Blue Ocean Strategy
by Renée Mauborgne and W. Chan Kim
Blue Ocean Strategy describes how to build a business strategy that operates outside of the traditional norms. The book describes a Red versus Blue Ocean and provides tools and techniques to create blue oceans. In the book, the red ocean is an ocean filled with sharks (businesses), and all the sharks going after the same food supply (customers). In the blue ocean, you create a new business paradigm that only you will be swimming in, and you do not maximize business revenue at the cost of the customer.
The book is broken into three parts. The first part describes what a Blue Ocean is and covers the tools and frameworks used to define a Blue Ocean. The second part provides details on formulating a Blue Ocean strategy using the concepts introduced in the first part. The third part provides insight on executing against a Blue Ocean Strategy.
- Chapter 1 provides a description and examples of Blue Ocean thinking and application.
- Chapters 2-6 cover the four key principles to the Blue Ocean approach. Each Principle addresses a risk (search, planning, scale, business model). These four chapters are the meat of the process.
- Chapter 7 introduces the notion of tipping point leadership, which helps with organizational risk.
- Chapter 8 describes fair process, an approach to integrating execution into strategy creation. This helps with management risk.
- Chapter 9 covers using what the authors’ call alignment to make the strategy sustainable, in order to help with sustainability risk. This involves aligning value, profit, and people.
- Chapter 10 focuses on renewal risk and covers how to manage and monitor a blue ocean business.
- Chapter 11 covers the Top Ten red ocean traps to avoid.
- Appendix A provides examples of businesses that have taken Blue Ocean approaches and how they differentiated themselves from other companies.
- Appendix B describes the Reconstructionist view of strategy and new growth theory.
- Appendix 3 describes the market dynamics of value innovation.
I suggest reading the first chapter and then reading one or two examples from Appendix A. From there, take your time reading Chapter 1 again, paying attention to the descriptions of Chapters 2-6. Read Chapter 2-6 and then stop reading the book until you practice using the tools.
A good approach to using the tools is to find a company you are interested in, downloading their SEC 10K for the current year and completing the Blue Ocean templates we provide. Once you’ve completed the templates, re-read Chapters 2-6, updating your work. Once done, read the rest of the book and consider how you would shift from creating a strategy to execution and maintenance (over time) of the strategy.