Blue Ocean Strategy: Finding the Way to Your Future Clients

Business growth in today’s global economy is arguably the biggest challenge facing companies. This goes from seedling startups to behemoth enterprise brands. Entrepreneurs and C-suite executives struggle to steer their products and services to success in this fast-paced environment that produces brilliant innovation one week, and copycat commodities the next. How can companies grow in the midst of such fierce competition? Fortunately, there’s an adjustable solution that can work in any industry: the Blue Ocean Strategy (BOS).

After defining the term, we’ll look at who uses it, see how it helps businesses grow, and cover some practical tips for success.

blue ocean strategy

What Is the Blue Ocean Strategy?

In 2005, authors W. Chan Kim and Renee Mauborgne published a groundbreaking, international best-seller that provided a fresh approach to business growth: Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Based on a 10-year study covering 30 industries, the book describes a shift away from growth strategies that rely on battling with competitors in bloody red oceans to increase market share. Instead, the BOS provides companies with frameworks to increase demand by opening new markets—blue oceans—where there is no competition.

As Professors and Co-Directors of the INSEAD Blue Ocean Strategy Institute, Kim and Marchaund continue their research and theory development, and have expanded their case studies into the non-profit industries.

Who Uses the Blue Ocean Strategy?

The BOS is flexible and scalable. So users range from startup founders to enterprise-level C-suite teams to government heads-of-state. It can work for any company seeking growth in an overcrowded market. The owners, founders, or executive team develop their strategy, and managers execute it.

Tim Ferris, author of The 4-Hour Work Week, describes why entrepreneurs need to open fresh markets in this Huffington Post article.

 If you’re aiming to differentiate your company, particularly if you’re in a crowded space, you can’t just stand to be cheapest as a small company. If you do become a threat, big companies can very easily put you out of business by lowering their prices for a period of time just to bleed you dry.

Ways in Which the Blue Ocean Strategy Can Help Your Business

Developing a unique BOS is a complex process. But options for support are wide-ranging—from using the analytical tools and frameworks described in the book, to doing advanced degree coursework offered by the Institute, to working with professionally trained consultants. Choice will depend on available time and resources.

HubSpot—a cloud-based, integrated marketing platform serving VSBs (very small businesses)—is a good example of how a startup can stimulate growth by generating new demand. Rather than compete in the crowded red ocean customer record management market space, co-founder Brian Halligan describes how the company used BOS to define a new market.

I used their framework/4-questions to create a draft of how we think about the Customer Managed Relationships (as opposed to CRM) marketplace.

Cirque du Soleil is a classic BOS success story. Rising from the dying circus industry, it transformed itself into a world-class live entertainment event. By eliminating animals and creating unique choreography and set design. It reinvented the circus.

5 Tips for the Success of Your Blue Ocean Strategy

Since the BOS appeared on the business scene in 2004, Professors Kim and Mauborgne continue to review it through ongoing interviews with executives and managers. Here are six updated insights to avoid the red ocean traps.

1. Focus on Finding New Customers to Create New Markets

Resist spending more resources on finding ways to make current customers happier. Sony refined its e-reader technology. But Amazon developed its massive library of Kindle books.

2. Create New Demand

You can do this by looking horizontally across buyer groups for common factors. Avoid segmenting existing markets into niches that are too narrow to be profitable. Successful British food vendor, Pret A Manger, combined demands from three lunch buying segments. These were fast foods, restaurant patrons, and brown-baggers.

The company did this to develop shops that make fast, affordable, high-end sandwiches. They deliver on the impossible trio of speed, price and quality.

3. Open New Markets

Offer lifestyle-enhancements like more productivity, less difficulty, eco-friendly features, or more enjoyment. New technology isn’t necessary for entering new markets. Also, it can become a hindrance when it comes with a learning curve.

Australian winemaker Yellow Tail created new demand by making wine less formal and more fun. The Segway Personal Transporter has been struggling to find its market since 2001.

4. Look for Not Served or Under-Served Markets

Disrupting an existing market is not the only way to create a new one. New markets can arise out of need or desire.

The Nintendo Wii attracts people who don’t play traditional video games. Also, it doesn’t try to replace those platforms.

earth globe on wall

5. Strive to Simultaneously Add Value While Lowering Cost

Value-add without lower cost means competing at the high end of same market. Lower cost without added value is the fatal race-to-the bottom that means going out of business. It’s challenging. But take inspiration from Pret A Manger, that found a profitable way to add quality, lower costs, and deliver quickly.

Diving into the Ocean

So the Blue Ocean Strategy can be useful in any industry, for any size company or organization—from startups to national governments. To further illustrate its diverse application, Professor Kim, in a Forbes magazine interview, suggests how professionals can apply it to their career paths. The advice easily scales from individual consultants to agencies:

…do not focus on seeking hot career opportunities and trying to out-compete others to win in a crowded and bloody red ocean space. Go for jobs that you love to do and are meaningful to you to create your own blue ocean career space. And play a non-zero-sum game by creating a bigger pie to share.

What’s your experience applying the BOS in your business? Share your insights or tips in the comments below.

The images are from