Blue Ocean Strategy
What is the Blue Ocean Strategy?
Blue ocean strategy is a business strategy developed by W. Chan Kim and Renée Mauborgne that aims to create new market spaces, or "blue oceans," rather than competing in existing market spaces, or "red oceans." The idea is that companies can achieve higher levels of growth and profitability by focusing on creating new demand and value for their products or services, rather than simply competing with rivals for a share of an existing market.
Blue ocean strategy is based on the idea that companies can create new markets by identifying and addressing unmet needs or untapped demand, rather than competing on the basis of price or other traditional factors. To do this, companies can use a framework known as the "Four Actions Framework," which involves:
- Eliminating factors that are not essential to the market or that add little value
- Reducing factors that are not essential to the market or that add little value
- Raising factors that are not essential to the market or that add little value
- Creating factors that are not essential to the market or that add little value
By applying the Four Actions Framework, companies can create new market spaces and differentiate themselves from competitors, leading to higher levels of growth and profitability. The blue ocean strategy has been widely adopted by companies in a variety of industries and has become a popular approach to business strategy and innovation.
Information technology (IT) can be a key enabler of a Blue Ocean Strategy creating new value for customers and setting the company apart from its competitors. This might involve identifying new technologies or services that address unmet needs or untapped demand or developing innovative approaches to delivering existing technologies or services.