What Is Blue Ocean Strategy?

As a business method, blue ocean strategy is not meant to outsell or outproduce a business rival, though proper implementation of the strategy may have this result.

Developers of the blue ocean strategy emphasize that the objective is to come up with a whole new place in which to do business, a market that no one else is working in. Thus the name of the program – find a blue ocean, a new ocean to swim in.

Beyond the concept of this blue ocean, the strategy package includes specific methods with which the new sea can be found or created. As with any business program or strategy for change, only the proper use of the correct tools will yield success.

Key among the terms used in the blue ocean strategy are methods, processes, and frameworks. The emphasis, designers state, is on getting everyone to literally see the implements to be used, to see the path toward a new ocean. To do so, management and task leaders must first address forming a strategy within the blue ocean guidelines.

There are key building blocks that must be part of this concept. They are value innovation, tipping-point leadership and fair process.

Many new and exciting business strategies are available in book form, and blue ocean strategy is no different. But developers caution managers and owners not to stop at reading the material. Hit-and-miss implementation of just a few steps will hardly produce the desired result, note blue ocean strategy creators.

Material for this relatively new strategy includes the description of current industries as red oceans. These are the known markets bounded by accepted limits and rules. The emphasis in the red ocean is, most often, increasing numbers by performing aggressively. The idea of a red ocean comes from the concept of cutting the competition’s throat.

In contrast, the blue ocean strategy concentrates on non-existing industry, those that are in an unknown market area. Rather than grabbing for a share of the kill, as in a red ocean, businesses in a blue ocean world create a demand for the product or service. Potential is a key word in this strategy.

Two words stand out in this concept – value and innovation. Putting the two together means that managers, owners, and employee teams actually create value for the customer and, in turn, creates value for the business itself. With blue ocean strategy, the plan must include providing excellent value at a reasonable cost.

Credit for this creative concept goes back to a Michigan State University professor named Charles Hill. He proposed that companies must combine being different with low cost to be consistently successful. Others have introduced similar programs in the years since Hill first talked about blue ocean (1988).

In sum, the blue ocean strategy is based on being the opposite of a red ocean company, because the aggressive competition required in traditional business settings may not be sustainable over a longer period of time. In addition, the leaders of this strategy must be able to carry the task forward once it becomes clear that the new strategy is getting results.

Following that, the process must begin as fair and equitable for those involved and must remain so throughout. With red ocean strategy, the developers say, value and low cost are seen as competing factors that benefit no one in the long run.