Blue Ocean Strategy

Blue Ocean Strategy

What is Blue Ocean Strategy?

  • Instead of trying to beat the competition, BOS focuses on making it irrelevant by creating uncontested marketspaces.
  • BOS is the strategic alignment of Value, Profit and People Propositions to systematically maximize opportunities while minimizing risks.
  • BOS is the result of a decade long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000)
  • BOS offers a set of methodologies, tools and frameworks that makes it a  structured,  learnable system.
  • BOS covers both strategy formulation and strategy execution
  • The key conceptual building block of BOS is value innovation.

Value innovation is created in the region where a company’s actions favorably affect both its cost structure and its value proposition to buyers. Cost savings are made by eliminating and reducing the factors an industry competes on.  Buyer value is lifted by raising and creating elements the industry has never offered.  Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates.

Red Ocean Versus Blue Ocean Strategy
Here, the strategic choices for firms are to pursue either differentiation or low cost. 

Red Ocean Strategy

Blue Ocean Strategy

Compete in existing market space

Create uncontested market space.

Beat the competition

Make the competition irrelevant.

Exploit existing demand

Create and capture new demand.

Make the value-cost trade-off

Break the value-cost trade-off.

Align the whole system of a firm’s activities with

its strategic choice of differentiation or low cost.

Align the whole system of a firm’s activities in

pursuit of differentiation and low cost.

In the re-constructionist world, however, the strategic aim is to create new best-practice rules by breaking the existing
value-cost trade-off and thereby
creating blue ocean.