Blue Ocean Strategy

Good Books + New Business Models: (via Emergic) Here is an excerpt from one of the online customer reviews on Amazon.com by Peter Leerskov about the book:

What is a Blue Ocean Strategy?
The authors explain it by comparing it to a red ocean strategy (traditional strategic thinking):

1. Do not compete in existing market space. Instead you should create uncontested market space.

2. Do not beat the competition. Instead you should make the competition irrelevant.

3. Do not exploit existing demand. Instead you should create and capture new demand.

4. Do not make the value/cost trade-off. Instead you should break the value/cost trade-off.

5. Do not align the whole system of a company's activities with its strategic choice of differentiation or low cost. Instead you should align the whole system of a company's activities in pursuit of both differentiation and low cost.

A red ocean strategy is based on traditional strategic thinking - e.g. Harvard's strategy guru Michael Porter. A blue ocean is created in the region where a company's actions favourably affect both its cost structure and it value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.

Examples of strategic moves that created blue oceans of new, untapped demand:
- NetJets (fractional Jet ownership)
- Cirque du Soleil (the circus reinvented for the entertainment market)
- Starbucks (coffee as low-cost luxury for high-end consumers)
- Ebay (online auctioning)
- Sony (the Walkman - personal portable stereos)
- Cars: Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984)
- Computers: Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).

Blue Ocean Strategy provides a framework to start thinking about new opportunities.

I think there must more ideas to come out of Blue Ocean Strategy + the concept is a tipping point + only time will tell whether the concept works in diverse business landscapes.