Blue Ocean Strategy cover

Blue Ocean Strategy - Book Summary

How to Create Uncontested Market Space and Make the Competition Irrelevant

Duration: 09:36
Release Date: November 12, 2023
Book Author: W. Chan Kim, Renée Mauborgne
Category: Entrepreneurship
Duration: 09:36
Release Date: November 12, 2023
Book Author: W. Chan Kim, Renée Mauborgne
Category: Entrepreneurship

In this episode of 20 Minute Books, we'll delve into "Blue Ocean Strategy," a remarkable book from 2004 that has forever transformed the business landscape. Authored by W. Chan Kim and Renée Mauborgne, esteemed strategy professors at INSEAD, "Blue Ocean Strategy" takes us on a deep dive into the fascinating world of market competition. It sheds light on why some businesses manage to sail smooth and grow in uncontested waters while others are left to wrestle in a sea of cutthroat competition.

"Blue Ocean Strategy" is more than just a book, it's a phenomenon that has achieved worldwide recognition. With over four million copies sold globally and a follow-up sequel named a New York Times best-seller, it's safe to say that Kim and Mauborgne's insights have had an indelible impact. Their acumen is so revered, in fact, that they were named the world's number one management thinkers by Thinkers50 in 2019.

So, who is this book for? Entrepreneurs looking to outpace their competition, investors on the lookout for promising enterprises, and business students keen to comprehend the intricacies of market dynamics, will all find invaluable wisdom in this work. So buckle up for a deep exploration of "Blue Ocean Strategy," because as we reveal in the next 20 minutes, clear blue waters might just be within your reach.

Diving into an ocean of new opportunities

Picture this — you're running a marathon. You're in the thick of the pack, puffing and panting, pushing and jostling with your fellow runners. Every stride you take, every sweat you break, is part of your mission to outpace others. Now, imagine an alternative scenario. A race where no one else is competing. Sounds too good to be true? In the world of business, this isn't merely a daydream. In fact, it's an achievable strategy that several successful companies have embraced. How did they make it happen? And how can your business replicate this success? Buckle up, for we're about to chart a course into uncharted waters.

Chart a course for uncharted territory, away from the competitive battlegrounds

Stepping into the business world often feels like entering a battlefield. Whether you're dealing in wines, streaming audiobooks, or selling life insurance, you find yourself embroiled in a fierce battle with hundreds of rival companies, all vying for a piece of a finite market. It's a bit like the popular American business reality show 'Shark Tank', with markets thrumming with companies raring to outdo each other. Amid the melee, it often feels as if you're navigating shark-infested, blood-red oceans.

But then, there are businesses that transcend this fight for survival and rise above the competition — these enterprising entities expand swiftly, grow unopposed and even seem to exist by their own unique rules. So, what's their secret?

These businesses avoid wrestling for leftovers in the bloody red oceans. Instead, they venture into the unexplored territories — the blue oceans. Blue oceans, metaphorically, represent markets that are yet to be discovered, encompassing products and services yet to be invented. Demand here isn't bound by existing limitations — it's virtually non-existent and waiting to be created. However, far from being a deterrent, it's an opportunity. An opportunity for unrestricted growth and unlimited profits.

The blue ocean strategy provides you with the tools and techniques to conquer such unclaimed markets. The basic premise is simple: While it may seem that the space in a specific industry is confined, there's nothing to stop a business from creating an entirely new industry.

A perfect illustration of this strategy can be found in the incredible success of the renowned Canadian circus company, Cirque du Soleil. The company has delighted millions around the globe with its captivating variety shows and raked in astounding profits, a feat unexpected from a circus company! So how did they do it?

Cirque du Soleil made two crucial decisions. First, they discarded the traditional circus concept of animal shows, resulting in cost reduction. Then, they enhanced their human performances with live music and captivating storylines. By doing so, they introduced a fresh, exciting aspect to the age-old circus entertainment. In essence, Cirque du Soleil established a blue ocean: they created an entirely new market niche for artistic theater experiences that was welcomed with open arms.

Navigating towards innovation — it's not as complex as you think

You might be thinking, "Circus? Well, that's quite eccentric!" Don't fret. A myriad of other businesses, including names like Ford, Nintendo, Netflix, Nespresso, Yellow Tail, Southwest Airlines, and The Body Shop, have employed the blue ocean strategy with resounding success. We'll dive into the specifics of their achievements shortly.

But first, let's talk a bit more about the red oceans — the established industries where everyone adheres to set norms. Not too long ago, these norms were something like: "Films are for purchase or rent." "Wine ought to exude sophistication." "Air travel is a luxury." But in the blue oceans, these norms hold no sway. The blue oceans are moulded by the strategic actions of the entrepreneurs who venture into them.

It's important to understand — to embark on your journey across the blue ocean, you need not reinvent the wheel. Often, slight modifications can distinctly set your product apart from the rest and establish a new market. It's a fairly straightforward process: Analyze your industry as it currently stands. Then ponder about which elements you can Raise, Eliminate, Reduce, and Create. Let's delve into these steps using real-life examples.

Raise. Consider ways in which you can enhance the quality, cost, or service standards within your industry. Take Southwest Airlines as an example. They revolutionized the industry by becoming the first US airline to offer quick, affordable domestic flights for all.

Eliminate. Contemplate what features of your product or service could be completely removed. Remember how Cirque du Soleil did away with expensive and controversial animal acts? Every industry harbors some archaic practices that could be better off discarded.

Reduce. Review which production processes, product features or services can be scaled back. For instance, Australian wine brand Yellow Tail shifted its focus from prestigious vineyards and aging processes to producing affordable wines that appealed to a wider customer base.

Create. Brainstorm innovative features to offer your customers. Consider Netflix — a prime example that introduced the concept of on-demand movie and TV show streaming.

The goal is to achieve two crucial things by considering these points: reduce your costs and set your business apart from the competition. This is essentially what it takes to create a blue ocean. And if your business continues to address these four aspects — that's to raise, eliminate, reduce, and create — it will invariably stay one step ahead of its competitors.

Summing it up

Through this journey, you've unraveled the distinction between red and blue oceans.

In lieu of locking horns for limited market share, triumphant businesses chart a course towards entirely new markets with boundless potential. These uncharted territories can be discovered by raising, eliminating, reducing, and creating elements within your industry. Doing so paves the way for reduced costs and a unique standing in the market that sets your business apart.

So what's holding you back? Stop treading the treacherous waters teeming with sharks and hoist the sails. Venture forth into the blue ocean.

Blue Ocean Strategy Quotes by W. Chan Kim, Renée Mauborgne

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