Blue Ocean Strategy: theory and examples

Article by: Ben Janse

Last update: March 3, 2026

Blue Ocean Strategy: this article explains the Blue Ocean Strategy (BOS), developed by W. Chan Kim and Renée Mauborgne, in a practical way. This summary covers what Blue Ocean Strategy is, how it compares to Venture Strategy and Red Ocean Strategy, and what the role of value innovation is. It furthermore provides the Blue Ocean Strategy Canvas and explains what the 4 Actions Framework is. It concludes with advantages, disadvantages and principles of Blue Ocean Strategy. Enjoy reading!

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 and experience market boundaries, 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 30 industries. In example like Apple, Cirque Du Soleil, Yellow Tail and Air Asia.

Blue Ocean Strategy was followed by the book Blue Ocean Shift, by both Chan Kim and Mauborgne, professors of strategy.

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’. Its counterparts are called bloody red oceans.

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.

Value Innovation

Chan Kim and Mauborgne developed their strategic approach by concentrating on customer needs instead of following standard methods which concentrate on competitors. In their logic, as much attention is paid to value creation as to innovation.

The process leads to the creation of value innovation as a new business approach. The combination of these two ensures that innovation is not only driven by technology, but by what is better for customers.

Value Innovation is only spoken of when companies gear their innovation activities to utility, cost and price. Organizations need to move away from competition-based theories which include Generic Strategies of Porter according to this example.

The states require businesses to select either cost leadership or product differentiation as their strategic direction. Blue Ocean Strategy developers who want to create new market space for their companies must work to achieve product differentiation through cost reduction. The process seeks to decrease expenses while simultaneously generating higher value for customers.

Customers receive more value when utilities or prices improve and when costs decrease. The cost structure will become more efficient which will result in decreased expenses. The implementation of these measures will establish value innovation which delivers advantages to customers and the organization as a whole.

The difference between Blue Ocean Strategy and Red Ocean Strategy

The red oceans are all industries and sectors that currently exist: the well-known market. In red oceans, borders have long been defined and accepted. The competitive rules of the game are well known, and the whole thing works smoothly.

In such an environment, companies try to outperform other companies in order to control a larger part of the existing market. As the market space becomes full of providers, profits and growth are inhibited. At a certain point, products are seen as raw materials, which leads to bloody competition. For this reason, the term ‘red’ has also been assigned to such an overall strategy.

The blue oceans, on the other hand, are all industries that do not exist or are known today. This is the unknown market. Completely unaffected by competition, in blue oceans demand is created instead of fought. In such an environment, there is ample opportunity for growth that is both rapid and profitable.

In these blue oceans, competition is irrelevant. The rules of the game have yet to be drawn up, there are no large market share holders, and there is sufficient potential. A blue ocean is an analogy, to describe the deeper potential that can be found in environments where no company has ever been present.

A blue ocean is deep, powerful and large, as is the potential for profit.

Tip: Combine your Blue Ocean strategy with Transaction Cost Economics. TCE helps you to intelligently organize new market space, partnerships, and cost structures.

Blue Ocean Strategy Canvas

The Blue Ocean Strategy Canvas functions as a tool to find value innovation methods. The Blue Ocean Strategy Canvas exists as a component of W. Chan Kim and Renee Mauborgne’s study which they conducted together.

The framework serves two different functions. The first objective is to record the current state of affairs in the current market. This includes identifying factors on which players in the industry are competing.

Figure 1 – Blue Ocean Canvas by (Kim & Mauborgne)

4 Actions Framework of Chan Kim and Renee Mauborgne

In order to help entrepreneurs to think innovative about the products they make in relation to the industry, the same researchers developed the 4 Actions Framework. Instead of wasting resources worrying about balancing cost and value, Blue Ocean Strategy helps maximize user value, reduce costs, eliminate unnecessary product features, and increase user profit.

The 4 Actions Framework consists of the following steps:

Step 1: Eliminate
Step 2: Reduce
Step 3: Increase
Step 4: Create

The 4 Actions Framework of W. Chan Kim and Renee Mauborgne helps to assess whether money is spent correctly around its production. By optimising this, the profit for the user is maximised, and the pains are minimised. Only the pains that really matter to the consumer should be included in the 4 Actions Framework.

Applying the 4 Actions Framework

Entrepreneurs who want to create innovative products should use the Blue Ocean Strategy through the 4 Actions Framework application.

Step 1: Eliminate

The 4 Actions Framework exists as a template which contains four separate columns for its structure. Each column requires you to establish proper questions which address the product’s industry standard metrics.

First, ask yourself for which factors companies have been competing for a long time. The investment-heavy elements exist which do not produce substantial revenue along with other elements which fail to improve the statistics.

Step 2: Reduce

During step 2 you must identify which elements require reduction to levels that fall significantly below what the industry demands. The product includes features which developers created to overcome competitors yet these features need substantial time and money to develop. The initiative needs evaluation to determine if its core elements can be simplified into an affordable solution which maintains user appeal and competitive advantage and relevance.

Step 3: Increase

The Blue Ocean Strategy 4 Actions Framework requires you to implement the fourth action which involves increasing. The evaluation requires you to identify which elements exceed the industry standard level. Which user pain points does the current market not yet address? How can I come up with functions that make the pain points of this group of people disappear?

Step 4: Create

Businesses must establish new elements which the current market sector does not provide as their final action point. The question represents a difficult challenge which simultaneously provides the greatest opportunity.

Business success depends on deep knowledge about both organizational operations and industry trends and customer preferences and market evolution patterns. The final action point requires you to plan for future events which will create customer requirements that have not yet been defined.

Manual 4 Actions Framework Blue Ocean Strategy

The 4 Actions Framework / BOS Framework from the Blue Ocean Strategy is particularly valuable when an entrepreneur is trying to achieve value innovation and break up the cost trade-off between value and cost. The developers of this method use terms of red and blue oceans to describe the global market.

As the market becomes full, the prospects for profit and growth are reduced. Blue oceans, on the other hand, are the markets that do not yet exist, so there is still a lot of potential there for organisations if they get there first.

In the blue oceans, demand is created instead of fought. When a company is stuck in a red ocean, or would like to differentiate alongside a business in the already existing market, the 4 Actions Template is a great tool.

Advantages and disadvantages Blue Ocean Strategy

Below are some of the benefits of the BOS method when applied correctly.

BOS as an organisation collaborates with various organisations to find new markets and avoid saturated markets.
Implementation of the BOS helps to overcome the barriers of competition within an existing market and cost structure and gradually transform into constructive improvements in value.
Value innovation is the foundation of a BOS. It ultimately creates new value and demand for consumers and thus increases the likelihood of growth potential.
BOS enable fundamental transformations in mentality. It also helps in recognising opportunities.
The BOS method is based on proven data rather than unproven theories.

Some disadvantages of using a Blue Ocean Strategy are:

It can be difficult to come up with futuristic ideas and identify colossal and unused markets.
The development of a successful BOS is the result of a calculated and detailed research supported by extensive analyses. Keep in mind that this is not a magic formula, or an easy DIY job.
Entering the market in the initial phase of a new market is risky. Chances are that customers do not understand the foundation of a product or service due to the lack of a fully developed technology.
Tapping into a new market is not easy. An organisation must be clear and smart about its customer base, and ways to expand it. It therefore requires a great deal of clarity about the considerations that are being made, as well as obstacles.
Choosing an ocean other than the Blue Ocean Strategy requires a lot of patience, perseverance, preparation and faith. An existing market is not completely closed, but tapping into a new market with an innovative product is, according to the creators behind the Blue Ocean Strategy, one of the better things an entrepreneur can decide to do.

When does the Blue Ocean Strategy work less well?

The Blue Ocean Strategy sounds appealing: away from the competition, toward new market space. However, the model does not work equally well in every situation. Many organizations underestimate how much courage, creativity, and focus it takes to really think differently. A common mistake is that teams approach the method too theoretically—there is a lot of talk about ideas, but little testing or validation.

In addition, a Blue Ocean strategy can fail if there is insufficient internal support. New ideas often come up against old habits or departments that stick to existing ways of working. If management doesn’t go along with it, even the best strategy will just be a plan on paper. Timing also plays a big role: if you’re too early with your idea, you run the risk that the market isn’t ready for it yet; if you’re too late, you’ll find an ocean that’s already turning red.

The power of the Blue Ocean therefore lies not only in creative thinking, but in consistent execution. Combine the model with tools such as SWOT analysis or the Business Model Canvas to test your idea for feasibility, risks, and internal support. This way, your strategy will not remain on paper, but will gradually turn into concrete results.

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.

Figure 2 – Blue Ocean Strategy (BOS) vs. Red Ocean Strategy (ROS)

Preliminary principles

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

Executive principles

overcome the main organizational hurdles
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.

A Blue Ocean is never finished

Many organizations see the Blue Ocean Strategy as a one-time exercise: you fill in a model, come up with a smart positioning, and then get back to business as usual. In practice, it works differently. A Blue Ocean is not an end point, but an ongoing process. Markets are changing faster than ever—new technologies, changing consumer behavior, and economic shifts can completely change the rules of the game within a year.

That’s why it pays not to set your Blue Ocean in stone, but to review it regularly. For example, check annually whether your value proposition is still distinctive enough, or whether competitors have now jumped into your ocean. A fresh look at your Strategy Canvas or ERRC grid (Eliminate, Reduce, Raise, Create) helps you see new opportunities and let go of old assumptions.

In other words, don’t view the Blue Ocean Strategy as a project, but as a framework that continuously evolves with your organization. By keeping the model alive, you remain alert to signs of change and are quicker to discover where new market space is emerging. This way, your ocean stays truly blue — even as the market around you becomes increasingly red.

Modern dimensions of the Blue Ocean Strategy

The world in which companies operate today looks completely different from when the Blue Ocean Strategy was developed. Whereas price and product used to make the difference, competition now revolves around experience, technology, and values. Think of digitization, sustainability, and data—three themes that are reshaping almost every market. Anyone who wants to create a new “blue ocean” must therefore look beyond innovation alone.

Today’s strongest players combine value creation with social relevance. They use technology not only to work more efficiently, but to truly help customers. Tesla, for example, is creating market space by combining sustainability and innovation, while Airbnb and Spotify have opened up new markets by making smart use of platform technology and community thinking.

For the modern organization, this means that a Blue Ocean is no longer just about “where no one else is swimming,” but also about where you make a difference as a brand. This could be in the customer experience, in sustainability, or in the way you collaborate with partners. Those who take these dimensions into account don’t just create a new market — they create a market that is future-proof.

Great examples of the Blue Ocean Strategy

The Blue Ocean Strategy reveals its full strategic power when organizations begin to implement it in their business operations. Cirque du Soleil transformed the traditional circus by merging theatrical elements with artistic performances and musical compositions. The group established a fresh entertainment concept which featured no animals but focused on emotional depth and artistic innovation and sophisticated narrative development. The market emerged as a unique space which lacked competing businesses and allowed for increased ticket sales.

Spotify serves as an additional excellent case study. The company chose to establish its own industry regulations instead of participating in the CD sales versus download battle by transforming the market from product ownership to product usage. The music industry developed an entirely new ecosystem through its focus on creating convenient access and customized experiences for users.

And look at Tesla. The automotive industry focused on improving their operations but Tesla followed an alternative path which fused technological advancement with design principles and environmental protection to build a top-tier electric vehicle. The process enabled them to establish a distinct market category which led to the development of a brand that unites cutting-edge technology with sustainable business practices.

Recommended literature and books on the Blue Ocean Strategy (BOS)

Abdel-Dayem, H. A., Ragheb, M. A. S., Abdel-Azzim, A. A.-W., & Hamaida, F. A.-A. (2021). The effect of Blue Ocean Strategy and niche marketing on business entrepreneurship. Open Access Library Journal, 8, 1-13. → Empirical article linking BOS to entrepreneurship and niche markets — valuable for application in small and medium-sized enterprises.
Idris, W. M. S., Al-Rubaiee, L., Joma, M. H. M. A., & Al-Nabulsi, M. (2019). Investigating the measurement scale of Blue Ocean Strategy: A structural equation modelling approach. International Review of Management and Business Research, 8(1), 1-16. → Methodological article in which BOS is monitored in terms of measuring instruments — useful for academic substantiation.
Kampa, J. R., Cziulik, C., & Amodio, C. C. (2012). A critical analysis on the Blue Ocean Strategy and an approach for its integration into the product development process. Product: Management & Development, 10(2), 79-97. → Critical analysis of the BOS model and its implementation in product and strategic development processes.
Kim, W. C., & Mauborgne, R. (2023). Beyond Disruption: Innovate and achieve growth without displacing industries, companies, or jobs. Boston, MA: Harvard Business Review. → Focuses on how organizations can grow innovatively without destroying established markets — relevant for modern strategy formation.
Kim, W. C., & Mauborgne, R. (2021). Blue Ocean Shift: Beyond competing – Proven steps to inspire confidence and seize new growth. New York, NY: HarperBusiness. → Practical follow-up to the original, with a step-by-step plan for actually implementing the blue ocean strategy in organizations.
Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Boston, MA: Harvard Business School Press. → The core work introducing the BOS concept: creating undisputed market space instead of competing in mature markets.
Madsen, D. Ø., & Slåtten, K. (2019). Examining the emergence and evolution of Blue Ocean Strategy through the lens of management fashion theory. Social Sciences, 8(1), 28. → Academic review that places the BOS concept in the context of management assertions; useful for critically reflecting on the model.
Sijabat, F. N., & Yunus, M. (2021). A review on Blue Ocean Strategy effect on competitive advantage and firm performance. Academy of Strategic Management Journal, 20(1). → Literature review examining how BOS relates to competitive advantage and business performance — applicable for evidence in the article.

How to cite this article:
Janse, B. (2020). Blue Ocean Strategy (BOS). Retrieved [insert date] from Toolshero: https://www.toolshero.com/strategy/blue-ocean-strategy/

Original publication date: March 14, 2018 | Last update: March 3, 2026

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Article by:

Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.