Series #3: Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant
By W. Chan Kim and Renée Mauborgne
Do you remember Marketing 101? In it, we learned the four pillars of marketing — product, price, placement and promotion. However, with burgeoning social media, the pandemic, and now ChatGPT, we often focus on merely the promotion pillar. We want to get the word out and want to gain market share or influencer attention.
In their book, Blue Ocean Strategy, the authors don’t directly reference the pillars, but as I was reading, I was reminded of how important it is to go back to basics sometimes. The book’s message, written in 2005, still rings true.
Traditional Marketing’s “Bloody Ocean”
We live in a global economy. Competition comes from everywhere. We find ourselves competing for the same clients and customers in ever-tightening segments of our markets. We struggle for differentiation. We find ourselves cutting costs to match increased commoditization of our offerings. The authors coin this phenomenon as “competing in the red, bloody ocean.”
Instead, we are given a picture of a clear, blue ocean with sunny skies and beautiful temperatures. We don’t have to battle competitors. We can create our own spaces in which we do what we do best and dominate with little competition. It sounds like a dream. We would love to do this!
The Marketing Secret of Successful Companies
Authors Kim and Mauborgne studied 150 successful companies in 30 industries operating in a period more than 100 years. They learned:
“There are no permanently excellent companies, just as there are no permanently excellent industries. As we have found on our own tumbling road, we all, like corporations, do smart things and less-than-smart things. To improve our quality of success we need to study what we did that made a positive difference and understand how to replicate it systematically. That is what we call making smart strategic moves, and we have found that the strategic move that matters centrally is to create blue oceans”. 1
These successful companies followed a consistent method of creating uncontested market space with bold strategic moves that the authors called “value innovations.” The results were powerful leaps in value that were created for the bottom lines of both the firms and their buyers. Rivals were made obsolete and new demand was unleashed.
However, in most businesses today the focus is trained on a competition-based, red ocean strategy. We talk about executive officers, headquarters, troops, front lines, and gaining territory. The authors believe that this mindset had its roots in military strategy, from confronting an opponent and fighting over a fixed piece of land.
A Marketing Success Case Study: Cirque du Soleil
The case of Cirque du Soleil is one of many examples given of the way things can be handled differently. The value innovation that Cirque du Soleil implemented was to take elements of both the circus world and of live performance theater and combine them to create a unique offering. They reached a whole new “blue ocean” of customers, including theater patrons, parents interested in getting the kids away from video games, movie goers, and those interested in an enjoyable evening out on the town. Cirque du Soleil cut expenses from their bottom line by eliminating animal acts and star performers, which are the most costly items to maintain. They added value for customers by introducing multiple productions with different story lines, intellectual richness, artistic music and dance, outrageous costumes, and magical lighting. They upgraded from the hard benches and rough, outdoor circus tent environments to elegant theater venues with comfortable seating and beautiful interior designs. Since the early 1980s, the company has grown into the internationally renowned entity it is today.
Minimizing Risk, Maximizing New Marketing Opportunities
The authors also give analytical tools to use to take a new view of our own industry, product, and competitors. Like those 150 successful companies, we can look to see what factors to eliminate and which new ones to add. We can look at how to minimize risk, while seeking new opportunities. In using these tools, we can get a fresh look and ideas for new directions to take.
The book gives practical guidance and action steps to follow gleaned from the 150 successful companies. Four principles are outlined:
- Reconstruct Market Boundaries. The authors outline six basic approaches that require looking at familiar data with new perspectives.
- Focus on the Big Picture, Not the Numbers. Most strategic plans describe current market conditions and competitors, with budgets, projections, and goals to gain market share. Often strategies are muddled and conflicting. Instead, they suggest creating a “strategy canvas” that gives us focus, differentiation, and a tagline.
- Reach Beyond Existing Demand. In addition to considering existing customers, they also look at the “ three tiers of noncustomers”. These Are those soon-to-be-customers, those customers refusing our offering, and customer bases we never explored.
- Get the Strategic Sequence Right. We are given a sequence to follow which the authors call buyer utility, price, cost, and adoption. If we analyze these in order, we can get a clear picture of whether to pursue our new direction.
The challenge, then, is to overcome resistance in our own organizations. People are comfortable in their own “we have always done it this way” thinking. The authors discuss methods that can be followed to present the idea to management, coworkers, staff, and investors so they can accept the new directions. We can get ideas of how to implement the changes successfully and impactfully.
Blue Ocean Strategy gave me a whole new look at business. It is refreshing to be given examples of success stories of companies that made value creation strategy work. It’s useful to be given concrete methodologies and action steps to take. I recommend this book as an inspiring read that will put you in action to find your own “blue ocean.”
Kim, W. and Mauborgne, Renée ( 2005 ) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (p. 2). Harvard Business School Publishing Corporation.
Interested in exploring more from these authors?
In 2017, authors W. Chan Kim and Renée Mauborgne published a second book, Blue Ocean Shift: Beyond Competing — Proven Steps to Inspire Confidence and Seize New Growth.
Summary: Blue Ocean Shift is packed with all-new research and examples of how leaders in diverse industries and organizations made the shift and created new markets by applying the process and tools outlined in the book. Whether you are a cash-strapped startup or a large, established company, nonprofit or national government, you will learn how to move from red to blue oceans in a way that builds your people’s confidence so that they own and drive the process.
Their third book, Beyond Competition: Innovate and Achieve Growth Without Displacing Industries, Companies, or Jobs was just released this month (May 2023).
Summary: Kim and Mauborgne reveal the distinct advantages of nondisruptive creation to business and society, showing how this new approach to innovation allows companies to grow while also being a force for good. A practical guide for driving innovation and growth, the rich research behind the book, coupled with its frame-breaking message, make it the must-read book for the next generation of innovators.
Want to expand your marketing knowledge even farther? Check out other books in our “What We’re Reading Series,” such as The New Chameleons: How to Connect with Consumers Who Defy Categorization!