Product Description

Winning by not competing: a fresh approach to strategy Since the dawn of the industrial age, companies have engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. Yet these hallmarks of competitive strategy are not the way to create profitable growth in the future. In a book that challenges everything you thought you knew about the requirements for strategic success, W. Chan Kim and Renée Mauborgne argue that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, the authors argue that lasting success comes not from battling competitors, but from creating “blue oceans”: untapped new market spaces ripe for growth. Such strategic moves—which the authors call “value innovation”—create powerful leaps in value that often render rivals obsolete for more than a decade. Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture blue oceans. A landmark work that upends traditional thinking about strategy, this book charts a bold new path to winning the future.

Product Details

• Amazon Sales Rank: #1119 in Books
• Published on: 2005-01-01
• Original language: English
• Binding: Hardcover
• 256 pages

From Publishers Weekly
Kim and Mauborgne's blue ocean metaphor elegantly summarizes their vision of the kind of expanding, competitor-free markets that innovative companies can navigate. Unlike "red oceans," which are well explored and crowded with competitors, "blue oceans" represent "untapped market space" and the "opportunity for highly profitable growth." The only reason more big companies don't set sail for them, they suggest, is that "the dominant focus of strategy work over the past twenty-five years has been on competition-based red ocean strategies"-i.e., finding new ways to cut costs and grow revenue by taking away market share from the competition. With this groundbreaking book, Kim and Mauborgne-both professors at France's INSEAD, the second largest business school in the world-aim to repair that bias. Using dozens of examples-from Southwest Airlines and the Cirque du Soleil to Curves and Starbucks-they present the tools and frameworks they've developed specifically for the task of analyzing blue oceans. They urge companies to "value innovation" that focuses on "utility, price, and cost positions," to "create and capture new demand" and to "focus on the big picture, not the numbers." And while their heavyweight analytical tools may be of real use only to serious strategy planners, their overall vision will inspire entrepreneurs of all stripes, and most of their ideas are presented in a direct, jargon-free manner. Theirs is not the typical business management book's vague call to action; it is a precise, actionable plan for changing the way companies do business with one resounding piece of advice: swim for open waters.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Fort Worth Star Telegram, 14 February 2005
"Companies struggling to stay afloat in the market's...red oceans would do well to look into Blue Ocean Strategy."

March 2005, American Way
“Blue Ocean raises pertinent questions… and delivers valuable answers.”

Customer Reviews

Top-Down Strategic Planning for Business Model Innovation

The authors looked at the business launches of 108 companies, and found that those which emphasized serving competitively uncontested customer needs were only 14 percent of the cases. Yet those "blue ocean" launches accounted for 61 percent of the total profits (or almost 10 times as many profits on average per launch as those who went after "red oceans," where competitive space is already served).

Rather than examining the processes that companies used to create these wins, the authors investigated the common strategic elements of the "blue ocean" cases they found, and developed a strategic planning process designed to focus on those elements. In the last 15 years, they have experimented with that process with a number of consulting clients and now report the results of their latest refined process.

They propose four principles formulate a strategy:

1. Reconstruct market boundaries
2. Focus on the big picture, not the numbers
3. Reach beyond existing demand
4. Get the strategic sequence right.

They also propose two principles to implement strategy:

5. Overcome key organizational hurdles
6. Build execution into strategy.

For applying each of the strategic principles, the authors describe different paths and steps, and provide simple, analytical tools designed to be applied in a back-of-the-envelope analysis.

1. Reconstruct market boundaries

Paths for this part of the process include looking across functional substitutes from other industries, different segments within an existing industry, different linked sets of buyers and buying influencers, complementary offerings, availability of functional versus emotional appeals, and extend the time perspective for a longer period. The key tool for this analysis is a simple strategy canvas that documents the areas where offerings have characteristics and whether the characteristics are positioned to be "high" or "low." Examples of this analysis abound.

2. Focus on the big picture, not the numbers

This part of the process comes in four steps:

a. Draw a strategy canvas (as described above) to see where change is needed
b. Directly observe customers and stakeholders being affected by current offerings
c. Have senior executives propose alternative strategy canvas solutions and pick a winner
d. Share the resulting strategy canvas to everyone and test it for implementation feasibility.

3. Reach beyond existing demand

You investigate specifically the needs of those who are about to stop buying in the existing industry, those who reject the existing offerings already, and noncustomers who buy now from markets distant from yours.

4. Get the strategic sequence right

You carefully check out the resulting idea in this order:

a. Does it add lots of new customer value (in terms of purchase, delivery, use, supplements, maintenance and disposal relative to customer productivity, simplicity, convenience, risk, fun and image, and environmental friendliness)?
b. Can most buyers afford the price?
c. Can you make a profit at that price?
d. Can you overcome the adoption challenges?

Blue Ocean Strategy converts into a discussion of implementation challenges from chapter 7 on, emphasizing "tipping point leadership" (refocusing attention, shifting resources from ineffective to effective areas, and gaining credibility); "fair process implementation" (involvement by employees and stakeholders rather than being treated like objects); putting up barriers to imitation; and repeating the process.

As you can see, this is a process-intensive "how to" book rather than a conceptual book, although the authors have chosen a powerful metaphor that helps offset the B-School diagrams and new terms and phrases.

The authors seem to be consciously trying to create a simpler, alternative version of Professor Michael Porter's classic, Competitive Strategy that excludes a focus on the classic simple strategies of more value, lower price or greater closeness to customers (see The Discipline of Market Leaders).

I found the book to be a close parallel to Professor Christensen's latest book for technology company innovation, Seeing What's Next, except Blue Ocean Strategy is intended to apply mostly to nontechnology companies. Both offer theories of an innovation process that they feel could work and early experiences with the process.

Both approaches remind me of the beginnings of reengineering. In fact, I renamed this book "Reengineering the Business Model" in my mind. I hope the experience with this process will be better than what followed from reengineering.

By contrast, I would like to humbly suggest that future researchers consider monitoring and examining instead the business model innovation processes of those who repeatedly introduce new business models that combine higher value, lower prices and reduced costs. I was shocked to see that such innovators were largely ignored in this book in favor of writing about cases where a single major business model innovation occurred in an organization.

If the authors had studied these examples (which have been described in the strategy literature since 1992), they would have discovered that business-model innovation of the sort they describe is more often driven by bottom-up sources and experiments rather than the top-down planning they support. As a result, I believe that their process will turn out to be relatively unproductive compared to the existing best practices in business model innovation.

As a result of that oversight, I concluded that this book will have its primary value for:

1. Entrepreneurs who are beginning to formulate a business model for a start-up and
2. Consultants who want a new service to sell to large companies who don't understand business model innovation.

I also have some quibbles with the scholarship behind the book. The key study for validating the superiority of Blue Ocean strategies isn't footnoted to a source and there is no documentation of the methodology, the sample used, the measurements or anything else that allows a reader to check out the conclusions.

Facts were frequently misstated or overstated in the beginning, once even contradicting the authors' own footnotes (saying that In Search of Excellence was published 20 years ago on page 9 while a footnote correctly states the publication date as 1982). Another example is the authors stating that the mutual fund industry was not a multibillion dollar industry in 1975 (really? -- I don't think so), nor were coffee bars a big business (the authors teach in Europe where coffee bars have been a huge business for many decades), and discount retail was not large then (ever heard of Wal-mart, Kmart, Levitz Furniture, etc.?).

For me, the best part of this book came in a few new cases that I wasn't familiar with before such as Curves (fitness salons for women), NovoLet (preloaded insulin injection pens), NABI (more durable, less costly to maintain buses), the Joint Strike Fighter (one platform customized for each branch of the U.S. military), and i-mode (Internet access on a cell phone in Japan). I thought all of the cases were well described.

If you are a serious student of strategic thinking, you should read this book. The book's content will come up in conversation, and you should have an opinion about these ideas.

Blue Ocean Strategy
A must read for any leader, January 1, 2007
I recently read, "Blue Ocean Strategy " How to create uncontested market space and make the competition irrelevant" by Chan Kim and Renee Mauborgne. The title really tells it all. The book talks about creating uncontested market space on the theory that contested market space is very difficult to make money on. It is now one of my favourite books.

There is no such thing as riskless strategy. Strategy always has to involve both opportunity and risk but the present playing field is dramatically unbalanced in favour of tools and analytical frameworks exceeded in existing businesses. As long as this remains true, existing businesses will continue to dominate companiesâ(tm) strategic agenda even if it is a business imperative for creating new initiatives and takes on a new urgency.

One thing that I like about the book is that it uses multiple examples of companies who have revolutionized the industry that they are in by creating brand new markets and brand new spaces. For example, they talk about the automobile business moving from the Model T to General Motors, to small fuel efficient Japanese cars to the Chrysler mini-van, etc.

One of the most interesting stories was about the Japanese hair cut that used to cost $40 to $50 and included everything from a shoulder and scalp massage to shampoo, etc., but generally took an hour and subjected the customers to long waits. When a chain of barber shops went into Japan offering no appointments and traditional haircutting like we are accustomed to in North America, the chain thrived in a big way.

This example explains part of what the book proposes. The key is to look at what is really being offered and look at what parts you can dramatically improve. Often you can end up with lower costs while at the same time adding more value to the customer. In the case of the barbershop, they were able to reduce the cost by not having to spend as long on each customer, not serving tea, etc. While at the same time, reducing the customers waiting time which is an important commodity. The customers were not valuing the extras as much as they were valuing having their hair cut.

A very useful business strategy thinking guide
You will read the first few pages and quickly reach the same conclusion as the authors. A blue ocean strategy makes a lot of sense. However, designing and implementing such strategy requires a deeper understanding. I found that the authors did a great job at simplifying their information into blocks that are easily learned. They provide a simple yet complete framework that will help you redefine your business strategy into the blue ocean.