Blue Ocean Strategies
The majority of businesses, whether start-ups or those already established but trying to develop and grow, begin by surveying the competition. Possible strategies for gaining a competitive advantage are explored, which can include, price, value product, differentiation, carving a niche market for themselves, etc. In their best-selling book, Blue Ocean Strategy, authors, W. Chan Kim and Rene Mauborgne, describe these strategies as Red Ocean Strategies, where companies are fighting fiercely against countless competitors. They liken it to cut-throat competition with the term Red Ocean being used to metaphorically convey the idea of a blood-red ocean.
However, they say that there is a more profitable strategy for growth and that is to adopt a Blue Ocean Strategy (BOS) one where the competition is made irrelevant.
BOS is about shifting away from the constraints of competing in these overcrowded red oceans to the creation of blue oceans which are clear, uncluttered and free of competition. BOS creates new demand which taps into a world of previously non-customers, therefore making the way clear to creating growth and profitability rendering the competition impotent.
Cirque du soleil is one example given of a company that, on seeing the fall for demand of traditional circuses, combined elements of theatre and circus, and moved into an uncontested market. The company secured new customers and success without having to use the red ocean strategies of competitors. Cirque du soleil had in fact discarded everything no longer considered necessary for the success of the company, e.g. animal housing, care and transportation, effectively reducing costs and increasing demand and there was no competition which made them pioneers of the industry. The companys creativity and innovation rendered potential competition ineffective.
Another example is that of Curves. Rather than compete with corporate health and fitness centres which meant high costs being passed on to customers, or competing with low value home exercise utilities, Curves created new demand and made the competition immaterial.Smaller and friendlier, women-only, gyms were created with low costs which in turned to high demand.
In both these instances, the companies pursued blue ocean strategies and achieved great success without entering into the red oceans of competitors.They each created their own markets and limited the possibilities of imitation. They sailed beyond the competition, beyond the red oceans, thereby making competition irrelevant. They moved into the uncontested space of the blue oceans and offered high value at low cost, thereby securing future growth and profitability.
However, they say that there is a more profitable strategy for growth and that is to adopt a Blue Ocean Strategy (BOS) one where the competition is made irrelevant.
BOS is about shifting away from the constraints of competing in these overcrowded red oceans to the creation of blue oceans which are clear, uncluttered and free of competition. BOS creates new demand which taps into a world of previously non-customers, therefore making the way clear to creating growth and profitability rendering the competition impotent.
Cirque du soleil is one example given of a company that, on seeing the fall for demand of traditional circuses, combined elements of theatre and circus, and moved into an uncontested market. The company secured new customers and success without having to use the red ocean strategies of competitors. Cirque du soleil had in fact discarded everything no longer considered necessary for the success of the company, e.g. animal housing, care and transportation, effectively reducing costs and increasing demand and there was no competition which made them pioneers of the industry. The companys creativity and innovation rendered potential competition ineffective.
Another example is that of Curves. Rather than compete with corporate health and fitness centres which meant high costs being passed on to customers, or competing with low value home exercise utilities, Curves created new demand and made the competition immaterial.Smaller and friendlier, women-only, gyms were created with low costs which in turned to high demand.
In both these instances, the companies pursued blue ocean strategies and achieved great success without entering into the red oceans of competitors.They each created their own markets and limited the possibilities of imitation. They sailed beyond the competition, beyond the red oceans, thereby making competition irrelevant. They moved into the uncontested space of the blue oceans and offered high value at low cost, thereby securing future growth and profitability.