Blue Ocean Strategy, Create New Markets and Leave the Competition Behind | Renée Mauborgne | WOBI

Summary

This insightful discussion contrasts red ocean and blue ocean strategies in business. Red ocean strategies focus on competing within existing market structures, often leading to intense competition and reduced margins. In contrast, blue ocean strategies seek to create new market spaces by innovating and reshaping industry structures, allowing companies to unlock new demand and financial success. The speaker highlights the sustainable nature of blue ocean strategies, exemplified by companies like Cirque du Soleil and JC Deco, which redefine their industries while achieving both differentiation and cost-effectiveness.

Takeaways

• 📊 The research distinguishes between 'Market Competing' (red ocean strategy) and 'Market Creating' (blue ocean strategy), highlighting different approaches to competition and growth.
• 🔍 Companies following a red ocean strategy operate under the existing industry structure, focusing on competing for market share rather than creating new demand.
• 🌊 Blue ocean strategy allows companies to reshape the industry's structure and create new markets, leading to unlimited opportunities.
• 💡 Successful market creators redefine competition by aligning their strategies to create new demand rather than just fighting for existing customers.
• 🏆 In red ocean strategy, companies must either be the most differentiated or the lowest cost player, which can limit growth opportunities.
• 💸 Blue ocean strategy emphasizes achieving both differentiation and low costs, even in high-cost environments, such as developed countries.
• 🤝 Sustainable blue ocean strategies align value propositions with profit propositions, motivating both buyers and partners effectively.
• 🕒 Blue ocean strategies are challenging to imitate, as evidenced by Cirque du Soleil, which remains unique even after 20 years.
• 🎮 The video game industry example shows how Nintendo created a blue ocean with the Wii, attracting new demographics and expanding market demand.
• 🪑 JCDecaux transformed outdoor advertising by redefining the industry, combining aesthetic improvement with effective advertising space, demonstrating successful market creation.

Q & A

What is the main difference between market competing and market creating?

Market competing refers to strategies within an existing industry structure, often characterized by intense competition and shrinking margins. In contrast, market creating involves developing new markets or 'blue oceans,' where opportunities are more abundant, allowing companies to innovate and reshape their industries.

What are 'red ocean' and 'blue ocean' strategies?

Red ocean strategies focus on competing within existing markets, leading to intense competition and minimal differentiation. Blue ocean strategies aim to create new market spaces, providing unique value propositions that allow companies to achieve both differentiation and low costs.

How do companies that create blue oceans approach industry structure?

Companies that create blue oceans do not accept the existing industry structure as given. Instead, they shape their strategies to redefine the industry's structure, allowing them to innovate and meet unaddressed customer needs.

Why is blue ocean strategy considered sustainable and hard to imitate?

Blue ocean strategy is seen as sustainable because it aligns the value proposition for customers with the profit proposition for the company and the motivation of employees and partners. This alignment creates a unique business model that is difficult for competitors to replicate.

Can you provide an example of blue ocean strategy in action?

The example given in the video is Nintendo's Wii, which entered the competitive video game market and appealed to a broader audience, including senior citizens. This created a blue ocean by expanding the customer base and demand for the industry.

What role does differentiation play in red and blue ocean strategies?

In red ocean strategies, differentiation often results in higher costs and narrower customer bases. Blue ocean strategies seek to achieve differentiation while also maintaining lower costs, broadening market appeal and accessibility.

How did JC Decaux redefine the outdoor advertising market?

JC Decaux transformed the outdoor advertising industry by introducing outdoor furniture as advertising space, which improved urban aesthetics and created a new growth market. This innovation allowed them to dominate a previously unattractive and small industry.

What implications do these findings have for companies trying to innovate?

The findings suggest that companies need to rethink their approach to competition and strategy. Instead of only seeking differentiation or cost leadership, they should explore opportunities to create new markets and align their value propositions in innovative ways.

What are the strategic moves referred to as market competing?

Market competing strategic moves involve trying to win existing customers from competitors, often resulting in fierce competition and a focus on either being the most differentiated player or the lowest cost provider within the current market.

What is the significance of aligning the value, profit, and motivation propositions in blue ocean strategy?

Aligning these propositions ensures that all aspects of the business model work together to create unique value for customers, generate sustainable profits for the company, and motivate employees and partners, leading to long-term success and reduced imitation risk.