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Blue Ocean Strategy Review

Blue Ocean Strategy Review



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Published by Anoop

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Published by: Anoop on Jan 09, 2009
Copyright:Attribution Non-commercial


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The first chapter,“Creating BlueOceans,introduces their thinking in amannerthat is engaging and compelling.Their language of“creating”strategy,ratherthan the more traditional approaches tostrategy development,sets the tone for theentire book.This is not just about strategy analysis and formulation;it is about usingsolid empirical data,rigorous analysis,and astrong dose ofimagination.According to the authors,a BlueOcean is a market space that is created by identifying an unserved set ofcustomers,then delivering to them a compelling newvalue proposition.This is done by reconfig-
W.Chan Kim and Renée Mauborgnehave made a real contribution to advancingthe thinking on business strategy,andthey have done so with clear prose and anengaging style.They offer a set ofpracticalframeworks and models that enables one toquickly grasp what appear to be intuitively obvious points,but are in reality profoundinsights and breakthrough contributions tobusiness strategy literature.By choosing as the title oftheir book acolorful metaphor not normally associatedwith strategy,the authors have given us asimple and memorable way ofdistinguishingtheir approach from more traditional ones.
Blue Ocean is a market space that iscreated by identifying an unserved setof customers,then delivering to them acompelling new value proposition.
his is one small book that packsone big punch.At a mere 216 pages,including appendices,it’s a delightfuland satisfying read.Heres why.
Blue Ocean Strategy
Reviewed by R.Lemuel Lasher 
is the director of CSC’sOffice of Innovation.
uring what is on offer to better balancecustomer needs with the economic costs of doing so.This is as opposed to a Red Ocean,where the market is well defined and heavily populatedby the competition.All parties inthese marketsare engaged in an intensecompetitive struggle for the same customers,with different and incremental yet easily comparable,value propositions.The Blue Ocean is the unserved,unstructured demand that is all around us,ifwe could only see it.The Blue Oceanstrategy is all about avoiding head-to-headcompetition.Because established marketsin the developed world are saturated,head-to-head competition cannot bring attrac-tive returns.At first read,it is so easy to understandand so intuitively obvious,that one is leftwondering why 
doesn’t adopt thisapproach.By the end ofthe book,you are leftwondering if 
is able to adopt thisapproach on a systematic basis.For to do sorequires a broad set ofmulti-disciplinary skills as well as fresh thinking about even themost mundane and pedestrian options.It requires both discipline and inspiration.So what is it and what distinguishes itfrom traditional strategy frameworks?Kim and Mauborgne’s first point indistinguishing this from the traditionalstrategic frameworks is that in the traditionalbusiness literature,the company forms thebasic unit ofanalysis,and the industry analysisis the means ofpositioning the company.Their hypothesis is that since marketsare constantly changing in their levelsoffavorability,and companies over timevary in their level ofperformance,it is theparticular
strategic move of the company 
,and not the company itselfor the industry,which is the correct criterion for evaluatingthe difference between Red and Blue Oceanstrategies.This strikes first and foremost at theheart ofMichael Porter’s competitive frame-work,and very effectively.To effect this analysis,the authors intro-duce the concept of“value innovation.Thecombination ofvalue with innovation is notresolves the trade-offdilemma.Insteadofcompromising the value wanted by thecustomer because ofthe high costs associatedwith delivering it,costs are eliminated orreduced ifthere is no or less value placedon the offering by the customer.This is areal win-win resolution that creates thecompelling proposition.Customers getwhat they really want for less,and sellers geta higher rate ofreturn on invested capital breducing startup and/or operational delivery costs.The combination ofthese two is thecatalyst ofBlue Ocean market creation.So how do we sort this all out?To start with,the authors provide aframework that is called the “strategy canvas.This framework sets out the currentstate ofplay ofthe competition in terms of what they are offering in value,as seen by the just marketing and taxonomic positioning.It actually means something,and hasenormous consequences.According to Kimand Mauborgne,“Value without innovationtends to focus on
creation on an incre-mental scaleand,“Innovation withoutvalue tends to be technology driven,marketpioneering,or futuristic,often overshootingwhat buyers are ready to accept and pay for.”They continue:“Value innovationoccurs only when companies align innova-tion with utility,price and cost positions”and,“value innovation defies one ofthe mostcommonly accepted dogmas ofcompetition-based strategy:the value-cost trade-off.Value innovation is intensely customerfocused,but not exclusively so.It balancescosts ofdelivering the value propositionwith what the buyer values,and then
t first,one is left wondering why
doesn’t adopt this approach.By the end of the book,you are left wondering if 
is able to adoptthis approach on a systematic basis.

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