Ever wondered how certain businesses manage to thrive in highly competitive markets, while others struggle to keep up? The secret might just lie in their strategy, specifically, their use of the Blue Ocean Strategy. If you're an entrepreneur seeking to gain a competitive edge, this guide is for you.
What is Blue Ocean Strategy?
Coined by Professors W. Chan Kim and Renée Mauborgne in their seminal book, 'Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant', the Blue Ocean Strategy refers to the pursuit of value innovation that creates a new, uncontested market space rather than competing in an existing one. It's about creating and capturing new demand, as well as focusing on differentiation and low cost.
Blue Ocean Strategy vs Red Ocean Strategy
To fully understand the Blue Ocean Strategy, let's contrast it with its counterpart, the Red Ocean Strategy.
Implementing Blue Ocean Strategy
Implementing this strategy is a systematic process. The book introduces several analytical tools and frameworks, including the Four Actions Framework and the Eliminate-Reduce-Raise-Create Grid (ERRC Grid).
-
Four Actions Framework: This involves questioning the strategic logic and business models of the industry. The four actions are: eliminate, reduce, raise, and create.
-
ERRC Grid: It pushes companies to act on all four to create a new value curve.
Case Studies of Blue Ocean Strategy
Many businesses have successfully implemented this strategy. For instance, Cirque du Soleil reinvented the circus industry by creating a new form of entertainment. Similarly, Tesla Motors has made a name for itself in the automobile industry by focusing on electric vehicles, thus creating a new market space.
Advantages of Blue Ocean Strategy
The key advantage of this strategy is the opportunity to move away from the fierce competition in existing markets (red oceans) and create your own market space. This can lead to rapid growth and high profits.
Challenges in Implementing Blue Ocean Strategy
While there are numerous benefits to adopting a Blue Ocean Strategy, it's worth noting that there are challenges as well, particularly for startups. These include risk-taking, the need for innovative thinking, and strong leadership.
The Blue Ocean Strategy offers a unique approach to strategy formulation and execution in the entrepreneurial world. For startups willing to take risks and innovate, it could be the key to securing an uncontested market space and achieving business growth.
