Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant | W. Chan Kim, Renée Mauborgne | A must read!

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Blue Ocean Strateg...

	Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant W. Chan Kim, Renée Mauborgne Harvard Business School Press, 2005 - 256 pages average customer review:based on 169 reviews view larger image
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highly recommended

Great Even for Novice

What can I say that has not been said about this book? Here is a more personal appreciation.

This is the first book I've read about branding and differentiation. The author is full of common sense but the
weird thing as that this type of common sense is not so common in business. Obviously this is not a step by
step guide to building a great business. There is no such thing. What you do get is a nice framework
to position your idea and see how you compare within your extended competitive landscape. Applying this
framework to your own idea might require more intuition than you think (otherwise creating the next best thing would be too simple) but the author uses many case studies as examples of how to use the framework.
Of course, he has the benefit of hindsight but that's no reason to dismiss the ideas. Great book and fun to read.

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A must read!

Today, competition between companies is rampant and bloody, especially with the new emerging economies such as China and India. According to the authors, our industries have become overcrowded, creating a "red ocean" of rivals fighting over a shrinking profit pool. The authors argue that while most companies compete within such red oceans, this strategy is increasingly unlikely to create profitable growth in the future. The authors argue that tomorrow's leading companies will succeed not by battling competitors, but by creating "blue oceans" of uncontested market space ripe for growth. Such strategic moves, according to the authors, render rivals obsolete and unleash new demand. The authors say, "These ideas are not for those whose ambition in life is to get by or merely to survive." (ix). The ideas in this book are meant to make a difference, and to create a company that builds a future where customers, employees, shareholders, and society win. As a side note, more than one million copies of this book were sold in the first year!

The metaphor of red and blue oceans is used to describe the market universe. Red oceans are all the industries in existence today--the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence the term `red oceans'.

Blue oceans, in contrast, denote all the industries not in existence today--the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.

This book challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. Instead of dividing up existing--and often shrinking--demand and benchmarking competitors, blue ocean strategy is about growing demand and breaking away from the competition. The authors say, "No company--large or small, incumbent or new entrant--can afford to be a riverboat gambler. And no company should." (x).

One such company that broke away from the competition is `Cirque du Soleil' (French for `Circus of the Sun). This Canadian company, founded in 1984 by Guy Laliberté, has forever changed the world of Circus entertainment. Instead of competing in a declining industry, with Circus profits at an all time low due to a decline in attendance and increase in overheads, Laliberté created a whole new industry in circus entertainment. The focus was no longer on animal shows, which were expensive to perform and were opposed by Animal Rights movements, but on spectacular audiovisual performances from artists from around the world. You'll have to attend a show to real know what `Cirque du Soleil' is all about. Each show is a synthesis of circus styles from around the world and has its own central theme and storyline which brings the audience into the performance by having no curtains and continuous live music.

Throughout the 1990s and 2000s Cirque expanded rapidly and went from one show with 73 employees in 1984 to currently 3,500 employees from over 40 countries. `Cirque du Soleil' tours every continent and has an estimated annual revenue exceeding US$600 million. The multiple permanent Las Vegas shows alone play to more than 9,000 people a night--5% of the city's visitors--adding to the 70+ million people who have experienced `Cirque du Soleil.'

Laliberté succeeded in breaking away from the competition and creating a new demand: stunning and magical performances with a storyline from cultures spanning the globe! A visit to 'Cirque' is a journey through time and space.

`Cirque du Soleil' is just one example (and the first) the authors cite. Their research is based on more than fifteen years of research on 150 strategic moves by companies in thirty industries and spanning more than a hundred years. The authors also published a series of `Harvard Business Review' articles. Their research led them to create strategies to making the competition irrelevant.

In this book, you will be introduced to the six principles that every company can use to successfully formulate and execute blue oceans. You will learn how to reconstruct market boundaries, focus on the big picture, reach beyond existing demand, get the strategic sequence right, overcome organizational hurdles, and build execution into strategy. Basically, these strategies will chart "a bold new path to winning the future."

The authors say that there are no permanently excellent companies, just as there are no permanently excellent industries. A perfect example is Polaroid. A giant once; gone today. The industry itself has changed and evolved, with the advent of digital photography. The companies that created a new demand in this industry are the ones that survived.

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Easy to read, easy to understand

I will not say this book is the defininate guide to success but does provide a new way of looking at the market, in particular an alternative look on the market.

By not only focussing on cost reduction, but more on getting more people interested in your product, this book gives some eye openers.

Even if it's not practical for you, the book is easy and entertaining to read and therefore no waste of time.

Value Innovate - Don't Be A Commodity!

This book provides 'out of the box' thinking for any executives struggling with competition and being perceived as a 'commodity' in their marketplace. Innovating your value and differentiating yourself to the portion of the market that the masses of competitors are not servicing is one path to success. The examples of Cirque du Soleil, Yellow Tail Wines and NetJets shows how creative strategy can move you out of the 'Red Ocean' (competitive blood bath) and into the 'Blue Ocean' (new market realm) to ultimately make the competition irrelevant.

I highly recommend this book to my clients that feel like they are stuck in a 'commodity play'. Value Innovate. Don't be a commodity!

Kevin A. McCann
President & CEO
Executive Strategy Group, LLC
http://www.executivestrategygroup.com

"Value Defined, Value Delivered" (tm)

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