You want to find your own little piece of paradise in the cutthroat world of business?

In the ever-evolving landscape of business strategy, few concepts have captured the imagination of entrepreneurs quite like the Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne. Introduced in 2005, they developed the signature approach for businesses seeking to break free from the rough waters of brutal competition, also known as the red ocean. And it’s stood the test of time.

The Blue Ocean Strategy is about creating uncontested market space, much like how Steve Jobs revolutionized the music industry with the iPod and iTunes. It's not about outperforming the competition within existing industry boundaries, but about redefining those boundaries altogether. Past others who trod this path include Thomas Edison and Henry Ford are often cited as those who famously created new market categories. But for a more modern example, how about Sara Blakely with Spanx?

To put it another way, imagine you’re at a crowded beach where everyone’s fighting for their plot of sand. That's like your typical business thrashing about in the red ocean. Now imagine finding a secret, pristine beach where you can pick any spot you desire with room to roam. That's a blue ocean. That’s what you want to strive for. It’s where you’re not racing to the bottom competing on price. It’s where you’re creating a market rather than taking market share from someone else.

So how do you find your blue ocean?

The strategy employs a set of analytical tools and frameworks such as Strategy Canvas, which provides a visual representation of a company's relative performance across key competitive factors. It's a tool that allows strategists to see the forest for the trees.

Another tool central to the Blue Ocean approach is the Four Actions Framework – Eliminate, Reduce, Raise, and Create. This framework challenges companies to question every factor their industry takes for granted. It’s about pushing the boundaries of conventional thinking to arrive at breakthrough insights. It’s about seeing what others don’t. And then building from there.

The success stories cited in the book include Cirque du Soleil, which reimagined the circus, creating a new form of entertainment that blended theater with acrobatics. Another, Yellow Tail wine democratized wine consumption, making it accessible to beer drinkers. Okay, we know wine affianados likely aren’t their customer but they found a huge untapped market! It’s not something a fine French winemaker, who competes in a very red ocean, would even consider. Then Nintendo's Wii expanded the gaming market by appealing to non-gamers.

It’s not all rainbows and unicorns

The path to creating a Blue Ocean does have its challenges. Companies often fall into the trap of focusing too much on existing customers, much like how Kodak clung to its film business even as the digital revolution loomed. Kodak even invented the digital camera in 1975, but they feared it would cannabalize their film business and dismissed its potential. In fact, they dismissed the impact of Sony’s first consumer digital camera in 1981 too. And look where they are now. Steve Ballmer of Microsoft famously dismissed the first iPhone because it didn’t have a keyboard and was the most expensive phone on the market. Yet, history proved we didn’t miss the keyboard.

Others might ignore competition entirely, a dangerous oversight in a world where disruption can come from unexpected places – a lesson painfully learned by companies like Blockbuster when Netflix emerged. The moral? Never, ever, get complacent.

The key to avoiding these pitfalls lies in validating assumptions. Companies must experiment, iterate, and refine their Blue Ocean strategies. Thomas Edison has the famous quote, “I have not failed. I’ve just found 10,000 ways that won’t work.”

Tools like the Buyer Utility Map and the Three Tiers of Noncustomers provide a structured approach to this process, making sure that innovation is grounded in reality.

Blue Ocean Strategy is a mindset and it isn’t for the faint of heart. Or those looking for a map. It operates in a world where there is no map. It requires bold, visionary thinking that can scare many away. For one may not be right and have to pivot or start over.

To go deeper, check out the book or their website. And then get to work locating that private beach and avoid the crowds altogether.

A kickstart for you:

What industry assumptions are you taking as gospel? What might be possible if you challenged them? Think about how you can find fresh perspectives on the problems you’re solving within the industry you play in. Then try exploring the tools mentioned above to turn the waters you’re swimming in from red to blue.

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