Blue Ocean Strategy: Make Competition Irrelevant
Instead of fighting rivals in a crowded market ("red ocean"), Blue Ocean Strategy creates new, uncontested space ("blue ocean") that makes competition irrelevant. It applies when you pursue both differentiation and low cost.
WHY IT EXISTS: Most business strategy focuses on competing within existing industry boundaries. This leads to crowded markets, commoditization, and shrinking profit margins—a 'red ocean' of bloody competition. Blue Ocean Strategy was developed to offer a systematic way to escape this trap.
THE MENTAL MODEL: Stop trying to beat the competition. Instead, make them irrelevant. You do this by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space. The analogy is moving from a red ocean, crowded with sharks fighting over the same fish, to a clear blue ocean with no predators and abundant food.
HOW IT WORKS: The core is 'value innovation,' the simultaneous pursuit of differentiation and low cost. This is achieved by using the Four Actions Framework to reconstruct buyer value elements. First, ELIMINATE factors the industry takes for granted. Second, REDUCE factors well below the industry standard. Third, RAISE factors well above the industry standard. Fourth, CREATE factors the industry has never offered. This combination allows a company to offer a completely new value curve.
WHEN TO USE IT: Use this strategy when your market is saturated, growth is stagnating, and competition is based primarily on price or incremental feature improvements. It's powerful for established companies looking for new growth avenues or for startups aiming to disrupt an entire industry rather than just capture a small piece of it.
WHEN NOT TO USE IT: Blue Ocean Strategy is not a good fit for industries where regulations heavily constrain market boundaries or where network effects are so powerful that displacing the incumbent is nearly impossible without playing by their rules first. It also requires significant organizational commitment and can be riskier than competing in an established market with known rules.
ONE CANONICAL EXAMPLE: Cirque du Soleil is the classic case. Instead of competing with traditional circuses, it created a new market. It ELIMINATED expensive animal acts and star performers. It REDUCED the emphasis on traditional clowning. It RAISED the production value with unique venues and artistic choreography. And it CREATED themes, storylines, and a refined theatrical experience, attracting a new audience of adults willing to pay a premium price for a sophisticated show.
Read the original → en.wikipedia.org
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