Books I have co-authored

Revisiting Blue Ocean Strategy – still a fad

Recently, I reread the 2005 book “Blue Ocean Strategy”. I was unimpressed when I first read it and a second reading only reinforced my first impression. The book is mostly a compilation of already existing models and theories mixed with common sense insight. However, the authors should be given credit for the compelling tagline “Blue Ocean Strategy”. Who wouldn’t want to sail into a new, large untapped market – a blue ocean?

The problem is that the way to reach the blue ocean is generic. There is no new theory or model derived from empirical research similar to Disruptive Innovation (Christensen), Crossing The Chasm (Moore), or Competitive Strategy (Porter). The book’s main assertion is far from groundbreaking. Find an untapped market. Understand customer needs. Redefine industry boundaries. Pretty simple.

However, their advice is sensible. For example, look for what they call Value Innovations, which is another way of saying that your innovation has to be relevant and valuable for your customers. It should not be technological brilliance for its own sake.

They also present a model for how to rethink your current business. The first step is to identify relevant performance factors that define the competitive landscape. These factors are used to draw up a strategic canvas, in which your own offer (“value curve”) is plotted together with your competitors. The next step is to look for ways to change the offer to the customers by applying what they call the Four Actions.

For each factor consider if it is possible to either 1) eliminate a factor that is taken for granted in the industry, 2) reduce a factor well below industry standards, 3) raise a factor above industry standards or 4) create a new factor that has never been offered in the industry. Summaries of the rest of book can be found at Slideshare, here, here, here, and here.

An example is the way NetJets redefined the market for corporate jets. Before NetJets entered the market, business travelers only had the choice between owning a corporate jet or buying first/business class tickets. When NetJets introduced fractional aircraft ownership, client companies could reserve a corporate jet from the NetJets pool at short notice just like a car pool. NetJets would offer: the convenience of owning a private aircraft at the cost of commercial airline tickets. The figure below illustrates the strategic canvas for NetJets compared to commercial airlines or owning a corporate jet.

As usual in popular management literature, the authors collect examples of success cases and use them as examples of blue ocean strategies. That is, after a new strategy has proven to be a success, the authors squeeze it into their model and claim that it is a Blue Ocean Strategy. This sometimes borders on the ridiculous, for example when they use the case of the successful turnaround of the NYPD in 1994 by the new police commissioner Bill Bratton as an example of a Blue Ocean Strategy. The case description of how NYPD managed to radically improve performance with the same budget is inspiring but the lessons are related to leadership and overcoming resistance to change. Not a Blue Ocean Strategy. I take issue with the way the authors expand the term to label everything successful as a Blue Ocean strategy. It is sloppy thinking.

4 comments to Revisiting Blue Ocean Strategy – still a fad

  • Jonas,
    I think your blog post highlights an ignorance shared by many regarding the Blue Ocean Strategy principles and methodology. Firstly, your claims regarding retrofitting of case studies into blue ocean strategy is correct; this is because the book was based on the exhaustive study of 150 strategic moves from which the principles and methodology were formed.

    However, since the writing of the book in 2005 many organisations have very successfully applied blue ocean strategy including Nintendo Wii, Tune Hotels Group, Malaysian & Danish Governments etc.

    A new book by authors, Profs W. Chan Kim and Renee Mauborgne is due to be released later this year and will feature many successful innovations created through companies applying blue ocean principles, tools and/or methodology.

    Of course the authors were unable to release many case studies earlier due to non-disclosure requirements of most companies regarding their strategic approach.

  • Jonas Lind

    I will repsond in a few days.

  • Jonas Lind

    Thanks for commenting and sorry for the late response. Blue Ocean Strategy is a process method for identifying viable business models and strategies. As such it will most likely produce a working strategy. But so will many other methods from the management consultants’ toolbox.

    In my view, Blue Ocean is a structured compilation of established common sense knowledge in the industry. It does not add a new theoretical concept supported by systematic empirical evidence. (For example “Disruptive Innovation” or “Crossing the Chasm”.) A series of confirmatory case studies in the new book does not change that.

    My main objection is the hype and hyperbole surrounding the term. The authors have not made any breakthrough substantial insight to management thinking, even though most alleged management gurus are incredibly good at self promotion.

  • I suggest you to read “blue ocean strategy” along with Seth Godin’s “purple cow”. I think both of these are concept only. Each one of us need to think to find a new idea relevant for our own work. Once we devise the strategy, we need to devise a plan on how to achieve our goal as mentioned in strategy.