A couple of week ago an acquaintance of mine recommended that I read a book called Blue Ocean Strategy. Now typically what happens when someone gives me an unsolicited recommendation like that is that I file it away in the “later” pile and often never get around to it.
As it happens though I really trust this person’s opinion, and the fact that he made a special point of recommending it to me gave me the extra motivation needed to go out and purchase the book.
And boy am I glad I did.
Blue Ocean Strategy is a business book, and as such it is truly excellent, but the principles it is based on can actually apply to many aspects of life.
What is blue ocean strategy?
To explain blue ocean strategy one first needs to understand what it’s opposite is. If you guessed it is red ocean strategy, you’re right.
Red ocean strategy describes the standard method of doing business, in which everyone is battling for the same piece of the pie. Every company is a shark in direct competition with other sharks, scrambling for every scrap of food, or market share, creating a blood bath in the process, hence, the red ocean.
With this strategy, everyone is fighting for an ever smaller piece of the pie, and only the strongest, and luckiest survive. There is little room for new entrants to use this strategy, no matter how compelling their product or service might be.
An extreme example of a red ocean strategy is the Linux operating system. Several times over, companies, some of them very large and powerful (Corel) have attempted to market Linux as a desktop PC operating system, in direct competition with Microsoft Windows. Every time they have failed to have any noticeable success.
Because Windows is firmly entrenched in the market, and Linux is not significantly different enough from Windows for people to see a benefit. Linux is seen, and rightly so, as being kind of like Windows, but less compatible and harder to use. To geeks who enjoy a challenge, Linux is appealing. No one else even knows what it is.
Linux has not seen success because it has entered an already saturated market, without being different enough to be compelling.
A blue ocean strategy is the exact opposite. Blue ocean is about created a market for something that did not exist before, and marketing it in a space free from competition.
Starbucks in it’s early days employed a blue ocean strategy. Prior the arrival of Starbucks there was no market in North America for high-priced, premium coffee. Canadian’s had Tim Horton’s and American’s had Dunkin’ Donuts. Starbucks created a market that did not previously exist, and enjoyed years relatively free of competition. This was the key to their success.
So what is the book all about?
Blue Ocean Strategy is not simply a collection of case studies, although there are plenty.It is also a comprehensive how to guide. Here is the chapter outline.
- Creating Blue Oceans
- Analytical Tools and Frameworks
- 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
- Conclusion: The Sustainability and Renewal of Blue Ocean Strategy
Each chapter is extremely in-depth and contains real actions steps to take, and includes a wealth of flow charts and graphs which are not only helpful, but easy to understand. Case studies are interwoven into the text, so you never find yourself bored or overwhelmed by the details.
If you’re imagining that the book is one of those long-winded space fillers and that blue ocean strategy could be summed up as “think of and original idea, don’t copy what’s been done”, you;d be wrong. That is only one small part.