Learn why developing blue ocean markets is your best chance for growth and profits.
Based on an eponymously titled book, this strategy argues that “cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool.” Companies should instead look for new market space and ways to reinvent the industry. In short, avoid head-to-head competition and focus on innovation.
The goal of a Blue Ocean Strategy is for organizations to find and develop “blue oceans” (uncontested, growing markets) and avoid “red oceans” (overdeveloped, saturated markets). A company will have more success, fewer risks, and increased profits in a blue ocean market.
This strategic planning model is a departure from the typical management exercise that focuses on number crunching and competitive benchmarking. Here are key points of the Blue Ocean Strategy:
Seeing is believing. Here are a few organizations that successfully captured a blue-ocean market:
Most likely, your organization is already running on an existing strategic planning model. Luckily, the Blue Ocean Strategy can be paired with other models. It doesn’t need to replace your current mode of operation.
Here are a few examples:
Blue Ocean + SWOT
Blue Ocean + Balanced Scorecard
Think of the Blue Ocean Strategy as a way to open up opportunities and markets for a new organization, or an existing organization looking to grow. Your current strategy reporting model will help execute the blue ocean ideas.
When you begin your strategic planning, recognizing the difference between a red and blue ocean may not be as easy as the colors would indicate. Start by identifying what your target market needs and doesn’t currently have. Then look at what existing organizations are doing well (or not so well) to serve that market and determine how you can differentiate (for example, by price point or audience). Use the above checklist as a guide through the process and hold internal brainstorming sessions for each point.
ClearPoint’s experience using the Blue Ocean StrategyHere at ClearPoint, we recently used the framework for our own business. These were the general questions we discussed and answered in order to highlight our blue ocean opportunities.1. What do we do well? Why do customers choose us and stay with us?2. What do our competitors do? Why might our ideal customers choose a different solution?3. Where are the red oceans? Which features and benefits do we compete head to head with our competitors?4. What is our blue ocean? What do we provide our customers that no one else can?We learned that on any given feature, there are lots of competitors that offer good solutions. But no other company offers all of the necessary features for strategy reporting in one place.
Blue Ocean challenges companies to push the boundaries of their industries and offer consumers something unique of immense value. By defining and seeing examples of the Blue Ocean Strategy, your organization can learn how to execute on this strategic planning model and successfully reconstruct your market. Once you know where you’re competing, you can add unique goals and measures to track your progress in charting that blue ocean.
Ted is a Founder and Managing Partner of ClearPoint Strategy and leads the sales and marketing teams.