Saturday, October 23, 2004

Blue and Red Ocean S.

W. Chan Kim and Renée Mauborgne in HBR of Oct 2004 don't deny that competition matters. But they do say that by focusing on competition and "competitive advantage" markets have become crowded and bloody and are looking like 'Red Oceans' as Kim and Mauborgne call them. Indeed they have a point if they claim that scholars, companies, and consultants have somewhat over-focused on 'competitive edge' and in doing so ignored 'Blue Ocean strategy':

"So why the dramatic imbalance in favor of red oceans? Part of the explanation is that CS is heavily influenced by its roots in military S. The very language of S. is deeply imbued with military references—chief executive “officers” in “headquarters,” “troops” on the “front lines.” Described this way, S. is all about red ocean competition. It is about confronting an opponent and driving him off a battlefield of limited territory. Blue ocean S, by contrast, is about doing business where there is no competitor. It is about creating new land, not dividing up existing land. Focusing on the red ocean therefore means accepting the key constraining factors of war—limited terrain and the need to beat an enemy to succeed".

Unfortunately the authors do not give much specific tools on how we can create and develop such Blue Oceans. We'll have to wait for their forthcoming book. If you don't want to wait you can find such tools plus a further review of the article here: Blue Ocean S.

6 Comments:

Blogger Pierre-Corneille Namahoro said...

I recently got the integral version of the article on the Blue Ocean Strategy in the harvard Business Review, myself I'm doin' researches in Corporate Strategy and Finance at the Catholic University of Central Africa, and I this way of seeing things seem to be in harmony of Sun Zi's strategic view.

As the authors of the Blue Ocean Strategy, I beleive this would be a new paradigm of Strategic thinking.

Every company has to find or create its blue ocean strategy. To complete this article I would propose the readings of Nicolas Machiavel, Sun Zi, and Karl Von Clausewitz, specially for the views of the red Ocean Strategy!

Back to you more later!

Yours,
Pierre-Corneille Namahoro
Master's Program of Economics and Management
Strategic Management and Finance
Catholic University of Central Africa
cocofinance@yahoo.it

2:54 PM  
Blogger Onno Franken said...

It is certainly refreshing to develop a Blue Ocean Strategy. Strategists will have to become true entrepreneurs instead of "officers": creating & delivering something valuable that no-one else does.
This will require different in-house or external strategists / entrepreneurs. I am interested in the real world cases especially in the challenging multi-media commercial services on mobile devices.

Onno Franken
Manager Connected Strategy Practice
Ordina

11:30 PM  
Anonymous TRU Group said...

 Underlying thinking contains little if anything that is new – if you redefine just about everything of course you have to have a new model
 Indeed, the definition of Blue Ocean changes so many times that it is difficult to fathom what is meant. The automotive industry is claimed to be a Blue Ocean Industry in 1908 when Henry Ford launched the Model T but it was also a Blue Ocean Industry according to the authors in 1926 - yes that is eighteen years later – when GM created a new Blue Ocean by selling cars for “fashion and comfort”. The niche strategy adopted by General Motors “increased overall market share from 20% to 50%”. Excuse me, I thought Blue Ocean strategy wasn’t about market share and competition?
 Does not resolve how management should create “uncontested market space” without analyzing the competition they detest
 Claims of new research discoveries have been made by the authors are not supportable. “The key defining feature of Blue Oceans was value innovation – innovation that was linked to what buyers value” This idea has been around and the foundation for marketing for more than forty years
 Authors need to brush up on marketing theory and practice – especially those of product development – and will find that
 If Red Oceans are as defined in the book, there are many more successful Red Ocean companies existing now than Blue Ocean Companies
 Authors need to study the high failure rate of companies who radically innovate [in pursuit of Blue Oceans]
 A dishonorable book

4:06 AM  
Anonymous TRU Group Inc said...

TRU Group Inc - trugroup.com
The definition of Blue Ocean changes so many times that it is difficult to fathom what is meant by Blue Ocean Strategy. The automotive industry is claimed to be a Blue Ocean Industry in 1908[7] when Henry Ford launched the Model T but it was also a Blue Ocean Industry according to the authors in 1926 - yes that is eighteen years later – when GM created a new Blue Ocean by selling cars for “fashion and comfort”. The niche strategy adopted by General Motors “increased overall market share from 20% to 50%”.[8] Excuse me, I thought Blue Ocean strategy wasn’t about market share and competition? But wait, there was another Blue Ocean in the seventies according to the authors, when the Japanese [[three competitors?] and “created a new blue ocean”. Now I am confused. Apple also created a Blue Ocean in 1978[9] but two years later there were twenty competitors[10]. I thought Blue Ocean Strategy made competitors irrelevant – now I am really confused!

7:16 PM  
Blogger TRU Group Inc - trugroup.com said...

Ocean Strategy, Red or Blue, belongs in the Dead Sea!

The book titled “Blue Ocean Strategy” is not helpful to management – don’t buy it and if you already have it dump it

¥ Management can and should be visionary in formulating strategy. But, contrary to the approach of Ocean Strategy, should do so by thinking about market environment shifts, how these could impact customer sets, and whether those customer sets are the ones you wish to serve synopsis Blue Sea Strategy BOS strategic planning consultant

¥ Also contrary to Ocean Strategy, production cost reduction is best seen as an operational or resource issue – a barrier to be overcome not an end in itself as a tool of strategy. Resources are easier to acquire than customers. Production methods should match volume to minimize costs The Boston Consulting Group

¥ In your strategizing do not take advice on strategy [or any other mission critical function] from management who are not qualified to give advice and do not treat strategy formulation as an exercise in management team compromise – contrary to the Ocean Strategy method Blue Ocean Approach free download World Innovation Forum

¥ This book should be at the bottom of the list for reading by strategy professionals for Ocean Strategy, Red or Blue, belongs in the Dead Sea!

¥ Harvard University professors should read it for they should wonder what they were thinking allowing Harvard University Press to publish it. Critique

TRU Group Inc

2:35 PM  
Anonymous Blue Ocean Strategy said...

The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant. I think it is better to create new market space or a blue ocean rather than competing in the existing market.

4:08 PM  

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