Blue Ocean Strategy

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Blue ocean strategy - ToolsHero

This article explains the blue ocean strategy, developed by W. Chan Kim and Renée Mauborgne, in a practical way. After reading you will understand the basics of this powerful strategy tool.

What is blue ocean strategy?

The blue ocean strategy (BOS) is the strategic organizational approach that is based on the principle that companies should not engage in a competitive struggle but that they should focus more on uncontested markets.

Blue ocean strategy has been developed by W. Chan Kim and Renée Mauborgne and is based on a study of 150 strategic moves in the course of one hundred years and over thirty industries like Apple, Cirque Du Soleil, Yellow Tail and Air Asia.

W. Chan Kim and Renée Mauborgne contend that future leading companies are likely to succeed by targeting uncontested markets that are ready for growth and development. They call these markets ‘blue oceans’.

Blue ocean strategy is an unconscious process

This strategic move provides value development both for the organizations themselves and for potential buyers. The basic principle of blue ocean strategy is to map out, in addition to the (already) known markets (‘red oceans’), the ‘blue oceans.

These ‘blue oceans’ document new markets and new opportunities. Furthermore, it is surprising that ‘blue oceans’ are already used and applied unconsciously by strategists in the current strategies.

This strategy especially tries to offset this unconscious part in an analytical framework. With the necessary resources, ‘blue oceans’ can be created and recorded successfully.

Venture strategy

Blue ocean strategy is often compared to Venture strategy. Venture strategies have been used by large multinationals for decades.

However, there is a large difference between these two approaches. Venture strategies are specifically about the technological innovation of companies towards a dynamic market.

Blue ocean strategy is about value innovation in general, in which no emphasis is put on reducing the speed to market.

Six principles of the blue ocean strategy

This strategy targets six principles that can be used in every organization so that they can arrive at a successful development and fulfilment of new markets.

A distinction is made between preliminary and executive principles.

Blue ocean strategy definition, summary & examples - strategy | ToolsHero

Preliminary principles

  1. reconstruct market boundaries
  2. focus on the big picture, not the numbers in the here and now
  3. reach beyond the existing supply and demand
  4. approach the right strategic sequence

Executive principles

  1. overcome the main organizational hurdles
  2. build in victory into the organizational strategy

W. Chan Kim and Renée Mauborgne are convinced that the Blue Ocean Strategy can break through all existing paradigms and ideas about traditional strategies.

Organizations should not be afraid to deviate from the traditional paths. Check out the video below for a brief explanation by Renée Mauborgne.

More information

  1. Kim, W. C., & Mauborgne, R. (2007). Blue ocean strategy. Leadership Excellence, 9, 20-21.
  2. Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Harvard Business School Press.
  3. Kim, W. C., & Mauborgne, R. (2005). Value innovation: a leap into the blue ocean. Journal of business strategy, 26(4), 22-28.

How to cite this article:
Van Vliet, V. (2011). Blue ocean strategy. Retrieved [insert date] from ToolsHero: http://www.toolshero.com/strategy/blue-ocean-strategy

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