Blue Ocean Strategy, Expanded Edition - How to Create Uncontested Market Space and Make the Competition Irrelevant

W. Chan Kim, Renee Mauborgne

Key Facts and Insights

  1. Value Innovation: The concept of value innovation is at the heart of the Blue Ocean Strategy. It refers to the simultaneous pursuit of differentiation and low cost, creating a leap in value for both the company and its customers.
  2. Blue Ocean vs Red Ocean: The book introduces a novel way to conceptualize markets. Red Oceans represent existing market space where companies fiercely compete, while Blue Oceans denote new, uncontested market space.
  3. Four Actions Framework: This framework helps companies to create a new value curve, by asking four critical questions aimed at raising and creating value for customers, and reducing or eliminating factors that don't create value.
  4. Eliminate-Reduce-Raise-Create Grid: This strategic tool helps businesses to act on the four actions framework and to visually depict their blue ocean move.
  5. Strategy Canvas: This is a diagnostic tool that helps companies to understand their current strategic position in the marketplace and to chart their future strategy.
  6. Three Characteristics of a Good Strategy: The book outlines that a good strategy should possess focus, divergence and a compelling tagline.
  7. Overcoming Key Organizational Hurdles: The book provides practical insights on how to overcome key organizational hurdles when implementing the blue ocean strategy.
  8. Reconstruction Market Boundaries: The authors propose six paths to reconstruct market boundaries and break from competition.
  9. Noncustomer Analysis: Noncustomer analysis is introduced as a new way to explore untapped market opportunities.
  10. Sequential Process of Blue Ocean Strategy: The book provides a step-by-step process to formulate and execute the blue ocean strategy.

In-depth Summary and Analysis

"Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant" by W. Chan Kim and Renee Mauborgne is a seminal work that challenges the traditional approach to business strategy. The authors argue that companies can succeed not by battling competitors, but rather by creating ″blue oceans″ of uncontested market space.

The book begins by introducing the concept of value innovation, which is the cornerstone of blue ocean strategy. The authors argue that companies often fall into the trap of competing on incremental improvements in cost or value, whereas value innovation requires them to align innovation with utility, price, and cost positions. The goal is to make the competition irrelevant by changing the playing field of strategy.

The Red Ocean vs Blue Ocean metaphor is a compelling way to visualize the strategic landscape. Red Oceans represent all the industries in existence today, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of existing demand. Blue Oceans, on the other hand, denote all the industries not in existence today, representing untapped market space and the opportunity for highly profitable growth.

The authors introduce the Four Actions Framework and the Eliminate-Reduce-Raise-Create Grid to help companies systematically create their blue ocean strategies. The Four Actions Framework poses four key questions that challenge an industry's strategic logic and business model. The Eliminate-Reduce-Raise-Create Grid pushes companies to act on all four to create a new value curve.

The Strategy Canvas is another powerful tool presented in the book. It is a diagnostic and an action framework for building a compelling blue ocean strategy. It captures the current state of play in the known market space and allows companies to see the future in the present.

The authors also outline the three characteristics of a good strategy: focus, divergence, and a compelling tagline. They argue that a strategy should have a clear focus on the factors that matter most to the company's strategic profile, it should diverge from the competition, and it should communicate the strategy in a way that staff and stakeholders can understand and buy into.

The book further provides practical insights on how to overcome key organizational hurdles when implementing the blue ocean strategy. It recognizes the organizational realities that can hinder execution and provides a framework to overcome them.

Reconstructing Market Boundaries is another major theme of the book. The authors propose six paths to redefine the boundaries of existing markets and create blue oceans.

The book also introduces the concept of noncustomer analysis. Instead of focusing on better serving their existing customers, companies need to look at why potential customers are staying away from their market. This can reveal new insights into how to create a blue ocean strategy.

Finally, the authors present a sequential process of Blue Ocean Strategy from formulation to execution. This step-by-step approach makes the Blue Ocean Strategy an actionable framework, not just a theory.

In conclusion, the Blue Ocean Strategy offers a systematic approach to breaking out of traditional competitive strategy thinking and creating uncontested market space. It provides a set of tools and methodologies that any company can use to leave the red ocean of bloody competition and sail towards the blue ocean of uncontested market space. The book is a must-read for any business leader or strategist looking to explore new growth paths and create sustainable competitive advantage.

Henrique Paternostro
Paula Armoa

Paula Armoa CH

Transformation & Strategic Projects Lead
Javed Ahsan

Javed Ahsan IN

Director/Founder, GoBliss Asia (OPC) Pvt Ltd
Andrea Zuppicich

Andrea Zuppicich IT

Founder/HR Manager, Fracto