Blue Ocean Strategy

December 5, 2016
Blue Ocean Strategy
W. Chan Kim and Renée Mauborgne

Book Review of Blue Ocean Strategy by W. Chan Kim and Renée Mauborgne


How does one create a Profitable company?

In the recent times, everyone is starting new businesses & companies. Also, the traditionally most crucial factor of Profitability seems to have lost its weightage. More and more technology startups are being funded and create a hype without proper fundamentals & this is eventually leading to bubble burst. They casually burn money in the name of Customer acquisition, proprietary technology and so on. This lack of profit doesn’t allow long term sustainability and also stops them from incurring expenditure on research, eventually fading out and turning obsolete. So how do companies and even non-commercial organizations keep themselves relevant & create long term impact??? Blue Ocean Strategy tackles this by decoding reasons of successful & proven companies that lasted over decades & revolutionized their industries forever.

What is the Blue Ocean Strategy?

The authors refer Blue Oceans as companies creating new market opportunities with profit potential. Whereas the ones that are constantly fighting competition, having little to no margin and running “me too” businesses are called as Red Oceans. So in order to achieve profits, one must get out of the red oceans & create a Blue ocean by exploiting an untapped market space & demand creation. This means looking across alternative industries, across strategic groups, across buyer options, complimentary products and service offerings.
eg. Netjets revolutionized the Aviation industry by offering the convenience of private jet at the cost of first and business class air travel.


How does one create Blue Ocean Strategy?

Any company has to drive Value innovation to differentiate itself from the crowd. The organizations must strategically identify the factors as crucial or non-crucial and finding gaps with respect to the current market practices. Once identified, all the non-important factors need to be removed to reduce costs and create space for new factors. Also, the critical factors may be Superior or even simplified.
eg Ford revolutionized the automobile industry with its Model T by removing all the non-essential parts and simplifying the cars.

 

Post Blue Ocean Strategy?
1.  Once a Blue ocean has been created, it must be maximized by building on powerful commonalities across non-customers minimizing scale risk.
2.Along with leap in value, one must create viable business models to maintain profitable growth. This helps in long term sustainability. 
3. Also, the Blue oceans need to be renewed at both the individual Business & corporate portfolio level.
eg. Apple has consistently renewed bringing innovative products like Mac, ipod, itunes, iphone, ipad etc despite being hugely successful. And that has created Apple into top global brand, just shows the importance of keeping on Innovating.

Overall, the Blue Ocean strategy guides and lays out a strategic plan about creating profitable long term businesses by strategically identifying crucial points in an product/ service offering and capturing an untapped Market. The book is made from research of hundreds of most successful & not so successful organization over the past century, strategically breaking down the reasons for their success or failure.
The language in the book is simple to understand and the examples highly relatable. We highly recommend this book for every business and organization owners and managers, and to everyone aspiring to be one. Here is a link if you would like to check it out.

Wrap Up

Blue Ocean Strategy

Pros

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