THE BLUE OCEAN STRATEGY

(WITH 4 EXAMPLES)
RED OCEANS

• Red oceans are all the industries in existence today – the known market
space. In red oceans, industry boundaries are defined and accepted, and the
competitive rules of the game are known.
• Here, companies try to outperform their rivals to grab a greater share of
existing demand. As the market space gets crowded, profits and growth are
reduced. Products become commodities, leading to cutthroat or ‘bloody’
competition. Hence the term red oceans.
BLUE OCEANS
• Blue oceans, in contrast, denote all the industries not in existence today –
the unknown market space, untainted by competition. In blue oceans,
demand is created rather than fought over. There is ample opportunity for
growth that is both profitable and rapid.
• In blue oceans, competition is irrelevant because the rules of the game are
waiting to be set. A blue ocean is an analogy to describe the wider, deeper
potential to be found in unexplored market space. A blue ocean is vast,
deep, and powerful in terms of profitable growth.
• Learn why finding and developing blue ocean markets is your organization’s
best chance for growth and profitability.
• Of the many strategic planning models that exist, the Blue Ocean Strategy
could be considered the pacifist of the group.
• Based on an eponymously titled book, this strategy argues that “cutthroat
competition results in nothing but a bloody red ocean of rivals fighting over a
shrinking profit pool.” Companies should instead look for new market space and
ways to reinvent the industry. In short, avoid head-to-head competition and focus
on innovation.
• The goal of a Blue Ocean Strategy is for organizations to find and develop “blue
oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped,
saturated markets). A company will have more success, fewer risks, and increased
profits in a blue ocean market.
SUMMARY OF THE BLUE OCEAN STRATEGY

• This strategic planning model is a departure from the

typical management exercise that focuses on number
crunching and competitive benchmarking. Here are key
points of the Blue Ocean Strategy:
IT’S MORE THAN THEORETICAL

• Some strategic planning models are based on theories that don’t quite pan
out during go-to-market executions. In contrast, Blue Ocean Strategy
originated from a study that took place over 10 years and analyzed company
successes and failures in more than 30 industries. It’s based on proven data
rather than unproven ideas.
THE COMPETITION IS IRRELEVANT

• Taking a Blue Ocean approach means your goal isn’t to outperform the
competition or be the best in the industry. Instead, your aim is to redraw
industry boundaries and operate within that new space, making the
competition immaterial.
DIFFERENTIATION AND LOW COST CAN COEXIST

• The Blue Ocean Strategy argues that consumers don’t have to choose
between value and affordability. 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. This is termed “value innovation.”
YOU HAVE A FRAMEWORK TO TEST IDEAS

• The Blue Ocean Idea Index is part of the overarching strategy and lets
companies test the commercial viability of ideas. This process helps refine
ideas and identify opportunities with the most potential, minimizing risk.
4 EXAMPLES OF BLUE OCEAN STRATEGY
NETFLIX
• In this David versus Goliath story, Netflix came on the scene when Blockbuster was
at the top of the video rental game. Rather than trying to compete with the popular
giant solely on price or entertainment choices, Netflix reinvented the market by
creating an entirely new kind of online DVD rental service. It utilized postal mail
rather than brick-and-mortar stores. And its flat-fee monthly payment model solved
two major pain points many Blockbuster customers experienced: return deadlines
and late fees. Netflix customers could keep a DVD for as long as they wanted,
without incurring any late fees. Plus, they could browse and select a video to rent,
without having to leave their house. Netflix has continued to innovate since then by
switching from DVDs to streaming, and then by creating their own shows and
movies. By using the Blue Ocean Strategy, Netflix has been able to constantly move
to new, uncontested spaces to capture demand.
UBER
• Before Uber was founded in 2009, customers looking to get from point A to
point B without their own vehicle had to rely primarily on taxis to obtain a
private mode of transportation. But the taxi industry hadn’t done much in
the way of innovation since its inception more than a century earlier. The
founders of Uber recognized the industry’s shortcomings—including limited
payment options, a lack of customer trust, and the absence of location
tracking—and decided to create a new type of mobility service that would
compete in a slightly different space. Instead of trying to buy its own fleet of
vehicles, Uber sought out drivers who were willing to use their own cars to
provide on-demand rides requested via mobile app. Today, Uber has annual
revenues of over $11 billion, and more than 19,000 employees.
ITUNES
• When iTunes entered the market, it solved the recording industry’s problem
of consumers illegally downloading music while simultaneously addressing
the demand for digital, a la carte songs. iTunes’ Blue Ocean Strategy created
an entirely new category of music sales that allowed artists to profit and
consumers to buy single songs versus entire albums. ITunes has dominated
this market space for years and is largely credited with driving the growth of
digital music.
META (PREVIOUSLY FACEBOOK):
• n October of 2021, CEO Mark Zuckerberg announced that Facebook’s new
name would now be Meta. When Facebook started, it was at the forefront of
its own blue ocean, known as social networks. More than a decade later,
social networking has become a red ocean. With the name change, Meta
can steer its product offerings into something new, exciting, and
unconquered: the “metaverse.” In the metaverse, Zuckerberg pictures
holograms, virtual reality, and digital worlds that feel like the physical world.
Although the strategy change is unproven, it’s clear that the idea of jumping
from the red ocean of social media to the blue ocean of the metaverse
played a part in the decision.
USING BLUE OCEAN WITH YOUR EXISTING STRATEGIC
PLANNING MODEL
• Most likely, your organization is already running on an existing strategic
planning model. Luckily, the Blue Ocean Strategy can be paired with other
models. It doesn’t need to replace your current mode of operation.
BLUE OCEAN + SWOT
• A SWOT analysis helps determine areas where an organization is doing well
and areas it needs to improve.
• By running both frameworks together, you’ll be able to identify how your
organization can grow in the future.
BLUE OCEAN + BALANCED SCORECARD
• Balance Score Card(BSC) is a framework used for tracking and managing an
organization’s strategy.
• By running both frameworks together, you can find uncontested markets
(blue oceans) and chart the course to get there.
HOW TO BEGIN
• When you begin your strategic planning, recognizing the difference between
a red and blue ocean may not be as easy as the colors would indicate. Start
by identifying what your target market needs and doesn’t currently have.
Then look at what existing organizations are doing well (or not so well) to
serve that market and determine how you can differentiate (for example, by
price point or audience). Use the above checklist as a guide through the
process and hold internal brainstorming sessions for each point.
ADVICE ON IMPLEMENTING A BLUE OCEAN STRATEGY
Blue Ocean challenges companies to push the boundaries of
their industries and offer consumers something unique of
immense value. By defining and seeing examples of the Blue
Ocean Strategy, your organization can learn how to execute on
this strategic planning model and successfully reconstruct your
market. Once you know where you’re competing, you can add
unique goals and measures to track your progress in charting
that blue ocean.