THE NEW GLOBAL WE.

Blue Ocean Strategy

Posted in Big Thought by Harsha on March 28, 2007

The book’s title also reads: "How to Create Uncontested Market Space and Make Competition Irrelevant"

While I am wary of business books (funny thing for an MBA to say!), I read them to gleam the gems created by others. Chan Kim and his co-author have spend 10+ years compiling research for this book, so hats off to them.

Big Thought: Rethink market strategy and competition. Instead of competing, the authors stress on creating a market. Examples like Ford Model T, Cirque du Soleil, Southwest and Samsung are testaments to this strategy. I love their "Strategy Map" and the ERRC Grid (Eliminate, Reduce, Raise Create) ideas.

Their pricing strategy is also interesting – instead of merely comparing what the comp is offering, the authors suggest looking at what customers will pay and then working back to an acceptable, profitable cost structure. This is radical in that it clearly will lay out what innovation is OK and what is not.

The other Big Thought is value-innovation, which is not just technological innovation but creating buyer value.

Scott Steen has written a good post about the book and has even applied it in his work. He also writes "(1) focuses on just a few things, (2) is differentiated from the rest
of what’s out there, and (3) is simple enough to reduce to a catchy
tagline" – that is, don’t try to be everything to every buyer, differentiate (in the Strategy Map; you’ll need to get the book to understand this better) and the strategy must be explainable.

None of this will be new for you. But what the book has done is provide a cool tool for us to use. The authors also note that 3/4ths of the examples used in "In Search of Excellence" are now-defunct companies, so this definitely is an updated new strategy. They also say that Porter’s competitive research work is part of the surviving-in-red-oceans strategy, while they’re asking you to create a whole new marketplace.

Rishi Khaitan of It’s Rishi has written an excellent book review. He reminded me about the unit of analysis used by the authors.  Instead of finding out if a particular company is successful or not (like others books do), the authors calculate the success using the "strategic move" as a measuring unit.

Here are some other blogs that talk about the book:RTodd.com, PebbleRoad.

I’m open to discussing with someone else who has read the book to plotting the Strategy Map for their industry or an sample industry and the ERRC grid etc. I think it’ll be a fun excerise.

Get the book, willya?

Harsha Raghavan

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3 Responses

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  1. Bikshapathi said, on May 4, 2007 at 2:12 pm

    It’s a nice article I am wary of business I read them to gleam the gems created by others. Chan Kim and his co-author have spend 10+ years compiling research for this book, so hats off to them. If you are interesting visit the site business strategy

  2. Harsha Raghavan said, on October 24, 2007 at 11:06 am

    Thank you for the comment Bikshapathi. Sorry for the delayed reply.

    There are 1000s of books out there and many contradict each other’s theories. The way I look at it, since everything is an experiment, you pick whatever you want to out of the bunch that is going to help you succeed. It could be success in money terms, peace/happiness etc. The rest is probably inapplicable to you. Read The Black Swan to know more.

    Thanks again and please keep the comments coming.

    Harsha

  3. […] 8, 2008 A lot of you have been searching for Blue Ocean, so I wanted to publish an update to my previous post. I came across this interesting link of another blogger who has made a career out of this, a la […]


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