Blue Ocean Strategy: Do’s and Don’ts
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.
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 PC (1978) and Dell’s built-to-order computers (mid-1990s).
$1 Billion in Sales? Here’s How to Do It By Anthony Cerminaro
1. Create and sustain a breakthrough value proposition…create an entirely new market…redefine an existing market…underprice the competition…
2. Exploit a high-growth market…
3. Focus relentlessly on cash flow…be profitable from a very early stage…finance growth at less cost than competitors…
4. Leverage big-brother alliances…
5. Pack your board with industry experts…