About the book

Blue Ocean Shift (BOS) is a systematic process to move you from fierce competition to new markets. You should be looking at wide-open blue oceans, which are without bloody competition and which can also engages company’s workforce. Successful BOS is a humanistic process. It should legitimizes our fears and deal with the issues.

W. Chan Kim and Renee Mauborgne are trying to empower managers to make the shift from red to blue ocean with practical guidance. With these methods you might even win by creating value-cost.

How was the book?

To start with – I’m somehow baffled. The Blue Ocean Strategy book was well advertised and  hyped decade 12 years. Even today you might find people talking about the Blue Ocean Strategy. Secondly the cases they are presenting are minimalistic or to be honest some cases are trivial. Thirdly they are seriously repeating points of views that could be well understood when mentioned only once. Too late, too little and too repetition?

When we forget these issues, I will gladly recommend the book for those who have not read the original Blue Ocean Strategy. It’s a big merit that Kim and Mauborgne have created the Blue Ocean concept. And with this book you get a workbook built within. Those who have already read the Blue Ocean Strategy, I would recommend to read something else unless the original book is your favorite.

What are the key learnings?

Blue Ocean Strategy is about market-competing moves and market-creating moves. It is like two oceans – red is market with fierce competition and blue is market with high growth and profit. Red ocean companies are bureaucratic and resistant to change just like the companies John P. Kotter and Jim Collins are trying to help. For example there is a story about Kimberley-Clark Brazil which is one of the great companies in the ”Good to Great” book by Jim Collins.

Kim and Mauborgne talk a lot about superior technology as one of the key drives of change. Compared to Collins who did not see tech as a driver for a transformation to a good to great company. Kim and Maubrogne combines these ideas and introduces a hybrid term of disruptive creation which combines for example both new technology and the creative usage of it.

Creative destruction by Joseph Schumpeter plays a vital role as a concept in the BOS although the real economic growth comes from the creation of new markets. For example blockchain could be one of those new technologies that enables new markets. The book uses different kind of examples. Such as how to reduce of the cost of petty criminals and prisons in Malaysia? How to define French fry maker market in France? How to create a youth orchestra in Iraqi and travel to international orchestra competitions? How long does it take to make the transformation? New French fry maker – ActiFry, was launched in two years. Iraqi and Malaysian cases ”were made in a year or so”. These and other examples illustrated how BOS works. Three key components to BOS:

1) Adopt a blue ocean perspective to expand horizon and seek for opportunities.

2) To have practical tools for market creation which helps the companies building commercially compelling new offering.

3) A bult-in process that empowers people to ”drive the process for effective execution.

Kim and Mauborge want’s to teach us how to move from market competing to market creating. BOS way of working is to identify and challenge the industry’s fundamental assumptions. Kim and Mauborge introduces five steps to create new markets are. These steps are based on their study about competition and blue oceans:

1. Get started with pioneer-migrator-settler map.

2. Understand where you are now with strategy canvas tool.

3. Imagine where you could be with buyer utility tool.

4. Find how to get there with six paths framework.

5. Make your move with blue ocean fair.

By the way the pioneer-migrator-settler map is kind of BCG Matrix which communicates to the management how fit the company is for the future. And ”to build a shared understanding of the likely consequences of inaction”. Anyways leaders are tied into two fundamentals. Firstly market boundaries and industry conditions are given. Secondly typically organizations make choice between differentiation and low cost. So you can’t offer value (differentiation) and low-cost (cheap) according to this thinking.

Nondisruptive creation can generate new markets like ringtones did for mobile entertainment, life coaching did for personal & professional lives, Sesame Street did for preschool market, Viagra solved dysfunctional erectile or Grameem Bank did with microloans. These did disrupt any market per se. So embrace nondisruptive and disruptive creation in strategic thinking. Comic Relief’s Red Nose-campaign and Salesforce.com’s web-based CRM are examples how to re-define the market and move to blue ocean. A growth model for market-creating strategy:

1. Breakthrough solution for existing problem.

2. Redifining an existing problem and solve it.

3. A brand-new problem and solution for that.

Blue ocean strategist do’s and dont:

• They do aim to make competition irrelevant.

– How to differentiate so that your offering cannot be benchmarked?

• They do focus on creating and capturing new demand.

– Search for new demand from noncustomers.

• They do aim to break the value-cost trade-off.

– They pursue differentiation and low cost, not either-or.

• They don’t take industry conditions as given.

– Industry conditions are created by individual companies and those can be changed by individual companies.

I feel again that I’m reading John P. Kotter or Jim Collins when Kim & Mauborgne starts to talk about humanness. For them it is to help people develop the confidence to act. Way to use humanness are:

1. Atomization = deconstruct the challenge and focus on solving them one at a time

2. Firsthand discovery = let people to discover for themselves the need for change (brutal facts)

3. Exercise of fair process = engagement, explanation and clear expectations.

With the BOS methodology you will create six different blue oceans with strategy canvases, business models, ERRC grids etc. Kim & Mauborgne have a lot of different kind of tools that are freely available for download from HERE. Just to get a glimpse of the tools I’ll present two – The Six Paths and ERRC.

Six-paths to open new value-cost frontier where you:

1. Look across alternative industries

2. Look across strategic groups within your industry

3. Look across the industry buyers and redefine the industry buyer group (Ogilvy & wife)

4. Look across complementary products and services

5. Rethink your functional-emotional orientation of your industry

6. Participate in shaping external trends over time

A useful tool is also the the ERRC grid <= the way you define your blue ocean. For example the hotel chain citizenM is worthwhile of reading on how to deeply the ERRC grid.

– Eliminate factors that are granted. For example citizenM eliminated front desk operations.

– Reduce factors that are below standards. For example citizenM reduced room size.

– Raise factors above the standards. For example citizenM raised the quality of the sleeping environment.

– Create factors that has not been offered. For example citizenM created check-in kiosks.

How should we change according to the book?

Obviously – if you are interested on creating new markets for you company – you should evaluate this methodology. While thinking about the possibility you could start the thinking from ”customer first” to ”noncustomer first”. Secondly we should never forget – today’s negatives can be turned into tomorrows positives. And when building the buyers experience in blue ocean – we should really experience the buyers experience.

What should I personally do?

Start thinking how to move your operations to areas where there is no competition (blue ocean). 

Summary

The book in six words – ”What we look for determines what we see.”