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Blue Ocean Strategy

by W. Chan Kim and Renée Marbourgne

Red Ocean = competitive, bloody - compete in existing markets, beat the competition, exploit existing demand, make the value-cost trade-off, align the whole system of a firm's activities with its strategic choice of differentiation OR low cost

Blue Ocean = open, uncontested - create uncontested market space, make the competition irrelevant, create and capture new demand, break the value-cost trade-off (deliver more value at lower cost), align the whole system of a firm's activities in pursuit of differentiation AND lower costs. Blue Ocean creates natural barriers to imitation. Takes time for competition to recognize, replicate operations, replicate mindset, catch up with learning curve, etc.

Six Principles and the Risks they Address/Reduce?

Strategy Formulation Principles

Execution Principles


Identify common/key factors on which firms currently compete:

The first two help lower cost structure. The second two help grow demand/value/revenue. => Create Eliminate, Reduce, Raise, Create Grid of factors => Creates a new value proposition

Three characteristics of good strategy:

Pitfalls to watch out for and avoid:



Focus on Big Picture (beyond the usual/known/knowable/comfortable metrics)

''Reach Beyond Existing Customers: three tiers of non-customers -

Get the Sequence Right

Overcome Organizational Hurdles

Build Execution into Strategy

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Last edited December 24, 2019 3:19 pm CentralTimeUSA by MichaelHerman
© 1998-2020 Michael Herman and, unless signed by another author or organization. Please do not reprint or distribute for commercial purposes without permission and full attribution, including web address and this copyright notice. Permission has always been granted gladly to those who contact me and say something about themselves, their work, and their use of these materials. Thank you and good luck! - Michael