NintendoPie said:
happydolphin said:
If they were going Red Ocean, they really weren't careful with their image and catering to the congested marketspace's needs and interests.
The image of this looks more Blue Ocean than anything, catering to the younger demographics... A failed strategy maybe, but that was their direction in terms of image at least.
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Please, HappyDolphin, explain to me what "Blue Ocean" and "Red Ocean" mean. I'm so confused. -.-
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I just read the Wikipedia article and will break it down for you, it's kinda hard to read I agree.
Book layout and highlight
The book is divided into five parts:
The first part presents:
- key concepts of blue ocean strategy, including Value Innovation – the simultaneous pursuit of differentiation and low cost – and key analytical tools and frameworks such as the strategy canvas,
- the four actions framework
- the eliminate-reduce-raise-create grid.
The second part describes:
- The four principles of blue ocean strategy formulation:
- how to create uncontested market space by:
- reconstructing market boundaries,
- focusing on the big picture,
- reaching beyond existing demand and
- getting the strategic sequence right.
These four formulation principles address how an organization can create blue oceans by
- looking across the six conventional boundaries of competition (Six Paths Framework),
- reduce their planning risk by following the four steps of visualizing strategy,
- create new demand by unlocking the three tiers of noncustomers and
- launch a commercially-viable blue ocean idea by aligning unprecedented utility of an offering with strategic pricing and target costing and by overcoming adoption hurdles.
- The book uses many examples across industries to demonstrate how to break out of traditional competitive (structuralist) strategic thinking and to grow demand and profits for the company and the industry by using blue ocean (reconstructionist) strategic thinking.
The third and final part describes:
- The two key implementation principles of blue ocean strategy including:
- tipping point leadership and
- fair process.
These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed.
- The four key hurdles comprise the
- cognitive,
- resource,
- motivational and
- political
Hurdles that prevent people involved in strategy execution from understanding the need to break from status quo, finding the resources to implement the new strategic shift, keeping your people committed to implementing the new strategy, and from overcoming the powerful vested interests that may block the change.
In the book the authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base create unconventional success – a strategy termed as “Blue Ocean Strategy”.
Unlike the “Red Ocean Strategy”, the conventional approach to business of beating competition derived from the military organization, the “Blue Ocean Strategy” tries to align innovation with utility, price and cost positions.
The book mocks at the phenomena of conventional choice between product/service differentiation and lower cost, but rather suggests that both differentiation and lower costs are achievable simultaneously.
The authors ask readers “What is the best unit of analysis of profitable growth? Company? Industry?” – a fundamental question without which any strategy for profitable growth is not worthwhile.
The authors justify with original and practical ideas that neither the company nor the industry is the best unit of analysis of profitable growth; rather it is the strategic move that creates “Blue Ocean” and sustained high performance.
The book examines the experience of companies in areas as diverse as
- watches,
- wine,
- cement,
- computers,
- automobiles,
- textiles,
- coffee makers,
- airlines,
- retailers, and even
- the circus
to answer this fundamental question and builds upon the argument about “Value Innovation” being the cornerstone of a blue ocean strategy.
Value Innovation is necessarily the alignment of innovation with utility, price and cost positions. This creates uncontested market space and makes competition irrelevant. The following section discusses the concept behind the book in detail.
[edit]Concept
The metaphor of red and blue oceans describes the market universe.
Red Oceans are all the industries in existence today – the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.
Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the ocean bloody. Hence, the term red oceans.[2]
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Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over.
There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.[2]
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Cirque du Soleil – an example of creating a new market space, by blending opera and ballet with the circus format while eliminating star performer and animals
The cornerstone of Blue Ocean Strategy is 'Value Innovation'. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.
The authors criticizeMichael Porter's idea that successful businesses are either low-cost providers or niche-players. Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost. Educator Charles W. L. Hill proposed this idea in 1988 and claimed that Porter's model was flawed because differentiation can be a means for firms to achieve low cost. He proposed that a combination of differentiation and low cost might be necessary for firms to achieve a sustainable competitive advantage.
Funky Business (Swedish book)
Many others have proposed similar strategies. For example, Swedish educators Jonas Ridderstråle and Kjell Nordström in their 1999 book Funky Businessfollow a similar line of reasoning. For example, "competing factors" in Blue Ocean Strategy are similar to the definition of "finite and infinite dimensions" inFunky Business. Just as Blue Ocean Strategy claims that a Red Ocean Strategy does not guarantee success, Funky Business explained that "Competitive Strategy is the route to nowhere". Funky Business argues that firms need to create "Sensational Strategies".
Just like Blue Ocean Strategy, a Sensational Strategy is about "playing a different game" according to Ridderstråle and Nordström. Ridderstråle and Nordström also claim that the aim of companies is to create temporary monopolies. Kim and Mauborgne explain that the aim of companies is to create blue oceans, that will eventually turn red. This is the same idea expressed in the form of an analogy. Ridderstråle and Nordström also claimed in 1999 that "in the slow-growth 1990s overcapacity is the norm in most businesses". Kim and Mauborgne claim that blue ocean strategy makes sense in a world where supply exceeds demand.