Glossary / Blue Ocean Strategy
Blue Ocean Strategy is a business strategy that focuses on creating new market spaces and uncontested market space, thereby making competition irrelevant. It was developed by W. Chan Kim and Renée Mauborgne and was first introduced in their book "Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant." The strategy suggests that instead of competing in existing markets with intense competition, companies should seek to create new markets or find untapped market spaces where competition is minimal or non-existent. This involves identifying and targeting new customer segments, offering unique value propositions, and creating innovative products or services. The term "blue ocean" refers to the metaphorical idea of an untapped market space, where the water is clear and uncontested. In contrast, a "red ocean" represents existing markets with fierce competition, where companies fight for market share and profitability. The key principles of Blue Ocean Strategy include: 1. Value Innovation: Creating new value for customers by offering a unique combination of factors that differentiate the company from competitors. 2. Focus on Non-Customers: Identifying and targeting non-customers who are not currently being served by existing market offerings. 3. Eliminate, Reduce, Raise, and Create (ERRC) Grid: Analyzing the factors that are currently offered in the industry and determining which factors can be eliminated, reduced, raised, or created to create a new market space. 4. Strategic Sequencing: Implementing the strategy in a systematic and sequential manner to ensure successful execution. By adopting a Blue Ocean Strategy, companies can break away from the competition, create new demand, and achieve sustainable growth and profitability. It encourages companies to think outside the box, challenge industry norms, and create their own unique market space.