Blue Ocean Strategy

LeadershipBlue Ocean StrategyCultureGoal Setting

Nov 25

Blue Ocean Strategy is one of the best-selling business strategy books of all time, but it is often misunderstood.

A blue ocean strategy is when a company finds and fills an uncharted customer experience. Since the waters are uncharted, it’s smooth sailing. No competitors exist. Red oceans, by contrast, are well-known, crowded markets. The competition is fierce and the waters are bloody.

Here are three examples of blue ocean strategies:

Cirque du Soleil delivers a circus-like theatrical experience. But they don’t compete with Ringling Brothers; Cirque de Soleil aimed at adults and corporate clients that could pay several times more than a traditional circus. They stripped away everything but the acrobats and delivered a new high-end experience.
The auto industry has gone through several blue ocean transitions. In the 1960s, GM made cars fun, comfortable, and fashionable. Then the Japanese automakers dominated the 1970s with fuel-efficient, low-cost cars. Chrysler roared back from the edge of bankruptcy in 1984 with the minivan--car/van hybrids that could carry the entire family and dogs, bikes, and toys.
Few would choose wine as a market for innovation. Yet, in just two years, Yellow Tail became the fastest-growing wine in history. They simplified the wine experience by reducing options, simplifying labels, and creating a fun vibe. Yellow Tail made wine for everyone, including beer drinkers.

Here’s the misunderstanding: usually, blue oceans are NOT about technology innovation. Customer experience is what matters. Cirque du Soleil created a new circus-like experience. GM created a fashionable driving experience in 1960s. Yellow Tail created an upscale experience for beer drinkers and a casual experience for drinkers of expensive wine.

Of course, technology can be important. Tesla is a great example. But Tesla also created a new, luxury EV experience.

Panera Bread’s blue ocean had nothing to do with technology. Read The Panera Bread Blue Ocean to learn how they avoided sharks in the bloody red ocean of fast food.