Wednesday, January 4, 2017

Book Summary: Blue Ocean Strategy

 Kim, W. & Mauborgne, R. (2015). Blue Ocean Strategy (Expanded Edition). Boston: Harvard Business School Press. ISBN 13:  978-1625274496


The Market space is divided into the Red oceans, where the competition is stiff and defined, and the Blue oceans, that is unexplored with new customers and without competition. The creation of blue oceans need a new approach, called as Value Innovation, to execute the strategy of maximizing the customer value and breaking from the competition through innovation. Use of analytical tools and action frameworks such as, Strategy canvas, four actions framework, Eliminate-Reduce-Raise-Create grid, would minimize the risk in the execution of a good blue ocean strategy that is focused on business objectives with a compelling tagline and that is divergence on competition.


Reconstructing the market boundaries using the "six paths framework" is useful to develop a successful blue ocean strategy that focuses on the big picture, not on the numbers alone. That strategy, through a step by step visualization, is used to unlock the people's creativity as well as to influence the company’s decision makers to successfully adopt within the company. Finally, build the strategy in the sequence of buyer utility, price, cost and adoption strategies and quantify its effectiveness to go for the largest catchment of buyers who were deemed as non-customers.

There are four organizational hurdles: cognitive, resource, motivational and political hurdles that need to be overcome to successfully execute the blue ocean strategy. After overcoming those, align the three strategy propositions i.e. value, profit, and people, as well as establish a viable fair process based on Engagement, Explanation, and Clarity of Expectations. Even when the organization is sailing in the blue ocean, there will continuous be challenges from the imitators for which there is need to constantly renewing the blue ocean strategy as well as putting various barriers such as: propositions alignment of value, profit and people; cognitive and organizational barriers; strong brand image; economic and legal barriers, etc. Finally, the author identifies the ten most common myths and traps of red oceans that the organizations need to be aware of to avoid falling into them. These traps label the blue ocean strategy as: customer oriented strategy; synonymous to differentiation and disruptive strategy; innovation and new technology only; low-pricing; be first in the market, move away from core business.

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