Blue ocean strategy displays an orderly way to deal with making the challenge unessential and traces standards and instruments any organization can use to make and catch their blue seas. The value innovation is a new and different way of thinking about and executing the strategy that results into the creation of a blue ocean and a come away from the competition. Blue ocean strategy is when an organization breaks away from the conventional approach to facilitate the creation of new uncontested market space thereby making competition irrelevant. If a company can identify what consumers currently value and then rethink how to provide that value, differentiation and low cost can both be achieved. Core competences are important for the performance and success of the company goddard, 1997. The cornerstone of blue ocean strategy what consistently. Pdf blue ocean strategy how to create uncontested market. Many companies take their industrys conditions as given. Making the internal process company ipf bos in order to optimize the implementation of blue ocean strategy, making the value of the company and the products to be better in the consumers. Blue ocean strategy is a book published in 2005 and written by w.
Value without innovation tends to focus on value creation on creating blue. Blue ocean strategy is a method of creating business strategy of the enterprise, which was described in a book by w. How to create uncontested market space and make the competition irrelevant pdf by w. How cirque du soleil broke out of the circus market and created its own. Blue ocean strategy for creating value of the organization examination of. Using bos to create new market space in sustainability. The strategy canvas provides a highly visual tool to help look at future options. Social sector application and research, including such topics as how blue ocean strategy can be applied in the developing world to mitigate poverty and improve education and health. Each industry underwent continuous upheaval, each time spurred by a blue ocean strategy that 1 reduced factors unimportant to buyers, 2 increased factors important to buyers, 3 expanded the market. Blue oceans strategy is the approach that suggests a company is better off searching for ways to play in uncontested market places instead of engaging with competition in existing marketing spaces. To integrate the concepts of strategy, business model, and tactics, we introduce the generic twostage competitive process framework depicted in figure 1. When expressed through a value curve, an effective blue ocean strategy has three complementary qualities. Blue ocean strategy how to create uncontested market space.
In this article you will learn how to make your competition irrelevant and have sales and profit. It is the idea of trying to find market spaces that are free of competitors by creating and caputuring new demand. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking away from the. While the book is aimed primarily at large, traditional businesses, our book club members managed to scale some of the advice to fit our needs. Chan kim and renee mauborgne, professors at insead.
The successful creation of a blue ocean can create brand equity which could last for years or even decades. Blue ocean strategy and sustainability for strategic management. How to create uncontested market space and make the. Although some blue oceans are created well beyond existing industry. How to create uncontested market space and make the competition irrelevant, a book by professors w. In this way, it swam into a blue ocean, offering a plastic watch at a price that allowed people to purchase two or three watches at one time. This is where the concept of value innovation is placed as the cornerstone of this strategy, and the six principles of blue ocean strategy are introduced, the latter. Rather than concentrating on beating the competitors, the company must actually prioritize on making the competition irrelevant. In this article you will learn how to make your competition irrelevant and have sales and profit growth in excess of anything you thought was even possible. The blue ocean strategy as a method for developing sustainable profitable frameworks implies the fundamental idea of developing new innovational markets with a majority of new customers. Because value to buyers comes from the offerings utility minus. Conventional strategic logic and value innovation differ along the basic dimensions of strategy.
You may or may not agree with the central philosophy, but you will be inspired. Chan kim and renee mauborgne and is the cornerstone of marketcreating strategy. It is being published in a recordbreaking 44 languages and is a bestseller across five. It is generally believed that firms or companies can either create intensified value to customers at a comparatively higher cost or can create reasonable value at a. Study 31 terms blue ocean strategy flashcards quizlet. Chan kim and renee mauborgne, professors at insead and codirectors of the insead blue ocean strategy institute. Chan kim and renee mauborgne in the indie business book club. Sep 26, 2016 the strategy canvas provides a highly visual tool to help look at future options. While this came in appendix a in the book, this is a good time to cover three industries with repeated blue ocean creation. Value innovation strategy competes in an uncontested market space. This can be done by creating more value for buyers enabling the company to open up a whole new uncontested market space, the blue ocean. Value innovation is the new way of thinking about, and executing, strategy that results in the creation of a blue ocean and a break from the competition. The blue ocean strategy argues that consumers dont have to choose between value and affordability. Blue ocean strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture their own blue oceans.
Achieved via the delivery of features that have a highest marginal benefit to customer needs. The blue line imperative is compelling, fun and provocative. Netflix created uncontested marketing space by selling tv shows over the internet which no one else was currently doing. In contrast, blue ocean strategy seeks to break the valuecost tradeoff by eliminating and reducing factors an industry competes on and raising and creating factors the. Competitive forces different business units face different structural conditions with different resources, capabilities and different strategic mind. Blue ocean strategy including examples and pdf download. Blue ocean strategy proposes that businesses can have more success by creating a blue ocean, rather than trying to compete in the red ocean.
Chan kim and renee mauborgne are professors of strategy at insead and codirectors of the insead blue ocean strategy institute. Instead of dividing up existingand often shrinkingdemand and benchmarking competitors, blue ocean strategy is about growing demand and breaking. This framework addresses not only the analytic aspects behind the creation of blue ocean strategy but also the allimportant human aspects of how to bring an organization and its people on this journey with a willingness to execute these ideas in. Blue ocean strategy and sustainability for strategic. Value innovation is the simultaneous pursuit of differentiation and low cost, creating a leap in value for both buyers and the company. The authors use the term blue ocean strategy to refer to the new management approach they are selling in their book. Blue ocean strategy is a marketing theory and the title of a book published in 2004 that was written by w. How to create uncontested market space and make competition irrelevant, is a market space that is undeveloped, and untapped by competitors. Chan kim and renee mauborgne in their bestselling book of the same name.
Pdf blue ocean strategy for creating value of the organization. This book provides practical frameworks and analytics for the systematic pursuit and. Sep 24, 2017 in 2005, blue ocean strategy, expanded edition. Pdf for creating new demands and open up a new market space the pursuit of differentiation. A third tool, the eliminatereduceraisecreate grid, pushes firms to act on all four questions posed by the four actions framework and to create a new value curve. The blue ocean strategy approach to strategy is based on six principles that cater for the major risks of a new market creation project. Blue ocean strategy proposes that businesses can have more success by creating a blue ocean, rather than trying to compete in the red ocean the traditional market space that is filled. A landmark work that upends traditional thinking about strategy, this bestselling business book charts a bold new path to winning the future. Sep 22, 2016 value creation matrix blue ocean strategy red ocean strategy improvement innovation new users existing users 05 when creating value for existing customers, users, or stakeholders, organizations will often be using the same best practices as the competition. Using a value creation compass to discover blue oceans article pdf available in strategy and leadership 372. The insead blue ocean strategy institute is dedicated to extending the research on blue ocean shift, blue ocean strategy, and blue ocean leadership by chan kim and renee mauborgne and disseminating it to professors, researchers and practitioners around the globe. Sep 03, 20 the blue line imperative is compelling, fun and provocative. How blue ocean strategies create more customer value and cut costs at the same time. Value creation matrix blue ocean strategy red ocean strategy improvement innovation new users existing users 05 when creating value for existing customers, users, or stakeholders, organizations will often be using the same best practices as the competition.
How to create uncontested market space and make the competition irrelevant from the worlds largest community of rea. Blue ocean strategy is based on the idea that every enterprise can achieve higher profit by creating new demand in noncompetitive market so called blue ocean. Public sector application and research, including the application of blue ocean shift, blue ocean strategy, and blue ocean leadership to governments and nonprofits. The research focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean. The blue ocean strategy is presumably based on the use of value innovations. Pdf harvard business school press blue ocean strategy. The cornerstone of the blue ocean strategy is value innovation. They are the authors of blue ocean strategy, which has sold over 3. In this article, the concept of value innovation, the cornerstone of blue ocean strategy, is analysed using the example of tefal actifry, a new type of french fry maker that used only one teaspoon of oil to make two pounds of fries, with roughly 40% fewer calories and 80% less fat. Importantly, value innovation defies one of the most commonly accepted dogmas of competitionbased strategy. Todays business leaders need to monitor the sources of their companys value and understand the trends and changes that affect it. May 30, 2017 it reduced costs by using plastic instead of metal, for example, and reducing the parts in each watch from 150 to 50. In the second stage, firms make tactical choices guided by their goals in.
Jul, 2018 for struggling businesses, mauborgne recommended the strategy canvas, which is featured in her and kims newest book, blue ocean shift. Pdf using a value creation compass to discover blue oceans. Blue ocean strategy case study service nsw 3 1 introduction blue ocean strategy1 has been used extensively to transform the public sector around the world at a local, state and national level. Throughout the book they use the metaphor of red and blue oceans red oceans. In blue oceans, demand is created rather than fought over. The premise of the book is that companies can succeed by creating. Value innovation is the cornerstone of blue ocean strategy.
There can be a very highprofit margin in new markets. Chan kim, bestselling author of blue ocean strategy, the bcg chair professor of insead and the codirector of the insead blue ocean strategy institute. Companies can create new market space by zeroing in on the complements that detract from the value of their own product or service. Blue ocean strategy can be found on amazon blue ocean strategy. Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant. The blue ocean strategy seems to be a perfect solution for present companies to become sustainable successful. Blue ocean strategy generally refers to the creation by a company of a new, uncontested market space that makes competitors irrelevant and that creates new consumer value often while decreasing costs.
This blog article is a overview of some of the key points of the book by w. All in all, blue ocean strategy is a book worth reading. Blue ocean strategy is based on over decadelong study of more than 150 strategic moves spanning more than 30 industries over 100 years. To join the free indie business book club, click here. The database and research have continued to expand. Most prominently, since 2009 the malaysian government has implemented a national blue ocean strategy to lift the living standard of the country and to. Actions framework to reconstruct buyer value elements in crafting a new value curve. The profit is much easier than the rivalry with the competition on existing markets. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. In the first stage, firms choose a logic of value creation and value capture choose their business model. Reviewing the blue ocean strategy universiteit twente. To create a blue ocean strategy, organizations must be committed to value innovation. Because value to buyers comes from the offerings utility minus its price.
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