Blue Ocean Strategy is deep-rooted in value innovation. It challenges businesses into taping uncharted waters of new market space, instead of contesting in traditional, ‘Red Ocean’ spaces. Blue Ocean Strategy represents the simultaneous pursuit of high product differentiation and low cost, thereby making the competition irrelevant. ‘Red Ocean Strategy’ on the other hand, presents a more controlled view of the market where all parties assent to predefined structures within an industry and continue to dabble in deep, cut-throat competition within these boundaries.he essence of
“Imagine creating your own market space, and instead of competing with others in your industry you are setting your own pace, creating unique products and profiting from lucrative new untapped markets” – Michael Yacoub
The Need for Blue Ocean Strategy
Nowadays, businesses face a maze of extremely unique challenges of disruptive nature. Yields have shifted due to technological impact across all industries. This means that niche markets with higher value are now becoming unreachable and if attained they are unsustainable. With all these challenges, profit margins are decreasing and businesses are stuck with competing violently and conversion on saturated markets instead of endeavoring to create new spaces.
Value Innovation Reinventing Global Industries
Blue Ocean Strategy allows businesses to create more value for their clients through innovation. It helps organizations shift from competing on either differentiation or low cost to adding value through the simultaneous pursuit of differentiation and low cost combined. This leads to wealth creation, higher profits and makes competition irrelevant. With its arsenal of tools, frameworks and tactics, businesses are able to rise above the competition and reinvent its mechanisms.
For example, the ‘Four Actions Framework’, an important Blue Ocean strategy tool, poses important questions and further shows leaders how to align value, profit and people to a new strategy. This creates a win-win situation for both, the company and its customers. The questions Blue Ocean Strategy presents are –
- What factors should be raised to improve the overall standards?
- What factors are pulling the business down and are already offered by competitors and therefore should be eliminated?
- Which factors should be reduced below the industry standards?
- What can we create that has never been offered before?
These 4 questions of Raise, Eliminate, Reduce and Create allow companies to analyze alternative industries, the strategic groups that exist within these industries, the classification of a new chain of non-customers and also complementary products or services that could alternatively be offered. Therefore, organisations as well as SME’s are better off executing Blue Ocean Strategy’s Value Innovation tactics than engaging in a traditional bloody and unhealthy competition.
Apple, yellow-tail wine and Cirque du Soleil are often cited as the perfect examples of the companies that have demonstrated the effective implementation of Blue Ocean move by breaking the existing ‘Red Ocean’, differentiation-low cost trade-off.
“Organisations as well as SME’s are better off executing Blue Ocean Strategy’s Value I
nnovation tactics than engaging in a traditional bloody and unhealthy competition” – Michael Yacoub
‘Value innovation’ has always been the cornerstone of Blue Ocean Strategy and transpires only when companies execute innovation with differentiation and low cost. If they fail to anchor innovation with value, then these businesses are in fact sowing the seeds for other companies to reap. If they are successful in realise it however, they will be creating new markets and markets and new demand. The bottom line is; Blue Ocean Strategy provides a robust mechanism to mitigate risks with new innovative ideas that will make companies stand out from the me-too-isms of ‘red ocean’ companies. Blue Ocean Strategy has revolutionized industries by inducting an ocean of possibilities and a whole new value curve that can ensure scalable and sustainable success with long standing profitability for businesses.
About the Author: Michael Yacoub is the Founder & CEO of Advantex360, Blue Ocean Strategy Consulting and author of a several best-selling books & publications. With over 25 years in business and leadership development, Michael is an accredited Blue Ocean Strategy consultant, international public speaker, and winner of Telstra Business and ASX Enterprise Market Awards.