Blue Ocean Strategy – a review

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BLUE OCEAN STRATEGY: How to Create Uncontested Market Space and Make the Competition Irrelevant, by W. Chan Kim and Renee Mauborgne, Boston: Harvard Business Review Press, 2015. 287 pages.        Reviewed by Melinda Johnston.

$32 list price. Available at Amazon by clicking here. 

 It takes a unique combination of business acumen and creative insight to see the similarities between the successful strategies of development and marketing of such diverse entities as Model T Fords, Cirque de Soleil, fighter planes and Novo Nordisk’s NovoPen insulin delivery system. Authors W. Chan Kim and Renee Mauborgne possess both, and have developed the blue ocean strategy to help others replicate the process of these business success stories. The two authors are co-directors of the INSEAD Blue Ocean Strategy Institute and professors at INSEAD, France, billed as one of the top business schools in the world. They wrote the bestselling book, Blue Ocean Strategy, in 2005, and updated it in 2015. Over the past eleven years, Blue Ocean Strategy has sold 3.5 million copies in 43 languages, and has been a bestseller across five continents.

The authors take the reader from the metaphor of a crowded, bloody red ocean filled with the competing products and services of rival companies, to that of an open, inviting blue ocean stocked full of new customers eager to patronize the new or newly revised company, product or idea that is being offered. The key, the authors claim, is incorporating blue ocean strategy each step of the way when looking at ways to start, expand, or improve a business. Throughout the book they include a number of case studies that demonstrate how following the blue ocean strategy can dramatically increase the odds of business success.

The overarching theme is to step away from the competition for existing customers, and look at fresh, new development and marketing efforts to gain non-customers, creating a whole new blue ocean teeming with potential new business. The authors lay out a step-by-step plan, or strategy, to do just that, complete with graphs and grids to further their point. As part of their research, they studied 150 strategic moves in 30 industries over the past 100 years to see what commonalities were present in those business success – and failure – narratives. From those commonalities, they developed the blue ocean strategy, a guide that, when followed, will bring home their premise that “the only way to beat the competition is to stop trying to beat the competition” (4). While the book will certainly be appreciated by mangers and business and marketing professionals, it is also valuable for communications professionals as much of the change required to move from a red ocean to a blue one involves strategic communication – with management, with employees, and with customers, both existing and new.

Consider the authors’ critique of Novo Nordisk, a company that plunged into a blue ocean with the creation of the NovoPen, a user-friendly insulin delivery system that does not require separate vials, syringes and needles. Through strategic planning, the company zeroed in on patient wants and needs, shifting its attention away from marketing insulin to doctors, its existing primary customer base. The wild success of the NovoPen helped changed the focus of the company from an insulin producer to a diabetic care company. Instead of competing head to head with other insulin producers, Novo Nordisk broke away from the competition by using blue ocean strategy: looking at who ultimately benefitted from the insulin, and determining how the company could appeal directly to the end user.

The authors cite Cirque de Soleil as another example of successful blue ocean strategy in action. Whereas traditional circuses competed with each other by offering big name acts in three rings, performing animals, concessions, and large tents, Cirque de Soleil managed to marry the circus atmosphere with the theatre, carefully selecting the best of both mediums and combining them into a unique performance category that attracted customers from all interests and backgrounds. By eliminating headline performers, animal acts, and concessions, they set themselves apart from a traditional circus. Incorporating more detailed storylines, lighting, dance and acrobatics, they adopted elements from traditional theatre. Though the audience for traditional circuses was dwindling, and the price of live theatre prohibited many would be theatre lovers from attending, Cirque de Soleil strategically priced their tickets higher than a traditional circus, but lower than most live theatre shows and were able to attract a more diverse audience than either of the traditional venues. They also established a strategic communication plan to market the new show to perspective sites and potential customers alike.

Consequently, in less than twenty years, Cirque de Soliel performances have been seen by more than 150 million people, and the company has achieved a level of revenue that took Ringling Brothers and Barnum & Baily more than one hundred years to realize (3). In simplified blue ocean terms, Cirque de Soliel used value innovation to make its mark. Instead of strategizing to “beat the competition” (13) the company created a “leap in value for buyers and their company by opening up new and uncontested market space” (13). Value innovation requires pursuing differentiation and low cost at the same time –hence, the creation of Cirque De Soleil, and with it a wide open blue ocean that is hard to replicate and continues to attract new customers.

Once a company has formulated a blue ocean strategy, it must be implemented carefully and deliberately to succeed. To emphasize the importance of effective communication, the authors quote Lieutenant General Christopher Bogdan, head of the Pentagon’s problematic F-35 program. According to the authors, the fighter jet program would have been much more effective if blue ocean strategy had been deployed. Bogdan took over the project after it was already in trouble, and was tasked with turning the situation around. Said Bogdan, “I’m encouraged by where we are today. I can tell you that when you start communicating and you start listening to each other, you start finding solutions to problems instead of finding blame” (187). His comments were in response to his efforts to require both Lockheed Martin and the Pentagon to face up to the problems each caused on the project, to start working together, and to come up with clearer agreements about what would be expected from each party. While the initial idea for the F-35 was blue ocean sound – building the same basic aircraft at a lower cost for all three main branch of the armed forces with the ability to make small tweaks for each – the project got bogged down in the execution details with poor communication within and between the two parties. In blue ocean terms, the two parties “violated fair process (engagement, explanation, and expectation clarity)” (175-176), among both internal and external stakeholders, a common mistake when trying something new.

Henry Ford successfully incorporated blue ocean strategy in all phases of development and execution when he made a car that was appealing to, and affordable by, the masses. Ford envisioned a blue ocean future where horses and buggies would be displaced by cars that would be attainable by the average person. In 1908 he introduced the Model T. By 1923, a majority of American households owned an automobile (228). Along the way, Ford differentiated his product from the custom made novelty automobiles of the time, created the assembly line process, put the horse and buggy companies out of business, and essentially spawned America’s love affair with the automobile. Creating a strategic plan that rendered the competition irrelevant by offering value innovation in transportation, and then following through with a strategy to create and market the Model T, is an example of using blue ocean strategy at its best. Though Ford’s initial blue ocean has turned red a number of times over the years, a common expected occurrence that the authors also address, the company’s blue ocean continues to pay dividends to shareholders more than 100 years later.

The book is packed full of numerous other examples of blue ocean strategy at work in companies and industries worldwide, and will take the reader on a step by step journey to employ that same strategy in their own company if they so desire. At thirty-two dollars, the book is a wise investment and certainly worth the read. However, if you want to take blue ocean strategy beyond the 287 pages of print, the authors also have a website, www.blueoceanstrategy.com , that offers a wide variety of free information including case studies, podcasts, articles and more that expounds upon blue ocean strategy. For those wanting more individualized help, the website also contains information about the Blue Ocean Network, a group of blue ocean practitioners that will make “house calls” to help businesses map out their own blue ocean strategy. In contrast to the many one-size-fits-all solutions to creating and executing a business strategy, the authors of Blue Ocean Strategy make it possible for each business to create its own individualized strategic plan, and they have the solid research and examples to back up their assertions. As the dust jacket claims, the book really does “present a systematic approach to making the competition irrelevant, and outlines principles and tools any organization can use to create and capture their own blue oceans.” I strongly recommend Blue Ocean Strategy as a must read for anyone interested in business, communications, marketing or public relations.

 

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