Searching for Blue Oceans

In their book, Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne align their business saavy with water colors.

In their scheme, Red Oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities or niche, and cutthroat competition turns the ocean bloody. Hence, the term red oceans.

Blue Oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.

The cornerstone of Blue Ocean Strategy is 'Value Innovation'. A blue ocean is created when a company achieves value innovation that creates value simultaneously for both the buyer and the company. The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market.


To establish a new value curve, they advocate a Framework consisting of four questions (and their corresponding actions) in particular:
1. ELIMINATE: Which factors that the industry takes for granted should be eliminated?
2. REDUCE: Which factors should be reduced well below industry standards?
3. RAISE: Which factors should be raised well above the industry's standard?
4. CREATE: Which factors should be created that the industry has never offered?