Here’s a question for all budding entrepreneurs and experienced business professionals – What if you could set up and thrive in your business without competition?
In today’s competitive environment, good ideas do not always lead to great businesses. Often they lack focus on a market niche that they can tap into uncontested. Building such a focus is the main premise behind the Blue Ocean Strategy. Blue Ocean Strategy provides a scientific approach, analytical framework, and tool to understand and enter uncongested markets.
In this blog, you will learn
What Is The Blue Ocean Strategy?
The Blue Ocean Strategy was developed by W. Chan Kim and Renée Mauborgne in 2004, in their book “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant“.
The aim of the Blue Ocean Strategy, as stated by Kim and Mauborgne in their book, is “to allow any organization to step up to the challenge of creating blue oceans in an opportunity-maximizing, risk-minimizing way”. Blue oceans, in this instance, refer to the idea that a firm should exist in a space where competition becomes irrelevant. This image is contrasted by using the term ‘red oceans’ to define markets that are heavily cluttered by firms competing with the same or similar products at different price points. This strategy aims to equip people with the tools to create their own niche, their own “blue oceans”, where they effectively unlock new demand and value innovation within new frontiers of opportunity.
There are five main principles in considering the Blue Ocean Strategy. These principles effectively drive this strategy by providing the context within which it works.
With the Blue Ocean Strategy, even when an industry has more supply than demand, smart entrepreneurs can create their own uncontested market space and can turn Red Oceans into Blue ones for their ventures.
Best Practices To Develop A Blue Ocean Strategy In Your Business
Within the Blue Ocean Strategy, there are 3 big stages each with its own separate frameworks that come together to form a larger strategy for a company. It is important to pay equal attention to each facet as innovation, preparation and careful planning are key to success within this strategy.
Stage 1: Eliminate The Trade-Off Between Low Cost And Differentiation:
Stage 2: Create A Blue Ocean Strategy
Focusing on the know-how of strategizing is important. The Blue Ocean Strategy has a clear methodology that has been created keeping in mind the successes of other groundbreaking companies, as well as years of research into the best ways of entering uncontested markets.
The main methodology for devising a Blue Ocean Strategy is this –
Stage 3: Implement The Strategy
Implementation of the Blue Ocean Strategy falls within two categories- leadership and execution focus. There are umpteen stories of fallen companies and startups. One of the most common reasons why even the most foolproof strategies fail is because of incompetent leadership. This is further exacerbated by an absence of fair processes within a business.
Four things to keep in mind when it comes to execution focus are: articulating the reason for the shift from the status quo of the industry, resource management, employee and leadership commitment, and overcoming vested interests and conflicts of interest.
Pitfalls And Things To Look Out For
As with every framework, the Blue Ocean Strategy is not perfect. It has attracted its fair share of criticism over the years. However, the value in its non-competitive business strategy is undoubtable. To get the best out of this strategy, here are certain things to keep in mind.
Case Study: iTunes
One of the most prominent examples of the Blue Ocean Strategy can be seen in the case of iTunes. When Apple came up with the idea for the iPod, there was already a glaring flaw in the design of their product – the availability of digital music. At the time, few services offered digital music at competitive prices legally, and physical music reigned supreme, with most record labels unwilling to change the status quo.
With the iPod, it became necessary for Apple to find other avenues to attain music that would then make their product viable for an audience that was, so far, happy with their Walkmans and boomboxes. And it had to do so legally, to avoid the certain possibility of litigation that would follow the launch of a product meant only to support as yet legally unavailable digital music. With that in mind, Apple came up with the idea for iTunes.
iTunes was built with a simple idea. Users should be able to download individual songs, for a fraction of the cost of a full album, right on to their iPods, and listen to their favorite music on the go.
Despite illegal and free music available due to the propagation of online downloading, iTunes broke into the market spectacularly and revolutionized the way we consume music now. It understood the issues with the existing industry i.e. buying the whole album to listen to a single track. And it garnered deals with the top labels at the time to provide individual songs for a flat fee. This was a win-win situation for Apple and record labels. Apple now had all the missing parts to make the iPod a success, and the record labels could now actually profit from digital music rather than succumbing to the inevitability of illegal downloading.
iTunes effectively created their own Blue Ocean within a highly saturated Red Ocean of music providers and has changed the music industry in ways that are still in effect, with digital sales of music bringing in far more revenue to their creators than physical music ever could.
SlideUpLift Templates For Blue Ocean Strategy
One of the easiest and most convenient ways to plan and map out your Blue Ocean Strategy is to use a template that can allow you to go through the processes and frameworks in a systematic manner. Remember, the sequence of strategizing is key to Blue Ocean Strategy’s success for your firm.
SlideUpLift has a collection of highly engaging, fully customizable, and expertly crafted Blue Ocean Strategy templates that can be the perfect guiding and working document for business professionals. These presentation templates are clear, concise, and visually creative, making them great for personal strategy, as well as communicating your plan to a larger group of people.
Source: Blue Ocean Strategy Template by SlideUpLift
Source: Red Ocean Blue Ocean Template by SlideUpLift
Source: ERRC Grid Template by SlideUpLift
Blue Ocean Strategy is a tool for new business professionals. In a competitive market, where there are too many players, both startups and conglomerates, fighting for the same market’s attention in the Red Ocean, moving beyond the rat race to find your own space (or, Blue Ocean) is essential. Understanding and implementing this strategy is a very useful tool for entrepreneurs. After all, who doesn’t want to become the market leader in their own industry?