What is blue ocean strategy?

We want to demystify innovation models such as design thinking and lean startup. So we are exploring some of the most commonly used frameworks for driving innovation in a series of posts. To start, we’re taking a look at blue ocean strategy.

Blue ocean strategy is an innovation strategy framework developed by W. Chan Kim and Renée Mauborgne in 2005. At its core, blue ocean strategy is an approach to innovation which favours creating new market space over competing in existing markets.

Where does ‘blue ocean’ come into it?

Kim and Mauborgne divide the business landscape into red oceans and blue oceans. The majority of businesses, they say, operate in red oceans – existing and often crowded market space where the focus is on beating the competition. Kim and Mauborgne argue that businesses can enjoy much greater success by creating what they refer to as blue oceans – uncontested market space which makes the competition irrelevant and captures new demand.

 

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How does a business create a blue ocean?

By simultaneously pursuing differentiation and low cost – a phenomenon Kim and Mauborgne refer to as value innovation. Low cost is obtained by eliminating or reducing the elements that an industry competes on, whilst differentiation comes from raising or creating elements the industry has never offered.

Want to find out more about blue ocean strategy?

Stay tuned for our next post where we’ll be exploring three great examples of blue ocean strategy.

This blog post is part of series designed to equip insight professionals with the tools, frameworks and terminology to make their mark on the innovation process. Want to know more? Download our whitepaper on the subject here.