Someone said it rightly “To find the pearls in life’s ocean, you have to venture out past the shore”.
Blue ocean strategy denotes all the industries “not” in existence today, that is, the unknown market space. This is the space that is free from the scope of competition as this is not yet discovered. It creates uncontested marketplace and make the competition irrelevant. Blue ocean also captures new demand for the market.
Majorly, blue ocean strategy can be created:
- When companies can give rise to completely new industries. For instance: Ebay in online Auction Industry
- It is also created from red ocean where a company alters a boundary of an existing company or an industry.
Blue ocean are not only about technology innovation, but is is very important to link tech to what buyer’s value. Incumbents often create blue ocean and usually within their core business. For example, General Motors (GM) was an established player when they created blue ocean in Auto Industry.
“Strategic move is main”. One must keep in mind that in case of designing blue ocean strategy, never use competition as benchmark as it is all about discovering a new industry.
One of the best thing about blue ocean strategy is that it has considerable economic and cognitive barriers to imitation. A blue ocean is an analogy to describe the wider, deeper potential to be found in unexplored market space. A blue ocean is vast, deep, and powerful in terms of profitable growth. Some of the tools of blue ocean strategy include value innovation, strategy canvas, four actions framework and buyer utility map.
Apple has clearly used this strategy to make huge profit. It ventured into digital music in 2003 with its product iTunes. Apple users can download legal and high quality music at a reasonable price from iTunes which was something new as people have been listening to free music and downloading the same. They somehow made traditional sources of distribution of music irrelevant. Earlier compact disks or CDs were used as a traditional medium to distribute and listen to music. Apple was successful in capturing the growing demand of music for users on the go. All the available Apple products have iTunes for users to download music.
Formulating Blue Ocean Strategy:
- Reconstruct Market Boundaries
- Try to focus on the big picture and not just on numbers to get insights,
- Reach beyond existing demand
- Get the sequence of strategies planned and rightly executed.
- Overcome key organization hurdles
- Finally, build execution into strategies .