Turnbacktheclock

Whichindustriesdidnotexist?

100years
50years
30years
20years
10years
5years

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Creating Uncontested Market Space and

Making the Competition Irrelevant

Cirque du Soleil
Blue Ocean Strategy

Red Ocean Strategy

Blue Ocean Strategy

Summary of Blue Ocean Strategy

New Market Space
Continuing Creation of Blue Oceans
Impact of Creating Blue Oceans
Rising Imperative of Creating Blue Oceans
From Company and Industry to Strategic Move
Value Innovation
Formulating and Executing Blue Oceans

New Market Space

Creating Blue Oceans Is Consistent Across Time
Regardless of Industry

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Fords 1908 Model T

1970 The First Mouse

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CNN 1980
Real-Time News 24/7

2002 Apples ipod

Continuing Creation of Blue Oceans

Impact of Creating Blue Oceans

Rising Imperative of Creating Blue Oceans

Driving forces include:

Technological advances & improved industrial productivity
Unprecedented array of products and services available
Supply exceeds demand
Globalization, niche markets and monopolies disappear
20th century strategy and management approach waning

Formulating and Executing Blue Oceans

From Company and Industry to Strategic Move

Value Innovation, Blue Oceans Cornerstone

TheParadoxofstrategy
Theverylanguageofstrategyisdeeplyimbued
withmilitaryreferenceschiefexecutive
"officers"in"headquarters,"troops"onthe"front
lines."
Describedthisway,strategyisallaboutredocean
competition.Itisaboutconfrontinganopponent
anddrivinghimoffabattlefieldoflimited
territory.
Blueoceanstrategy,bycontrast,isaboutdoing
businesswherethereisnocompetitor.Itisabout
creatingnewland,notdividingupexistingland.

Ablueoceaniscreatedintheregionwherea
company'sactionsfavorablyaffectbothitscost
structureanditsvaluepropositiontobuyers.
Costsavingsaremadefromeliminating
andreducingthefactorsanindustrycompetes
on.Buyervalueisliftedbyraisingandcreating
elementstheindustryhasneveroffered.Over
time,costsarereducedfurtherasscale
economieskickin,duetothehighsales
volumesthatsuperiorvaluegenerates.

TheSimultaneousPursuitofDifferentiationandLowCost

TheBookandthe
Authors

JOHN ABBOTT

Prof Chan Kim

JOHN ABBOTT

Prof Renee
Mauborgne

Accolades
Over2millioncopiessold

Translatedintoover41foreign
languagesaworldrecord
Taughtasthemajortheoryofstrategy
atleadingbusinessschools
GivesinsightstoCEOs,Executives,
HeadsofStateandPrimeMinisters

WhatistheBlueOcean?
Highprofitgrowthatlowrisk
Industriesnotinexistencetoday
Untappedmarketdemand
Unknownmarketspace

Summary
Conventional Logic

Blue Ocean Logic

Industry
Assumption

Industry conditions are

given

Industry condition can be

shaped.

Strategic
Focus

Build competitive advantages

to beat the competition.

Create a quantum leap in

buyer value to dominate the
market.

Customers

Retain and expand the

customer base through further
segmentation and
customization.
Think in terms of embracing
customer differences.

Go for the mass of buyers

and willingly let some
existing customers go. Think
in terms of embracing key
customer value
commonalities.

Summary
Conventional Logic

Blue Ocean Logic

Assets &
Capabilities

Think in terms of a
companys existing assets
and capabilities.
Build on what it has.

Think free from a companys

existing assets and
capabilities.
Ask, what if we start anew?

Product/
Service
offerings

Think in terms of
products/services offered by
the industry. Seek to
maximize the value of these
offerings.

Think in terms of buyers

solution even if that transcends
the industry. Seek to solve
buyers major bottlenecks/chief
compromises in using the
products/services of the
industry.

Four Actions to create a Blue

Raise
Ocean
What factors
should be raised
well beyond the
industry standard?

Eliminate

Create

What factors
should be
eliminated that the
industry has taken
for granted?

What factors should

be created that the
industry has never
offered?

Reduce
What factors
should be reduced
well below the
industry standard?