W. Chan Kim on BLUE OCEAN SHIFT

Summary

In this interview, INSEAD professor Chan Kim discusses the concept of Blue Ocean Strategy, a business approach that emphasizes finding untapped markets rather than competing in existing ones. He explains the three key factors for success: adopting a 'blue ocean' perspective, utilizing market-creating tools, and focusing on people. Kim also talks about the follow-up book, 'Blue Ocean Shift,' which provides a five-step process to systematically create new market spaces. He highlights examples of successful companies and stresses the importance of non-disruptive innovation to foster growth without major internal disruption.

Takeaways

• 💡 Blue Ocean Strategy encourages companies to focus on creating new market spaces, rather than competing in crowded markets.
• 🌊 The concept of 'Blue Ocean Shift' builds on Blue Ocean Strategy by providing a systematic process for finding uncontested markets.
• 🚀 Three key factors for a successful Blue Ocean Shift include a broad perspective, market-creating tools, and people involvement.
• 🔑 Companies often fail to innovate because they focus too much on existing customers and neglect potential new markets.
• 🏆 Blue Ocean Strategy is applicable to startups, established companies, governments, nonprofits, and even individuals.
• 📊 Disruption is only one form of innovation; 'non-disruptive creation' can also drive growth without destabilizing the current market.
• 🎯 Many companies have successfully applied Blue Ocean principles, such as CitizenM, Wawa, and SAP, leading to significant market growth.
• 🏅 Non-disruptive innovations, like micro-financing and Sesame Street, solve new problems without replacing existing solutions.
• 📚 Traditional business schools often focus on competition, but the Blue Ocean approach advocates teaching creation and innovation in a structured way.
• 🤝 Employee engagement and humaneness, including confidence-building, are critical for the success of a Blue Ocean Shift strategy.

Q & A

What is the main concept behind the book 'Blue Ocean Strategy'?

The main concept behind 'Blue Ocean Strategy' is to encourage companies to focus on creating new markets rather than competing in existing, saturated markets. This approach is referred to as finding 'blue oceans,' where there is less competition and more opportunity for growth.

What are the three factors that determine whether companies can successfully find new areas of growth?

The three factors that determine whether companies can successfully find new areas of growth are: having a 'blue ocean perspective,' having the right market-creating tools, and effectively managing the people element.

Why do many companies fail to create new markets?

Many companies fail to create new markets because they lack a blue ocean perspective, fail to use appropriate market-creating tools, and often ignore the importance of bringing their people along in the shift.

What is the difference between 'red ocean' and 'blue ocean' strategies?

'Red ocean' strategies focus on competing within existing market spaces, which often leads to intense competition and limited growth opportunities. In contrast, 'blue ocean' strategies emphasize creating uncontested market spaces, which offer more significant opportunities for growth without direct competition.

Can the 'blue ocean shift' approach be applied to all types of organizations?

Yes, the 'blue ocean shift' approach can be applied to all types of organizations, including startups, established companies, individuals, governments, and nonprofit organizations.

What is the difference between disruptive and non-disruptive creation, according to Chan Kim?

Disruptive creation involves innovation that replaces existing products or services, which can be disruptive to the market. Non-disruptive creation, on the other hand, involves creating new demand without disrupting existing products or services, thereby providing growth opportunities without causing market disruption.

What are some examples of companies that have successfully used the blue ocean shift?

Examples of companies that have successfully used the blue ocean shift include CitizenM, which offers affordable luxury hotels, and SAP in France, which created a French fry maker without using oil. Other examples include Wawa, which transformed from a gas station to a restaurant that also sells gas.

How can companies add new products or services without causing too much disruption internally?

Companies can add new products or services without causing too much disruption by focusing on non-disruptive creation, which allows them to expand their product lines or market presence without directly challenging or replacing existing offerings.

How does the blue ocean shift approach differ from traditional business school teachings on strategy?

Traditional business school teachings on strategy often focus on how to compete, while the blue ocean shift approach emphasizes how to create new market spaces. This shift moves strategy from a competitive focus to a creative one, aiming for growth through new opportunities rather than competition.

What is the significance of the 'confidence to act' in the blue ocean shift process?

The 'confidence to act' is crucial in the blue ocean shift process because it ensures that people within the organization have the belief and competence to execute the strategy. It's not just about having a roadmap but also about empowering people to take the necessary actions to create new markets.