Next up on the review list is Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant by W. Chan Kim & Reneé Mauborgne. I say review list because Blue Ocean Strategy is a bit of an exception in that I’ve already successfully used some of the concepts at work last summer. I just finished re-reading the book so it’s time to take another look at it.
Now, Blue Ocean Strategy is very popular book with over a million copies sold. The subtitle contains a lofty promise as is often the case with strategy books, presumably so they’d sell more. “Making the competition irrelevant” always sounds good. But despite the numerous copies sold and, one would assume, attempts at creating a “Blue Ocean” as the authors call markets with no competition, we still see quite a bit of competition in the world in most or all industries. So what gives? Is the promise overstated and is the book just another useless strategy book out of which comes no practical value?
Yes and no. Of course it doesn’t magically make your competition irrelevant just like that. But Blue Ocean Strategy is also far from impractical or useless. So what is a Blue Ocean anyway? It’s an area of uncontested market space, where there are no competitors (yet). Traditionally companies strive at surviving in so-called Red Oceans, the hotly contested traditional markets with clearly defined boundaries and competition. The Blue Ocean Strategy is about a systematic approach to creating Blue Oceans.
One could be forgiven to think that there are no more Blue Oceans left in the world, that the hyper-competition has exhausted all possibilities of new “virgin” markets. But that would be a mistake. All you need to do is to think back only, say, 30 or 40 years, and you will find that many industries we now take for granted simply didn’t exist. One of the biggest in the world, one of the few trillion-dollar industries today, was nowhere to be seen 30 years ago – mobile communications. Or biotechnology, nanotechnology, discount retail, snowboards, home videos… the list is surprisingly long. And then think forward 15, 20 or 30 years – wouldn’t it be simply unrealistic to assume no new industries pop up? There are Blue Oceans, but the question is how to get there.
So how does the book help in this task? By providing a number of useful tools, processes and frameworks, the book actually does help in accomplishing that. One of the key tools is the strategy canvas – a visualization of a companies strategy mapped as a graph of key principal factors. We’ve used the strategy canvas at work and it’s a quite nice visualization tool. There is also a plethora of other frameworks and tools in the book, including some with very poor names – or what comes to your mind from a “PMS Map”? 
(it’s actually a pioneer-migrator-settler map, luckily one of the less useful tools in the book)
Like many good books, one of the best offering in the book is the wealth of case studies and real-life examples. It’s interesting to note that household names such as CNN and JCDecaux were once seen as radical companies, in effect implementing the Blue Ocean strategy very successfully. There are also many valuable points that may seem counter-intuitive; for one, customer desegmentation is often called for when looking for Blue Oceans, going against the current trend of increasing customer segmentation and targeting. And, despite the pompous subtitle, the authors at the end do acknowledge that companies need to be good at both Blue Ocean and Red Ocean strategies – furthermore, there are no permanently excellent industries or even permanently excellent companies. To stay at the top, the company would need to constantly be re-inventing itself, but very few or no companies actually manage to do that. That alone ought to be a sobering lesson.
Blue Ocean Strategy is certainly a very good book and I definitely plan on continuing to use the tools I’ve learned from it. Of course it’s not perfect; for one, it’s missing some important innovation process information (making “How breakthroughs happen” a good companion read). The book also attributes perhaps too much weight on the new strategies in the lowering of NYC’s crime (you’ll recall the Tipping Point providing an alternative, or at least complementary, explanation). Still, the shortcomings are relatively minor – the book is excellent. Read it. But then again, merely reading it will do nothing for your company. If you don’t do the significant footwork involved, expect to get nowhere.
