What is Blue Ocean Strategy?
The concept of Blue Oceans strategy is not entirely new, but its application to innovation sets it apart. The Breakthrough Toolkit brings together a collection of the most cutting edge tools of this kind from around the world, along with a concise guide to finding and applying them. The Breakthrough Toolkit does, however, have some limitations as a strategy.
Strategy is important in building new markets, generating new value, defending or winning new markets, managing competitors, and making long term investments. But the strategy is useless unless a company possesses the creativity, organisation, and flexibility actually to execute the strategy. Building Blue Oceans requires a comprehensive toolkit that identifies existing opportunities, analyses the competition, and creatively applies the knowledge. The Breakthrough Toolkit, then, is more than a list of tools that can be implemented; it is a blueprint for a deeper understanding of the competition, a deeper understanding of the business itself, and a more profound understanding of the opportunities that lie ahead.
Blue Oceans strategies must be flexible and adaptable to meet the changing dynamics of the market. Blue Oceans strategies must also consider the fact that competition is global and that it has shifted not only internationally but also within each industry. Now, blue oceans strategies must face a second critical test: whether they are designed to build and maintain a competitive advantage over their competitors or whether they can be used to dominate the competition simply. While there are several useful analogies to think about when considering strategy (i.e., think of the oil industry), the key is recognising that the competition doesn’t need to be like the oil industry.
One of the core tenets of strategic innovation is the idea of simultaneous pursuit. When you think of several strategies that work together, you can easily form a “paradigm” that will help you focus on the most promising results. In the case of the oil industry, this meant developing new technologies (think of new drilling techniques, new refineries, or new extraction methods) and taking advantage of new technologies (i.e., using new technologies to extract oil from harder-to-reach, more difficult-to-watch regions). It also meant evaluating the status quo with respect to efficiency, environmental impact, and safety.
However, just because you can think of several good strategies doesn’t mean that they’re all going to work. Just because there are numerous good ideas doesn’t mean that they will be successful. One crucial factor in developing a Blue Ocean strategy is the ability to identify the competitors’ strengths, weaknesses, unique attributes, motivations, and opportunity costs. By being able to differentiate yourself from your competitors, you have the opportunity to leverage Red Ocean thinking to bring about more productive results.
The Blue Ocean strategy isn’t about fighting your competition. It’s about leveraging their strengths, seeking out opportunities to be the first to find untapped red and blue oceans, and turning those into competitive advantages. In a scenario where competition is irrelevant, leveraging the strength of the competition gives you the ability to win a crucial market space, and in so doing, become the first company to realise its full competitive potential.
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