Blue Ocean Strategy

Red Ocean

All industries in existence today

Industry boundaries are defined and accepted
Competitive rules of the game are known
Companies try to outperform rivals to grab
greater share product or service demand
As the market gets crowded, the prospects
for future growth and profits are reduced,
products become commodities or niche and
cutthroat competition turns the ocean bloody

Blue Ocean Vs Red Ocean

Red Ocean Strategy
Compete in existing
market space
Beat the competition
Exploit existing demand
Make the value cost
tradeof
Align the whole system of
the firm activities with its
strategic choice of
diferentiation or low cost

Blue Ocean Strategy

Create uncontested
market place
Make the competition
irrelevant
Create and capture new
demand
Break the value cost trade
of
Align the whole system of
a firm activities in pursuit
of diferentiation and low
cost

Value
Innovation

Cost savings are made by eliminating

and reducing the factors an industry
competes on.

Value innovation places

equal emphasis on value
and innovation.

COSTS

Value innovation is a new

way of thinking about and
executing strategy that
results in the creation of a
blue ocean.
The creation of blue
oceans is about driving
costs down while
simultaneously driving
value up for buyers.

VALUE
INNOVATION

BUYER VALUE

Buyer value is lifted by raising and

creating elements the industry has never

Action Framework

Six principles of blue ocean strategy

1. Reconstruct market boundaries
2. Focus on the big picture, not the
numbers
3. Reach beyond existing demand
4. Get the strategic sequence right
5. Overcome key organizational
hurdles
6. Build execution into strategy

Reconstruct market boundaries

Identifies the paths by which managers can
systematically create uncontested market space
across diverse industry domains
Prompts companies to the six conventional
boundaries of competition to open up
commercially important blue oceans
Follows a six path focus - looking across
alternative industries, across strategic groups,
across buyer groups, across complementary
product and service oferings, across the
functional-emotional orientation of an industry,
and even across time.

Focus on the big picture , not the

numbers
Goes beyond incremental
improvement to create value
innovations.
Tackles planning risk
Drives managers to focus on the big
picture rather than to be submerged
in numbers and jargon.

Reach beyond existing

demand
It minimizes scale risk
Managers must challenge the
conventional practice of aiming for
finer segmentation to better meet
existing customer preferences.
Building on the powerful
commonalities across noncustomers
to maximize the size of the blue ocean
being created

Get the strategic sequence

right
To ensure that the business model they
build will be able to produce and
maintain profitable growth
The right sequence to follow is Utility,
price, cost and adoption requirements.
It helps them to address the business
model risk and the blue ocean idea
they created will be a commercially
viable one.

Overcome Key Organization Hurdles

Cognitive: waking employees up to the
need for a strategic shift
Limited resources: The greater the shift in
strategy, the greater it is assumed are the
resources needed to execute it
Motivation: motivate key players to move
fast and tenaciously to carry out a break
from the status quo
Politics: It deals with organizational risk

Build execution into

strategy
Culture of trust and commitment must be
created that motivates people to execute
agreed strategy.
People are required to step out of their
comfort zone and change how they have
worked in the past.
It deals with management risk associated
with peoples attitudes and behaviors
Fair process plays a key role in the
execution of the blue ocean strategy.