One of the biggest challenges facing organisations today is the task of standing out from the crowd; how can they be different – and successful?

 

Most organisations compete in what are often termed “red oceans”, the analogy being that as they fight to maintain their share of a defined market space, everyone suffers and has to make painful decisions. Hence the ocean is, metaphorically, covered in blood.

The concept of Blue Ocean Strategy as a methodology was developed by Chan Kim and Renée Mauborgne at INSEAD and is the result of 15 years of research. What Kim and Mauborgne did was seek out and learn from what was common to organisations who had successfully redefined their markets and enjoyed the very significant advantages that come from such an approach. Their objective was to work out how such results could be replicated or achieved in a systematic manner.

Red Ocean Blue Ocean
Compete in existing market space Create new market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create new demand
Strategy is low cost OR high value Strategy is low cost AND high value

In the “blue ocean” , companies redefine their markets, creating a space where, for a period of time at least, they can make their competitors irrelevant.

The product or service stands out from the crowd because it satisfies often unperceived needs that no-one else addresses. It will frequently compete based on different factors and even where the factors are common, the offering is still different enough to stand out.

Often discussed in parallel is the concept of value innovation. “Value Innovation” is the identification and implementation of strategic change that delivers real competitive advantage, by simultaneously seeking out reductions in cost and increases in customer value. One of the main challenges put forward against such an aspiration is that you can do one or the other but not both.

Experience shows however that you can do both and that when you do, you will operate in a market space that you control; where the competition will struggle to participate, at least in the short to medium term.

Over the next month or two we will post here a series of articles that will cover some of the concepts and tools, based on what we view as the four key stages of the process:

  1. Current State Analysis;
  2. Awakening;
  3. Exploration; and
  4. Reconstruction.