Blue Ocean Strategy

Blue Ocean Strategy

What is a blue ocean?

Too many companies ignore the cardinal rule: that businesses and markets don't work in stasis. When we think of business, we think of military concepts. Chief Executive Officer, Headquarters, Campaigns, Corporate Strategy, etc.

All of these are predicated on the idea that there is a fixed set of territory or business for us to fight over (so-called "red oceans").

Companies aren't the right unit

When looking at various companies (good to great, built to last, etc), more often than not, a company which is the wrong thing to analyze! So many companies go through periods of ups and downs (and often regress to the mean) that it's clear that companies aren't the right thing to measure.

Instead, it's markets that tend to make the difference between success and failure. A company's ability to discover and move into those new markets is what helps it avoid competition and maintain pricing power.

Compete on different axes

Sort of like Clayton's disruptive theory, blue oceans are created when companies compete on different axes than they might do normally. Usually there's some sort of key insight (or set of insights) which the company unlocks to differentiate itself in the market

Cirque du Soleil

  • animals — get rid of them, they are costly and also sort of a weird draw
  • three rings — people can only focus on one performer anyway, so only have a single ring
  • performers — no need to have named performers, they are small fry compared to movie stars
  • tents — keep these, they are a key part of the experience
  • adult — give more of an adult theater vibe

Yellow tail

  • wines typically all compete on the same axes: winery, grape type, price, awards
  • premium wines max out these categories. cheap wines optimize for price above all else
  • yellow tail big idea: the beer and cocktail market was bigger, make a wine that is more approachable!
  • keep branding that seems fun and easy to drink, kangaroo, lower-case yellow tail, colorful packaging
  • use popular variants: chardonnay, pinot
  • keep prices low by making just two separate wine variants, and bottling them the same way

Alternatives are different than substitutes! Substitutes compete in the same market along the same axes. Alternatives are like restaurants vs movies-both have the same goal. Can you take a similar activity and use it to help boost your main goal?