Blue Ocean Strategy: Getting Started

I get asked a lot about how to get started using Blue Ocean Strategy. The authors answer the question beginning on page 84. One poorly understood notion is the amount of introspection and work needed to find a Blue Ocean offering. I'll relay the individual steps but the authors do a better job than I ever could with this concise summary about the work of one of their case-study companies: "It was a painful experience."

Blue Ocean Strategy has two primary components: value innovation and a set of management techniques, including Fair Process & Tipping Point Leadership. As a business and product developer I tend to focus most on value innovation: making new businesses. The first part of value innovation the authors call "Visual Awakening" -- it's an uncomfortable experience.

Visual Awakening involves the process of mapping exactly where your business is, and where the various substitutes consumers can use are, and comparing the two. When done honestly the results are rarely uplifting. For each substitute you draw a Value Curve: a plot-diagram with the key factors that the industry competes within drawn at the bottom and the plots of each substitute drawn low to high. Most companies quickly realize that their curve looks virtually identical to the substitutes, an indication that they are competing on commoditized factors like price: red-ocean competition that that results in ever-shrinking margins and customer base.

It's rare that the Visual Awakening stage isn't disquieting. I'll address what comes next -- how to navigate to a better place -- in a future post.