Blue Ocean Strategy

The whole field of strategy intrigues me, especially as it applies to business pursuits. My current profession of managing projects is typically concerned with more tactical pursuits such as completing my activities on time and within budget, but I often like to view projects that I am working on for their strategic impacts. This probably stems from my background in running my own business, as I was constantly looking for strategies to stay ahead of the competition.

It was with interest that I ran into this article explaining "Blue Ocean" strategy which is the title of a book Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renée Mauborgne, which was one of Harvard Business School Press' best selling books. In this primer published by Insead, it summarizes blue ocean:

The rule of strategy has been that to gain share in a given market place you must take something from the competitor. In other words, you win, they lose. This is known as zero-sum gain... In this traditional view of strategy, it is presumed that the structure is fixed – the environment and conditions are already determined and cannot be changed by the efforts of a company. In academic terms this is known as the structuralist view or environmental determinism. “Strategy thus becomes a question of outpacing rivals to gain a greater share from a limited economic pie,” Mauborgne says. “But when we look at industry who do we admire most? Those who outpace rivals? Yes, we admire winners. But more so, we admire people who create new paradigms, businesses and market spaces. These are what expand the pie of intellectual and creative wealth. In other words, creating a non-zero sum game.” This shift from win-lose to a win-win is the essence of Kim and Mauborgne’s Blue Ocean strategy.

The diagram below highlights the main points and differences:




Though the argument is interesting, I can't help but feel that this is hardly an original thesis. There have been numerous books which have positioned the same assertion such as The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials) by Clayton M. Christensen back in the 90s.

Nevertheless, I may read the book as the primer indicates it has case studies and practical examples such as how "Cirque du Soleil eliminated animals and star performers from the show, which dropped its cost structure and created an all new element of artistic dance and music to achieve differentiation." I have been impressed with how this franchise has been able to constantly re-invent themselves and sustain their niche market share given that the circus has all but disappeared as an entertainment venue.

Given the projects I'm currently working on, the major focus of all of them is based on this reconstructionist notion of needing to simultaneously differentiate yourself from the competition while keeping costs down, and is probably why I have not had any free time. As everyone attempts to differentiate, the irony is that the process of differentiating is such a widespread practice, that it no longer differentiates you to differentiate! Maybe the new strategy is not to differentiate but to aggregate and synthesize. Maybe I'll write the next big strategy book...