blue ocean approach is a strategic tool that helps innovation strategists asses current and desired future strategic states whereasred ocean is a current state. The blue ocean that disappeared the case of nintendo wii. Blue ocean strategy provides a systematic approach to break out of the red ocean of severe competition and make the competition irrelevant by reconstructing market boundaries to create a leap in value for both the company and its buyers.
Blue ocean strategy pushes companies to create new industries and break away from the competition. Intuit created a blue ocean with its quicken financial software package by. By contrast, a blue ocean is where there is potential for more profits or an area of the market that is undiscovered. Alternatively, a market filled with competitors was likened to an ocean red with the blood of vicious competitors, hence it was called a red ocean. Most blue oceans are created from within red oceans by expanding existing industry boundaries. This strategy can be adopted to explain the significance of agile methodologies as compared to the waterfall method of software development. Red ocean blue ocean robo creating disruptive change to the way you work, what you do and who you work with. Blue ocean shift is the definitive guide to shift you, your team, and your organization to new heights of confidence, market creation, and growth. What is blue ocean strategy about blue ocean strategy. The purpose with this article is to analyze the blue ocean phenomenon in depth. While lean six sigma is great for optimizing existing processes, it can sometimes inhibit the development of new products and markets. The blue ocean strategy represents the simultaneous.
Surface 3 and apple watch red oceans v blue oceans strategy. By that we can see that there is a lot of interest by the business people and academics around the world about that subject. Blue ocean strategy is a theory, method and toolkit developed by w. Blue ocean strategy comes from the book with the same name, which used an analogy comparing competitionless business to a clear blue ocean.
Blue ocean strategy is based on over decadelong study of more than 150 strategic moves spanning more than 30 industries over 100 years. Insead blue ocean strategy offers a new perspective on strategy formulation and execution. Aug 20, 2017 adopting a blue ocean strategy, pivoting to a brandnew markets without competitors, is, for many, the holy grail of corporate strategy. This new market space is created by launching new offerings, with the aim being to make the competition irrelevant so that an organization can grow, uncontested, at least in the beginning.
See comparison between red and blue ocean strategies here in one simple table. From a profitability stand point they have more profit impact and there are far fewer blue ocean launches than red ocean. Recognized as one of the most iconic and impactful strategy books ever written, blue ocean strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Blue ocean strategy is a theory explained in a 2005 book by w. Our team in the blue ocean strategy simulation was anuket. Otherwise, every company would pursue a blue ocean. In a few cases, companies can give rise to completely new industries, as ebay did with the online auction industry.
Chan kim and renee mauborgne and outlined in their breakthrough book, blue ocean strategy. Once companies realize that blue ocean strategies have a different underlying. The concept of blue ocean strategies is new in the business world as it was first published in 2005 in the book manual blue ocean strategy, by w. Blue ocean strategy excel template six sigma software. In todays environment most firms operate under intense competition and try. Blue ocean strategy and its implications for businesses. Chan kim and renee mauborgne, develops and explains how to beat the competition by reaching beyond it into new unexplored markets. This process helps refine ideas and identify opportunities with the most potential, minimizing risk.
A instead of competing in existing industries, blue ocean strategy equips companies with frameworks and analytic tools to create their own blue ocean of. But, lets first understand what is blue ocean and how it is different from red ocean strategy. Blue ocean strategy can be applied across sectors or businesses. How to create uncontested market space and make the competition irrelevant, a book by professors w. But its not always clear how to create a blue ocean strategy for yourself. Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. Blue ocean strategy with boss business simulation stratx. The strategy was intended to fill a gap in the market. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was written by w. The blue ocean strategy gives important insights regarding how to create new market space in uncontested markets thereby making the competition irrelevant. Kim and mauborgne list some pretty compelling data as to why blue oceans should be invested in.
It presents a systematic approach to making the competition irrelevant and outlines principles and tools any organization can use to create and capture their own blue oceans. A business model describes the rationale of how an organization creates, delivers, and captures value economic, social, cultural, or other forms of. Blue ocean strategists have always existed but for most part their strategies have been largely unconscious. Making your competition irrelevant with the blue ocean strategy. Jack trout has been writing about differentiation, guerrilla nd flanking strategies for decades, i found his books to be more complete and useful. At the end of all rounds of the simulation, our company health was as follows. We have experience in using the software, and can help you with implementing it. How to create uncontested market space and the make. The fundamental premise is that most companies fight competitors headtohead in the same space, chasing the same customers with very similar products, creating a bloody red ocean in their feeding frenzy. For explaining this topic more precisely, ive created a video explaining this topic in hindi. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry. In todays environment most firms operate under intense competition and try to do everything to gain market share. We have come to think of them as red ocean traps, because they effectively anchor. The theory of blue ocean leadership blue ocean strategy.
How to find a blue ocean for your startup blog web and. Understand the advantages and disadvantages and examine examples. Instead of struggling to survive in the bloody sharkinfested red oceans of vicious competition, why not move to the blue oceans where. Here are the differences between the blue and red oceans. To start thinking outside of the box, you might want to create a blue ocean strategy.
The blue ocean strategy simulation was designed with extensive input from the authors of the bestselling book blue ocean strategy. The blue ocean strategy is a reconstructionist view of the market where no accepted boundaries or structure is present. Therefore the market is usually heavily populated by competition and there are a set of rules that is known. This blog article is a overview of some of the key points of the book by w. A red ocean strategy involves competing in industries that are currently in existence. These systems started to gain popularity in the 1970s with consoles that played only pong. With the jaws movies series in mind, we can easily visualize a bloody red ocean with aggressive sharks eating you alive. What is the blue ocean strategy the term blue ocean was coined by two professors w. The first step towards implementing blue ocean theory is finding your own blue ocean. As will become evident later, this is what cirque did. Apr 23, 2019 for explaining this topic more precisely, ive created a video explaining this topic in hindi. If all you have is a hammer, everything looks like a nail red ocean is retailer of some of the best tools in the business.
This creates a new product offering that doesnt currently exist. First published in 2005 then republished in 2015 with new information, it has become the core approach we use with our clients, many of whom are literally on the brink before getting unstuck and moving ahead in new directions. Actually there are no hard and fast rules, in my opinion most blue oceans are created by luck, experimentation or through frustration with existing industries, but there are some tools you can use if you want a more formal method. Blue ocean strategy the blue ocean approach is a strategic tool that helps innovation strategists asses current and desired future strategic states whereas red ocean is a current state. Blue ocean strategy is where a company creates a completely new market space or market category. Your course participants will truly experience the power of blue ocean strategy by applying the theory and using the methodologies and tools described in the book. Chan kim and renee mauborgne in 2005 from harvard business school. Whereas red oceans are all about battling the competition, blue oceans are all about making the competition irrelevant. The blue ocean red ocean analogy is a powerful and memorable metaphor, which is responsible for its popularity. Blue ocean vs red ocean business strategies youtube. Like the blue ocean, it is vast, deep and powerful in terms of opportunity and profitable growth. This new market space is created by launching new offerings, with the aim being to make the competition irrelevant so that an organization can grow, uncontested, at.
Blue ocean strategy is a powerful framework for finding new business opportunities. This is why it is encouraged that firms look into blue ocean innovations. How to create blue oceans using value curves arif harbott. The goal is to better understand the underlying dynamic strategies in the form of interactions between theory and management practices. This often requires overcoming an intense level of.
Blue ocean strategy theory and criticism 1246 words. In their 2017 new york times bestselling book, blue ocean shift, kim and mauborgne share how to put these practical marketcreating tools into practice to move from red to blue oceans and to do so in a way that people own and drive. The structure can be created or recreated by the steps taken by players in the market. Apr 02, 2015 comparing surface 3 and apple watch shows us the difference between a red ocean competitor and a blue ocean competitor which are you. Blue ocean vs red ocean strategies 6 major differences. Competing in red oceans dominates the current field of strategy in theory and in practice, even as businesses need to create blue ocean strategy heightens. Jul 16, 2015 in this article, we will look at 1 what is a blue ocean strategy. Consider some of the well known blue oceans created by the new york police department, southwest airlines, cirque du soleil, casella wine yellowtail, nintendo wii, cemex cement, and the body shop.
Red oceans are markets where existing companies are competing, often using pretty harsh methods thats why these oceans are red from blood. Value innovation strategy competes in an uncontested market space. Take your strategy from a grand plan to the real deal with these free strategic planning templates. As a student of business, marketing and strategy i had high expectations for this book. So the first article in the blue ocean series introduced what a blue ocean was and the theory behind it. They research for around over 20 years and sum up a theory of blue ocean. We will introduce the aspects of red ocean strategies that most of. Jul 28, 2018 blue ocean strategy provides a systematic approach to break out of the red ocean of severe competition and make the competition irrelevant by reconstructing market boundaries to create a leap in value for both the company and its buyers. The red ocean in contrast is red because ofwell blood. A blue ocean strategy is based on creating demand that is not currently in existence, rather than fighting over it with other companies. Delivered by worldclass faculty, this programme will teach you how to apply the theory created by insead professors w. Blue green red and purple ocean strategy slideshare.
It is a roadmap to move you, your team, and your organization to new heights of confidence, market creation and growth. We have been with blue ocean for 8 of the 10 years we have been using sap business one. Achieved via the delivery of features that have a highest marginal benefit to customer needs. The term red ocean is often used to refer to the strategy of competing in existing markets with a number of existing competitors. Kim and mauborgne compared this to a blue ocean where the water is clear and blue, a lovely place to go for a swim.
The book the origin of the terms red and blue oceans comes from blue ocean strategy how to create uncontested market space and make the competition irrelevant. How does blue ocean strategy differ from red ocean strategy. Red ocean strategy blue ocean strategy compete in exiting market space create uncontested market. Mar 10, 2015 back in 2008, i wrote a paper on blue ocean strategy which was published at the international conference on management. Blue oceans blue oceans refers to undefined market space, demand creation, opportunity for highly profitable growth most are created from within red oceans by expanding existing industry boundaries rules of game waiting to be set competition irrelevant blue ocean strategy is a marketcreating strategy 7. These organizations created their blue ocean and so can you. Commodity futures and options trading have large potential rewards, but. Sep 24, 2017 blue ocean strategy requires a different mindset. Blue ocean strategy including examples and pdf download. Pursuing a blue ocean strategy can be a great choice for many companies, but it is not without risks or challenges. The authors use the metaphor of the blue ocean as a direct contrast to red oceans.
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