Blue Ocean Strategy

A lot of people hate it when people say ‘blue sky thinking’ but what about blue ocean strategy does this make you cringe or does it make you think about things in a different perspective.

What is a Blue Ocean Strategy?

Blue Ocean is the pursuit of new markets using differentiation to create a new demand. In a blue ocean this market is not thick with competitors, there is no competition. Who ever enters into this market has first mover advantage. Imagine the most wonderful marketplace where there are no rules, no boundaries, no industry players to compete with. This is the meaning of swimming in a blue ocean.

How many oceans are there? The concept of Blue Ocean is coined by W. Chan Kim & Renée Mauborgne and they argue that there is both a blue ocean and a red ocean.

A red ocean is described as the market as it already exist i.e. what we all know already. The red ocean has a hierarchy that is accepted i.e. xx is the market leader and it cost x to disrupt the existing market place. The players and the game are known to all. In a red ocean companies compete against each other for market share, the market gets crowded and eventually everyone is beat their rivals and we end up with a metaphorical blood bath. This is illustrated by the term the red ocean- swimming in a bath of red waters. Most of the time the market operates within the red ocean, we could argue that this is the norm.

Why don’t we all operate in a blue ocean instead?

If only it was that easy, swimming in a blue ocean is harder than winning the lottery. A blue ocean has no rivals, the industry does not exist, for those who swim in a blue ocean they have created something new and never seen before. For inventors who swim in the vast blue sea, opportunities are ample, the waters remain clear untainted by rivals willing to shed blood to fight for market share. Those who have the strategic vision to swim in a blue ocean are rewarded with wide and deep potential. The ocean is vast and the profits are as big as the ocean.

If you still find this a bit abstract a perfect example is Apple. When they invented the first smartphone this is a classic example of Blue Ocean Strategy. The invention did more than disrupt the market, there was no competitor, apps did not exist, a phone is now as powerful as a computer. Apple did not attempt to swim in the red ocean full of similar devices, instead they created a brand new market, they created a blue ocean.

No ocean can stay blue forever, eventually competitors will copy and move into this space, turning what was once a beautiful blue ocean into a red one. Apple has since lost some of their blue ocean advantage, for the time being we can wait to see if they develop another new product that embodies the spirit if the blue ocean.

HBR wrote an interesting article on how Ava Duvernay managed to create a blue ocean in Hollywood relating to her Netflix doucumentaries most recently “When they see us” https://hbr.org/2019/08/how-ava-duvernay-is-finding-blue-oceans-in-hollywood . It’s a good example of how blue oceans can be created anywhere.

This piece of inspiration is normally more suited for strategy or marketing. From a procurement perspective have a think about how the blue ocean concept might be used?

If you are looking specifically for a procurement strategy click here

1. Design the strategy canvas: The strategy canvas is a visual representation of the current market space and how your new value proposition differs from existing offerings. Plot key industry factors along the X-axis (e.g., product features, pricing) and their level of offering on the Y-axis (e.g., high, medium, low). Use this canvas to showcase your unique position and value proposition.
2. Create a business model canvas: Develop a detailed business model canvas that outlines the key elements of your business strategy, including customer segments, revenue streams, cost structure, key activities, and partnerships. This canvas will provide a holistic view of your new market approach.
3. Develop an execution plan: Define the actions, resources, and timelines required to implement your Blue Ocean Strategy. Create a roadmap that outlines the necessary steps to launch and scale your new market offering successfully.