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In this perennial bestseller, embraced by organizations and industries worldwide, globally preeminent management thinkers W. Chan Kim and Renee Mauborgne challenge everything you thought you knew about the requirements for strategic success. Recognized as one of the most iconic and impactful strategy books ever written, BLUE OCEAN STRATEGY, now updated with fresh content from the authors, argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Based on a study of 150 strategic moves (spanning more than 100 years across 30 industries), the authors argue that lasting success comes not from battling competitors but from creating "blue oceans"--untapped new market spaces ripe for growth.

BLUE OCEAN STRATEGY presents a systematic approach to making the competition irrelevant and outlines principles and tools any organization can use to create and capture their own blue oceans. This expanded edition includes:

A new preface by the authors: Help! My Ocean Is Turning Red
Updates on all cases and examples in the book, bringing their stories up to the present time
Two new chapters and an expanded third one--Alignment, Renewal, and Red Ocean Traps --that address the most pressing questions readers have asked over the past 10 years

A landmark work that upends traditional thinking about strategy, this bestselling book charts a bold new path to winning the future. Consider this your guide to creating uncontested market space--and making the competition irrelevant.

About The Authors: W. Chan Kim and Renee Mauborgne

W. Chan Kim and Renee Mauborgne are Professors of Strategy at INSEAD and Codirectors of the INSEAD Blue Ocean Strategy Institute. They are the authors of the New York Times and #1 Wall Street Journal bestseller, BLUE OCEAN SHIFT and the international bestseller BLUE OCEAN STRATEGY, which is recognized as one of the most iconic and impactful strategy books ever written. Blue Ocean Strategy has sold over 4 million copies, is being published in a record-breaking 46 languages, and is a bestseller across five continents. In 2019, Chan Kim and Renee Mauborgne were named the world's most influential business thinkers by Thinkers50. They are the recipients of numerous academic and management awards around the world including the Nobels Colloquia Prize for Leadership on Business and Economic Thinking, the Carl S. Sloane Award by the Association of Management Consulting Firms, the Leadership Hall of Fame by Fast Company, and the Eldridge Haynes Prize by the Academy of International Business, among others. They are Fellows of the World Economic Forum and the founders of the Blue Ocean Global Network. For more on these authors and their new book, BLUE OCEAN SHIFT, see blueoceanstrategy.com.

Other Book Summaries

Blueoceanstrategy.com Summary

Yet in today’s overcrowded industries, competing head-on results in nothing but a bloody “red ocean” of rivals fighting over a shrinking profit pool.

Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth. Such strategic moves—termed “value innovation”—create powerful leaps in value for both the firm and its buyers, rendering rivals obsolete and unleashing new demand.

ClearPoint Strategy Summary

Key Points

It’s more than theoretical. Some strategic planning models are based on theories that don’t quite pan out during go-to-market executions. In contrast, Blue Ocean Strategy originated from a study that took place over 10 years and analyzed company successes and failures in more than 30 industries. It’s based on proven data rather than unproven ideas.
The competition is irrelevant. Taking a Blue Ocean approach means your goal isn’t to outperform the competition or be the best in the industry. Instead, your aim is to redraw industry boundaries and operate within that new space, making the competition immaterial.
Differentiation and low cost can coexist. The Blue Ocean Strategy argues that consumers don’t have to choose between value and affordability. If a company can identify what consumers currently value and then rethink how to provide that value, differentiation and low cost can both be achieved. This is termed “value innovation.”
You have a framework to test ideas. The Blue Ocean Idea Index is part of the overarching strategy and lets companies test the commercial viability of ideas. This process helps refine ideas and identify opportunities with the most potential, minimizing risk.

4 Examples Of Blue Ocean Strategy

Netflix: In this David versus Goliath story, Netflix came on the scene when Blockbuster was at the top of the video rental game. Rather than trying to compete with the popular giant solely on price or entertainment choices, Netflix reinvented the market by creating an entirely new kind of online DVD rental service. It utilized postal mail rather than brick-and-mortar stores. And its flat-fee monthly payment model solved two major pain points many Blockbuster customers experienced: return deadlines and late fees. Netflix customers could keep a DVD for as long as they wanted, without incurring any late fees. Plus, they could browse and select a video to rent, without having to leave their house. Netflix has continued to innovate since then by switching from DVDs to streaming, and then by creating their own shows and movies. By using the Blue Ocean Strategy, Netflix has been able to constantly move to new, uncontested spaces to capture demand.
Uber: Before Uber was founded in 2009, customers looking to get from point A to point B without their own vehicle had to rely primarily on taxis to obtain a private mode of transportation. But the taxi industry hadn’t done much in the way of innovation since its inception more than a century earlier. The founders of Uber recognized the industry’s shortcomings—including limited payment options, a lack of customer trust, and the absence of location tracking—and decided to create a new type of mobility service that would compete in a slightly different space. Instead of trying to buy its own fleet of vehicles, Uber sought out drivers who were willing to use their own cars to provide on-demand rides requested via mobile app. Today, Uber has annual revenues of over $11 billion, and more than 19,000 employees.
iTunes: When iTunes entered the market, it solved the recording industry’s problem of consumers illegally downloading music while simultaneously addressing the demand for digital, a la carte songs. iTunes’ Blue Ocean Strategy created an entirely new category of music sales that allowed artists to profit and consumers to buy single songs versus entire albums. ITunes has dominated this market space for years and is largely credited with driving the growth of digital music.
Meta (Previously Facebook): In October of 2021, CEO Mark Zuckerberg announced that Facebook’s new name would now be Meta. When Facebook started, it was at the forefront of its own blue ocean, known as social networks. More than a decade later, social networking has become a red ocean. With the name change, Meta can steer its product offerings into something new, exciting, and unconquered: the “metaverse.” In the metaverse, Zuckerberg pictures holograms, virtual reality, and digital worlds that feel like the physical world. Although the strategy change is unproven, it’s clear that the idea of jumping from the red ocean of social media to the blue ocean of the metaverse played a part in the decision.

What You Will Learn Summary

Kim and Mauborgne off a ‘strategy canvas’ for evaluating the different competitors in your industry. Once you’ve got an understanding of ‘the lay of the land’ in your market, there are four vital questions you need to ask yourself in order to set yourself apart from the competition and create your blue ocean.

Which of the factors that the industry take for granted should be eliminated? This forces you to eliminate factors that companies in your industry have long competed on. If you can identify one of these areas of competition that you believe that consumer doesn’t really care about, you can eliminate it from your strategy. By eliminating something that everybody else is fighting over, you can re-allocate your focus and your efforts to improving the more important and more valuable things. This will help make your offering far more attractive. For example, some airlines eliminated the airport lounges. For a long time, the airlines were competing on this. Some lower-cost airlines were able to remove this offer and instead focus on other areas (like reducing costs or making flights more frequent). To the consumers who were more sensitive the price than to the lounge experience, these airlines were able to create some blue ocean.
Which factors should be reduced well below industries standard? You can’t be perfect in every criteria. You need to compromise on some things so that you can dominate others. In this case, these are the things that can’t be eliminated altogether (as in action 1), but you can reduce them to the bare minimum level required to pass.
Which factors should raise above industries standard? There are the things that you feel are most valued by customers. By eliminating some things and significantly reducing others, you have spare resources left over that you can allocate to being exceptional in specific areas.
Which factors should be created that has never been offered? This is where the innovation comes in. What is something that no one else in your market is doing? What’s something brand new that your customers care about that you can create in order to solve their needs or wants? Finding the right answer to this question goes a long way to setting you apart in your own blue ocean.

Keywords & Key Ideas

Value Innovation

Instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.

Read Ocean

In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.1

There Is No Permanence

Several patterns stand out across these three representative industries. * There is no permanently excellent industry. The attractiveness of all industries rose and fell over the study period. * There are no permanently excellent companies. Companies, like industries, rose and fell over time. These first two findings both confirm and add further evidence that permanently excellent companies and industries do not exist.

Value Curve

The value curve, the basic component of the strategy canvas, is a graphic depiction of a company’s relative performance across its industry’s factors of competition.

Strategy Canvas

Four key questions to challenge an industry’s strategic logic and business model: 1) Which of the factors that the industry takes for granted should be eliminated? 2) Which factors should be reduced well below the industry’s standard? 3) Which factors should be raised well above the industry’s standard? 4) Which factors should be created that the industry has never offered?

The first question forces you to consider eliminating factors that companies in your industry have long competed on. Often those factors are taken for granted even though they no longer have value or may even detract from value. Sometimes there is a fundamental change in what buyers value, but companies that are focused on benchmarking one another do not act on, or even perceive, the change. The second question forces you to determine whether products or services have been overdesigned in the race to match and beat the competition. Here, companies overserve customers, increasing their cost structure for no gain. The third question pushes you to uncover and eliminate the compromises your industry forces customers to make. The fourth question helps you to discover entirely new sources of value for buyers and to create new demand and shift the strategic pricing of the industry.

Highlights

Michael Highlights

Focus On Alternative And Non-Customers Rather Than Just Competitors And Existing Customers

To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to noncustomers of the industry.1 To pursue both value and low cost, you should resist the old logic of benchmarking competitors in the existing field and choosing between differentiation and cost leadership. As you shift your strategic focus from current competition to alternatives and noncustomers, you gain insight into how to redefine the problem the industry focuses on and thereby reconstruct buyer value elements that reside across industry boundaries. Conventional strategic logic, by contrast, drives you to offer better solutions than your rivals to existing problems defined by your industry.

Book Summary Of Blue Ocean Strategy