What is Blue Ocean Strategy?
The Blue Ocean Strategy is a strategic concept by W. Chan Kim and Renée Mauborgne that encourages companies to create new, uncontested market spaces (Blue Oceans) rather than competing in existing, fiercely contested markets (Red Oceans).
Red Ocean vs. Blue Ocean
- Red Ocean: Existing markets with known boundaries. Companies compete for existing demand. Competition leads to shrinking margins.
- Blue Ocean: New market spaces that didn't previously exist. No direct competition. Growth through innovation rather than displacement.
Blue Ocean Strategy Tools
- Strategy canvas: Visualization of competitive factors and own position
- Four actions framework: Which factors to eliminate, reduce, raise, or create?
- ERRC grid: Structured tool for the four actions
- Three tiers of non-customers: Who isn't buying today and why?
Why is Blue Ocean Strategy Relevant?
In saturated markets, it offers a way out of competitive pressure:
- Innovation over imitation as a growth driver
- Tapping new demand rather than redistributing existing
- Higher margins through lack of direct comparability
- Sustainable competitive advantage through hard-to-copy business models
In Practice
Blue Ocean Strategy is not an alternative to solid strategic craftsmanship – it complements it. Not every company can or must create a Blue Ocean. But the mindset – being different rather than better than the competition – is valuable for every strategist. Well-known examples: Cirque du Soleil (redefining circus), Nintendo Wii (gaming for non-gamers).