What characterises Red Ocean vs Blue Ocean Creating Organisations?
Red Ocean companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth reduce. Products become commodities and cut throat competition turns the ocean bloody red.
Blue Ocean companies, in contrast, access untapped market space and create demand, and so they have the opportunity for highly profitable growth. In Blue Oceans, competition is irrelevant. Yes, imitators arise, but experience shows there is a wide window of opportunity to stay ahead of imitators.
What consistently separates winners from losers in creating Blue Oceans is their approach to strategy. Creators of blue oceans do not use the competition as their benchmark, but follow a different strategic logic that we call value innovation.
Instead of focusing on beating the competition, make them irrelevant by simultaneously creating a leap in value for buyers and your company, thereby opening up new and uncontested market space.
Blue Ocean creating businesses follow a different strategic logic. They say:
- We Challenge Industry Conditions & Paradigms
- We Focus On Customers, Not Competitors
- We Don’t Segment Customers, We Aggregate Them
- Our Assets Capabilities Are Not Fixed, They Are Fluid
- We Solve Problems Across The Entire Supply Chain
Source: Extract from the book Blue Ocean Strategy. (c) Kim & Mauborgne, 2015. Boston. Harvard Business School Publishing