Blue Ocean strategy involves market-creating innovation. It opens up new possibilities that are not available to organizations operating within the existing cost-value structure. It expands the universe as to what is possible, often enabling higher value at lower cost.
In their work since the launch of their 2005 book, the authors have found three key components in successful Blue Ocean shifts:
• Mindset: The authors found that, as in the world of Agile management, Blue Ocean strategy is fundamentally a shift in mindset. It involves “expanding mental horizons and shifting understanding of where opportunity lies.”
• Tools: Successful implementers of Blue Ocean strategy have used practical tools to systematically “translate blue ocean thinking into commercially compelling new offerings.” Sporadic, one-off “Blue Ocean strategy” is one thing: systematically adopting Blue Ocean thinking is another.
• Human-ness: Successful implementers exemplify “a humanistic process, which inspires people’s confidence to own and drive the process to own and drive the process for effective execution.”
The Blue Ocean Mindset
Perhaps the most important chapter is Chapter 3, which delineates the Blue Ocean mindset and the distinctive opportunity-based thinking that is at the foundation of Blue Ocean strategy. It is a perspective that enables strategists “to ask a fundamentally different set of questions,” the answers to which “in turn enable them to perceive and appreciate the fallacies behind long-held assumptions and the artificial boundaries we unknowingly impose on ourselves.”
It describes for instance how Salesforce.com was able to upend the customer-relationship management industry through providing services on a subscription basis through the cloud. Such Blue Ocean strategists epitomize strategic agility by focusing on creating and capturing new markets, not fighting over existing customers. In effect, they “think different.”
The Five Step Process
The book offers a five-step process for systematically reproducing such strategic triumphs, and shows how a Blue Ocean initiative can be successfully launched in even the most bureaucratic organization that is trapped in a bloody Red Ocean. The five steps are:
1. Choosing the right place to start and constructing the right Blue Ocean team for the initiative.
2. Getting clear about the current state of play
3. Uncovering the hidden pain points that limit the current size of the industry and discovering an ocean of non-customers.
4. Systematically reconstructing market boundaries and developing alternative Blue Ocean opportunities.
5. Selecting the right Blue Ocean move, conducting rapid market tests, finalizing, and launching the shift.
