Blue Ocean Strategy

Posted by on May 8, 2011 in DOOH

The only way to beat the competition is to stop trying to beat the competition…In blue oceans, competition is irrelevant because the rules of the game are waiting to be set….Products become commodities, and cutthroat competition turns the red ocean bloody…The reality is that industries never stand still. They continuously evolve. Operations improve, markets expand, and players coma and go. history teaches us that we have a hugely underestimated capacity to create new industries and re-create existing ones. –W. Chan Kim and Renee Mauborgue

If you have not read the entire book, it is a must read. As you read through the examples over examples of blue ocean strategies in a ton of different market spaces, you begin to see other examples out in the corporate world as well. One of my favorites from the last ten years or so has been Apple. In fact, when Jobs came back to Apple he had to convince management that they were not in the war against Microsoft, but that they needed their own strategy. Ignoring Microsoft would be difficult, but it is eventually what they did. Now Microsoft is continually playing catch-up.

However, Microsoft has its own examples of a blue ocean strategy. Think of the Kinect. It represents a new breakthrough technology that has become one of the fastest selling consumer products of all time. Some might argue its simply a reaction to the Nintendo Wii–which is probably true, but its still differentiated enough to be a blue ocean in its own right. Example upon example exists out there.

One thing that is probably the most important when you speak of a blue ocean strategy is the execution. This is where the risk in the blue ocean strategy is virtually eliminated. This is where you implement the goals of your project. While you may not work it flawlessly, it is essentially that it is done in such a way that you can be successful at implementing and chartering into previously unchartered waters. Planning and preparing for such a product launch is quite possibly the best thing you could possibly do in this type of scenario.

Create something new, a new uncontested market space and you will do more than survive. You will thrive. However, blue oceans are more risky. Think about Christopher Columbus. His blue ocean could have meant his ultimate demise. However, if you believe in some type of manifest destiny (much like he did), then certainly he was probably confident–almost to a fault–of his ability to succeed. Blue oceans may be more risky, but you have to take on a bit more risk in order to have a higher return. That’s finance 101.

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