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Blue Ocean Strategy How to create uncontested market space and make the competition irrelevant

Two worlds

Two worlds

Red Ocean Strategy


Compete in existing market space. Beat the competition. Exploit existing demand.

Blue Ocean Strategy


Create uncontested market space. Make the competition irrelevant. Create and capture new demand.

Make the value-cost trade-off.


Align the whole system of a strategic firm's activities with its choice of differentiation or low cost.

Break the value-cost trade-off.


Align the whole system of a firm's activities in pursuit of differentiation and low cost. VALUE INNOVATION

BOS Logic: The Core Principles


Reconstruct Market Boundaries overcome believes.
Reach beyond existing Demand go for uncontested space. Get the strategic sequence right value [innovation] first.

COST

VI VI
VALUE

BOS Logic: Reconstruct market boundaries


Boundaries of Competition
Industry

Head-to-Head Competition
Focuses on rivals within its industry Focuses on competitive position within strategic group Focuses on better serving the buyer group

Creating New Market Space


Looks across alternative industries Looks across strategic groups within its industry Redefines the buyer group of the industry Looks across to complementary product and service offerings that go beyond the bounds of its industry Rethinks the functional-emotional orientation of its industry

Strategic Group

Buyer Group

Focuses on maximizing the value Scope of Product and of product and service offerings Service Offerings within the bounds of its industry
Functional-emotional Orientation of an Industry Time/Trends Focuses on improving priceperformance with the functionalemotional orientation of this industry Focuses on adapting to external trends as they occur

Participation in shaping external trends over time

BOS Logic: The Core Principles


Reconstruct Market Boundaries overcome believes.

Reach beyond existing Demand go for uncontested space.


Get the strategic sequence right value [innovation] first.

COST

VI VI
VALUE

BOS Logic: Reach beyond existing demand

Core Customer

Noncostumer

Soon-to-be-NC

Refusing Customer

BOS Logic: The Core Principles


Reconstruct Market Boundaries overcome believes. Reach beyond existing Demand go for uncontested space.

COST

Get the strategic sequence right value [innovation] first.

VI VI
VALUE

BOS Logic: Get the Strategic Sequence right


Buyer utility
Is there exceptional buyer utility in your business idea?

No Rethink YES
Price Is your price easily accessible to the mass of buyers?

No Rethink

YES
Cost Can you attain your cost target to profit at your strategic price?

No Rethink

YES
Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front?

No Rethink

YES

A commercially viable Blue Ocean Strategy