Years ago when I was sitting in my final marketing strategy class, the book that my professor kept mentioning over and over again was “Blue Ocean Strategy“. This book stuck out in my head not only because it was useful for developing new business models but also because of its relevance regardless of the economic situation that an entrepreneur was facing. Written by W. Chan Kim and Renee Mauborgne and published by Harvard Business School Press, this book definitely lives up to its credibility as being an invaluable source of information regarding business strategy.
Although a bit dry at times, Blue Ocean Strategy is a very practical and accessible book for business professionals and entrepreneurs alike. This book is written in case study style which allows the reader to quickly build a reference point for the concepts introduced.
The concept of a “Blue Ocean” is the idea that instead of competing with existing firms in a highly competitive market (Red Ocean), companies can seek out new markets by focusing on Value Innovation. As stated in the book, “Value Innovation is created in the region where a company’s actions favorably affect its cost structure and its value proposition to buyers.” Basically what this means is that the firm is offering more value in terms of innovation or utility at a lower cost.
A few of the notable organizations that are mentioned are:
– Cirque Du Soleil
– Yellowtail Wines
– New York Police Department
Each of these firms is shown to have created a Blue Ocean Strategy which has allowed them to launch into new markets and remain uncontested. One really neat feature of the presentation of the book is the “Strategy Canvas”. Each company that is referenced as having a solid Blue Ocean Strategy has their primary three points of differentiation listed out on a scatter chart which represents how they compete effectively against other companies who offer similar products or services.
The Six Principles of Blue Ocean Strategy are broken down into strategy formulation and then execution. These principles are:
– Reconstruct market boundaries
– Focus on the big picture, not the numbers
– Reach beyond existing demand
– Get the strategic sequence right
– Overcome key organizational hurdles
– Build execution into strategy
All in all, there is far too much great information in this book to be covered in a blog post; however, I highly recommend Blue Ocean Strategy for any business professional, entrepreneur or marketer who is looking to direct their organization into the next great blue ocean.