The concept of the blue ocean strategy was set out in a book of the same name, by W. Chan Kim and Renee Mauborgne in 2005. It became Chrysler’s bestselling car. Diabetics needing insulin had to deal with vials, syringes, and needles several times a day. Industries ranged from hotels, cinema, retail, airlines, energy, computers, broadcasting, and construction to automobiles and steel. Philips’ blue ocean strategic move in the teakettle industry is an example of looking across complementary product and service offerings, path four in the six paths framework. Click the link above or the picture below to read more. Eventually, Americans moved into suburbs, and Palace Theaters were too expensive to service a large geographical area. Standardization reduced costs by employing unskilled laborers instead of car artisans. The business was merged to form CTR in 1911. This was another Blue Ocean Strategy example. By the end of the 1950s, IBM had captured 85% of the business electronic computer market. Using the Strategy Canvas as the basis of the challenge, individuals working in small teams shared and explored common and unique issues regarding competition, regulatory environments, technological disruption, change management and operations. The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant. This reduced cost and training time. With the launch of iTunes, Apple unlocked a blue ocean of new market space in digital music that it has now dominated for more than a decade. Limiting car options reduced the number of unique parts needed. The letters INSEAD stand for Institut Européen d’Administration des Affaires, which translates into English as the European Institute of Business Administration. DLSU Graduate School of Business at RCBC Plaza, Top 10 Emerging Influential Blogs in 2007, The Renaissance Person Forever a Learner and Personality Tests, All About the Hootsuite Social Marketing Certification. Despite being unreliable, they cost $1,500, twice the average annual income. It was intimidating and pretentious. 1 It’s grounded in data Blue ocean strategy is based on a decade long study of more than 150 strategic moves spanning more than 30 industries over 100 years. Then in 1978, Apple created the first popular home computer – the Apple II. Further blue oceans include the tablet with Apple’s iPad, cloud computing services, and mobile phones. The book presents analytical frameworks and tools to foster an organization's ability to systematically create and capture "blue oceans"—unexplored new market areas. The Apple II wasn’t the first personal computer – the Altair 8800 was. Furthermore, you attract a new type of customer the industry hadn’t previously supported, thus growing the market. In 1893, the Duryea brothers created the first automobile. Can you create a new product targeting their pain points? According to the Blue Ocean Strategy principles, companies should not only try to compete in existing markets (Red Oceans), but also find or create new markets where competition does not yet exist (Blue … Here are a few organizations that successfully captured a blue-ocean market: Cirque du Soleil: This Canadian entertainment company began in the 1980s as a bunch of “crazy people” with a vision of what the modern circus could be. outline the essence of blue ocean strategy. Market share increased from 9% in 1908 to 61% in 1921. They assert that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant. Most blue oceans are created from within red oceans by expanding existing industry boundaries. In this summary, we’ll give a synopsis of the key concepts, tools and tips from the book. This led president of DEC to say “there’s no reason for any individual to have a computer in their own home.”. Dell Computer upended this pattern, selling direct to consumers and reducing price substantially. Allen graduated from Harvard University summa cum laude and attended medical training at the MD/PhD program at Harvard and MIT. 3 Examples Of Blue Ocean Strategy. In 1914, Thomas Watson at CTR simplified tabulators. Authors believe that the red ocean stands for a market that is overwhelmed with competitors, and the blue ocean represents an unknown market without rivals. Learn more about yellow tail wine’s blue ocean strategy here. In 1952, the first electronic computer, named the UNIVAC, was released by a competitor. Apple observed the flood of illegal music file sharing that began in the late 1990s, enabled by file sharing programs such as Napster, Kazaa, and LimeWire. Examples of Blue Ocean Strategy. Blue Ocean Strategy Summary Three Examples of Blue Oceans While this came in Appendix A in the book, this is a good time to cover three industries with repeated blue ocean creation. In the 1890s, the horse and buggy was the primary mode of transportation. Furthermore, the aim of adopting this strategy is to search for a business in which very few firms operate and where there is no pricing pressure. The key to a successful blue ocean strategy is finding the right market opportunity and making the competition irrelevant. The content was fun and accessible. Blue Oceans, in contrast, denote all the industries not in existence today: the unknown market space, untainted by competition. To illustrate how Blue Ocean Strategy can be used in a variety of industries, we’ll cover three very different industries – automobiles, computers, and movie theaters. Wine alternatives like beer and spirits accounted for the majority of sales, so clearly most Americans saw wine as a turn off. Despite few sales, IBM recognized the promise and released the IBM 650, a less powerful but less complicated computer. In Blue Oceans, demand is created rather than fought over. Traditional circus performances were lighthearted affairs targeted toward children, whereas Cirque … The Australian firm Casella Wines examined the wine industry from a different perspective: how do you make wine that’s easy to drink and fun? Slack and Dropbox are examples. We all wan… Blue Ocean Strategy frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index. However, this discussion will also include the more recently expanded 2015 edition. It is based on practical approaches that have proven results during live market executions. Now that cars were mass-market, Ford’s cars were getting boring. Offering complements to your product – even at cost – may add additional value through bundling. Before movies, a major form of visual entertainment was through live theater or operas. While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers – as argued by Schumpeter and his followers – BOS offers systematic and reproducible methodologies and processes in pursuit of innovation by both new and existing firms. This blog article is a overview of some of the key points of the book by W. Chan Kim and Renée Mauborgne.In this article you will learn how to make your competition irrelevant and have sales and profit … Before we dive into Blue Ocean Strategy examples, let’s get clear on what a blue ocean is. Learn about Cirque du Soleil’s blue ocean strategy here. The phrase “blue ocean strategy” describes a market strategy that differs from the conventional approach of entering an established market and attempting to compete with existing players. Blue Ocean strategy is a framework which inspires to create a market for an innovative product or market where there is a less competition. This was low-cost but relatively slow. BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index. Consider targeting the end-user’s pain points, especially if they’ve traditionally been ignored, and creating a new product with a different value curve. Kim and Mauborgne cite actual cases of companies using the blue ocean strategy, while Josiah Go holds up a few local Philippine companies as outstanding examples: Blue Ocean Strategy is a powerful framework for finding new business opportunities. Based on a study of 150 strategic moves spanning more than 100 years and 30 industries, Blue Ocean Strategy addresses this question and provides a systematic approach to drafting and implementing your own Blue Ocean Strategy. This helped meet a wider array of buyer needs while spreading risk and lowering costs. The Apple II combined existing technology into an easy-to-use solution with compelling software for the home (like word processors and games). This catered primarily to the educated upper class, out of reach of working-class people. The authors were co-directors of the INSEAD Blue Ocean Strategy Institute. This blog which focuses on legal issues in the Philippines gives a brief overview of blue ocean strategy and applies the concept to a number of cases in the Philippines. This article is an excerpt from the Shortform summary of "Blue Ocean Strategy" by W. Chan Kim and Renee Mauborgne. It didn’t feel like a special night out any longer. Novo Nordisk, which made its name manufacturing insulin, addressed the user pain point with the NovoPen, a pen-sized device with an insulin cartridge that allowed easy injection. Blue oceans, where a market space is new and uncontested, and strategy centers around value innovation. Using the framework for building a compelling blue ocean strategy, we will apply the Blue Ocean Strategy Canvas to healthcare across three areas: Where the competition is investing. Your email address will not be published. Products are rarely used in isolation – they’re part of the total experience. (Shortform example: Corporate software-as-a-service (SaaS) products traditionally target the buyer in corporations, like the Chief Information Officer or senior management. To customers, they were largely all different from box wines in the same way. It cost $850, half the price of existing cars. Your email address will not be published. Going to the movies also requires finding a babysitter, parking, and possibly a drink afterward. Creating blue oceans. Blue Ocean Strategy vs Red Ocean Strategy The only way to beat the competition is to stop trying to beat the competition In this concept, a market space is created which is free from any competition. Simple theaters were constructed in lower-rent neighborhoods. It asserts that for businesses to win in the future, they must stop competing. Shows cost only 5 cents and played from morning to night. Dell reduced delivery time to 4 days, compared to the industry average of 10 weeks. In 1914 Palace Theaters created a blue ocean by moving upmarket, creating plush theaters showing longer films with more mature plots. Blue Ocean Strategy Examples: iTunes. Like this article? Methodology/Approach: In the first part of this study, an extensive literary review is presented, solely focused on Blue Ocean Strategy and Business Model Innovation. But the latter was difficult to use, with no monitor, no permanent memory, no keyboard. Defining Blue Ocean Strategy: Red Ocean Versus Blue Ocean. Blue Ocean Strategy is based on “time and again” proven data rather than unproven theories.