Blue Ocean Strategy

Kim
& Mauborgne
Kim & Mauborgne

Red Ocean vs Blue Ocean Strategy

Red Ocean Strategy Blue Ocean Strategy
Compete in existing market space

Create uncontested market space

Beat the competition

Make the competition irrelevant

Exploit existing demand

Create and capture new demand

Make the value-cost trade-off

Break the value-cost trade-off

Align the whole system of a firms

activities with its strategic choice of
differentiation or low cost

Align the whole system of a firms

activities in pursuit of
differentiation and low cost

Kim & Mauborgne

Researching the History of

Blue Ocean Creation
Data: 150 blue ocean creations, more than 30
industries, over 100 years (1880-2000)
hotel, cinema, retailing, airline, energy, computer, broadcasting,
home
construction, automobile, steel manufacturing, chemicals,
cosmetics, software, etc.

Variables considered: industrial, organizational,

strategic

Kim & Mauborgne

Substantially Higher Returns from

Investments in Blue Oceans

Red Oceans
Market-Competing Business Launches

Blue Oceans
Market-Creating Business Launches
Kim & Mauborgne

How do you create a

Blue Ocean
in your industry?

Kim
& Mauborgne
Kim & Mauborgne

The As Is Strategy Canvas

for the US Wine Industry
hi

offering level

Premium

Budget Wines

lo
Price

Use of enological
terminology and
distinctions

Above-theline
marketing

Aging
quality

Vineyard
prestige
and legacy

Wine
complexity

Wine
range

Kim & Mauborgne

The To Be Strategy Canvas

of [yellow tail]
hi

offering level

Premium Wines

lo
Price

[yellow tail]

Budget Wines

Use of enological
Use
of enological
terminology
and Above-theterminologyin
and
distinctions
wine line
distinctions
communication marketing

Aging
Aging
quality
quality

Vineyard
Vineyard
Wine
prestige
prestige
complexity
and legacy
legacy
and

Wine
range

Fun &
Easy
Ease of
drinking selection Adventure

Kim & Mauborgne

The Four Actions Framework

Reduce
Which factors
should be reduced
well below the
industrys
standard?

Eliminate
Which of the
factors that the
industry takes for
granted should be
eliminated ?

Create
A New
Value
Curve

Which factors
should be created
that the industry
has never offered?

Raise
Which factors
should be raised
well above the
industrys
standard?

Kim & Mauborgne

Eliminate-Reduce-Raise-Create Grid:
The case of [yellow tail]
Eliminate
Enological terminology
and distinctions
Aging qualities

Raise
Price versus budget
wines
Retail store involvement

Above-the-line marketing

Reduce

Create

Wine complexity

Easy drinking

Wine range

Ease of selection

Vineyard prestige

Fun and adventure

Kim & Mauborgne

Value Innovation: the simultaneous

pursuit of differentiation and low cost

Eliminate

Cost
Reduce
Blue
Ocean

Raise
Create

Buyer
Value
Kim & Mauborgne

Six Paths to Blue Ocean Strategy

The six conventional boundaries of competition
Industry
Strategic group

From
Competing
Within

Buyer group
Scope of product or service
offering

To
Creating
Across

Functional-emotional
orientation of an industry
Time
Kim & Mauborgne

Shifting the Strategic Focus

Conventional Logic
Industry
Strategic group

Buyer group

focus on rivals within its industry

Blue Ocean Strategy Logic

focuses on competitive position

within strategic group

focuses on better serving the

buyer group

Scope of product or
service offering

focuses on maximizing the

value of product and service
offerings within the bound of its
industry

Functional-emotional
orientation

focuses on improving priceperformance within the

functional -emotional orientation
if its industry

Time

focuses on adapting to external

trends as they occur

looks across alternative industries

looks across strategic groups

within industry

redefines the industry buyer group

looks across to complementary

product and service offerings

rethinks the functionalemotional orientation of its

industry

participates in shaping external

trends over time
Kim & Mauborgne

Pioneer-Migrator-Settler Map
Pioneers
The only ones with a
mass following

Migrators
Best in the crowd

Settlers
Me-toos

Today?
Kim & Mauborgne

Pioneer-Migrator-Settler Map
Pioneers
The only ones with a
mass following

Migrators
Best in the crowd

Settlers
Me-toos

Today

Tomorrow
Kim & Mauborgne

Minimizing Risks and Maximizing

Opportunities in Formulating and
Executing Blue Ocean Strategy
Formulation Principles

Formulation Risks

Reconstruct market boundaries

Search Risk

Focus on the big picture, not the numbers

Planning Risk

Reach beyond existing demand

Get the strategic sequence right

Execution Principles

Scale Risk
Business Model Risk

Execution Risks

Overcome key organizational hurdles

Organizational Risk

Build execution into strategy

Management Risk

Kim & Mauborgne

www.blueoceanstrategy.com

Kim & Mauborgne