Blue ocean strategy
Blue Ocean Strategy is a method for developing permanently profitable business models from the field of strategic management : The basic idea is that only through the development of innovative and new markets, which really differentiate and relevant benefits for the broad mass of customers and non-customers, “Blue Oceans “offer lasting successes. This is to be achieved, among other things, through competition that has become meaningless , new customer acquisitions and optimized cost structures.
origin
The concept of Blue Ocean Strategy was developed by W. Chan Kim and Renée Mauborgne at INSEAD business school develops and initially as Value Innovation ( value innovation refers). Based on empirical studies over a period of 15 years and based on the analysis of more than 100 leading companies, examples of companies were found that opened up new, previously unused sub-markets and thus made the previous competition irrelevant.
concept
In connection with the Blue Ocean Strategy, the term ocean describes a market or industry . " Blue Oceans " are understood as pristine markets or industries that have little to no competition. Anyone who plunged into the Blue Ocean would find undiscovered markets or industries. " Red Oceans ", on the other hand, denote saturated markets, characterized by tough competition, overcrowded with competitors who all offer the same service or the same products .
The term "red ocean" is based on the image of bloody fights of predatory fish (the competitors), while the "blue ocean" is free from bloody fights.
| Red Ocean Strategy | Blue Ocean Strategy |
|---|---|
| Competition in the existing market | Creation of new markets |
| Beat the competition | Dodge the competition |
| Use the existing demand | Tap into new demand |
| Direct relationship between benefits and costs | Eliminating the direct relationship between benefits and costs |
| Alignment of the overall system of corporate activities with the strategic decision for differentiation or low costs | Alignment of the overall system of corporate activities towards differentiation and low costs |
The idea behind the Blue Ocean Strategy concept is that successful companies do not orientate themselves towards competition, but rather look for their own innovative ways to create a Blue Ocean themselves. Innovations open up new markets and increase their attractiveness due to the absence of some unattractive market features that are less valued in previous competition. Successful innovations are seldom based on technological innovations, but rather on a new design of the overall range. This often means a redefinition of the market or the consumer (see examples).
Blue Ocean methodology
Value curves
First, a value curve is created for a market or branch of industry in order to clarify which core elements characterize these from the perspective of customers and non-customers. Important characteristics can, for example, be significant and highly competitive core attributes or the investment drivers of competitors. The value curve of a company is visualized with the value curve of the current and potential competition.
Value curves within a strategic group (e.g. premium vs. low-cost providers) are usually interchangeable and represent an industry standard.
By changing the core elements that were previously defined, value curves can be changed permanently. There are four measures to redefine core elements:
- Elimination
- Which factors have to be left out? The customer's considerations of benefit can change dramatically, so that some components of a product must be eliminated.
- reduction
- What can be radically cut? Too great a differentiation drives costs up and can overwhelm customers.
- increase
- Which elements of the product need to be raised above the industry standard?
- creation
- Which components of a product need to be reinvented?
By changing the core elements of a value curve, new business models should be developed.
implementation
There are two aspects to consider during implementation:
- Overcoming organizational hurdles ( tipping point management )
- Integrate implementation into the strategy
Examples
Yellow Tail Wine
If not the oldest, then probably the most used example is a wine producer from Australia. The company had the " stuck in the middle " problem and was therefore unable to establish itself properly in the market. By adapting the wine to an easy-to-drink alcoholic beverage, reducing the quality at higher prices, the company was saved. The new target group was no longer wine drinkers with demands on the quality and body of the wine, but beer drinkers who simply want to consume alcohol.
A new market has thus been opened up and the company has driven displacement on the beer market.
Southwest Airlines
The oldest example is probably the history of the low-cost carrier (low-cost flight provider) Southwest Airlines , which looked at alternative industries and created new benefits for potential customers. Southwest Airlines positioned itself as a competitor to the car, not to other airlines, and adapted its strategy to the resulting needs:
- Reduced prices due to the elimination of additional services
- Improved check-in times and departure frequency
- Allows the customer to travel at high speed (airplane) at a low price (comparable to a car)
So here the offer has been redefined. The customer is the common traveler, not just the business or leisure traveler.
The Body Shop
Another prominent example is the concept of The Body Shop , which created a new functional and emotional benefit in the cosmetics industry. The mostly glamorous appearance of cosmetic companies was ignored in the Body Shop concept. The Body Shop stood out for its functional appearance, reduced prices and unpretentious packaging. Increased emphasis was placed on natural ingredients, a healthy lifestyle and ethical concerns. As a result, The Body Shop reached a new customer base and was able to achieve very high cost savings (approx. 85% of the costs via packaging and advertising).
Nintendo
A more recent example of a Blue Ocean strategy is the success of the Nintendo Wii game console , which was developed for a new target group for video games . Nintendo is evading the competition for graphics and computing power from other consoles such as Microsoft's Xbox or Sony's PlayStation with a control concept with motion sensors .
Nespresso
Another example is the introduction of the Nespresso coffee system by the food company Nestlé .
Cirque du Soleil
Cirque du Soleil has created a new market for itself in the circus competition. The most obvious peculiarity is that, unlike in conventional circuses, no animals are shown. Rather, the focus here is on the artist and the combination of entertainment elements such as opera, ballet and rock music. The music is only played live. The target group is no longer primarily families with children, but adults who are willing to pay a correspondingly higher admission price for high-quality entertainment.
literature
- W. Chan Kim, Renée Mauborgne: The Blue Ocean as a Strategy. How to create new markets where there is no competition. Carl Hanser Verlag, Munich and Vienna 2005, ISBN 3-446-40217-9
Web links
Individual evidence
- ^ "Creating new Market Space", in: Harvard Business Review , January / February 1999, pp. 83-93.
- ^ "Blue Ocean Strategy", in: Harvard Business Review , October 2004, pp. 76-84.
- ↑ insead.edu: A Conversation with W. Chan Kim and Renee Mauborgne ( Memento of December 3, 2008 in the Internet Archive )
- ↑ yellowtailwine.com: Blue Ocean Strategy ( Memento from May 12, 2013 in the Internet Archive )
- ^ "Wii Innovate - How Nintendo Created a New Market Through the Strategic Innovation Wii"