Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant
W. Chan Kim and Renee Mauborgne
Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow's leading companies will succeed not by battling competitors, but by creating "blue oceans" of uncontested market space ripe for growth. Such strategic moves - termed "value innovation" - create powerful leaps in value for both the firm and its buyers, rendering rivals obsolete and unleashing new demand."
According to Kim and Mauborgne, "Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant...
This book not only challenges companies but also shows them how to achieve this. It first introduces a set of analytical tools and frameworks that show you how to systematically act on this challenge, and, second, elaborates the principles that define and separate blue ocean strategy from competition-based strategic thought."
Blue Ocean Strategy presents a systematic approach to making the competition irrelevant and outlines principles and tools any company can use to create and capture blue oceans.
A landmark work that upends traditional thinking about strategy, this book charts a bold new path to winning the future.
Eliminate factors that the industry takes for granted but adds no perceived value to customers.
Reduce factors well below the industry's standard to avoid the mistake of over delivering in order to beat the competition.
Raise factors well above the industry's standard so your customer won't have to make compromises.
Create new sources of value that the industry has never offered.
There are six principles, which are introduced and then discussed on pages 49, 82, 102, 117, 143, and 172, respectively. Of greatest interest is Kim and Mauborgne's assertion that the innovations, which enabled these companies to succeed with a Blue Ocean strategy, did NOT depend upon a new technology. Rather, each company pursued a strategy, which enabled it to free itself from industry boundaries.
A blue ocean is created in the region where a company's actions favorably affect both its cost structure and it value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.
The authors argue that lasting success comes not from battling competitors, but from creating 'blue oceans': untapped new market spaces ripe for growth. Such strategic moves-which the authors call 'value innovation'- create powerful leaps in value that often render rivals obsolete for more than a decade.
The authors have studied more than 150 blue ocean creations in over 30 industries. Examples include: - Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984) - Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).
We consider this book essential for any strategist or entrepreneur who wants to move out of intensively competitive shark-infested waters and into the relative tranquility of the open blue ocean.
About the Authors
W. Chan Kim is the Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International Management at INSEAD. He is a contributor to The Financial Times, The Wall Street Journal, The Wall Street Journal Europe, The Asian Wall Street Journal, The New York Times, The International Herald Tribune, World Link, South China Morning Post, and others.
Renée Mauborgne is the INSEAD Distinguished Fellow and Professor of Strategy and Management. She has published numerous articles on strategy and managing the multinational which can be found in Academy of Management Journal, Management Science, Organization Science, Strategic Management Journal, Administrative Science Quarterly, Journal of International Business Studies, Harvard Business Review, Sloan Management Review, and others.
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