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Article

Robert M. Randall

W. Chan Kim and Renée Mauborgne, professors of strategy at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute, introduced and defined the theory and…

Abstract

Purpose

W. Chan Kim and Renée Mauborgne, professors of strategy at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute, introduced and defined the theory and practice of blue ocean strategy – a unique methodology for creating commercially relevant new market space – in 2005. Despite the widespread interest in the concept, many managers still aren’t clear how blue ocean strategy differs from disruption theory, niche marketing, customer-focused innovation and other pioneering practices.

Design/methodology/approach

To better understand how to use blue ocean strategy methodologies and tools, the interviewer asked the researchers to explain some of the underpinning concepts.

Findings

Blue ocean strategy is about being first to get the customer offering right by linking innovation to value.

Practical implications

A blue ocean strategist gains insights about reconstructing market boundaries not by looking at existing customers, but by exploring noncustomers.

Originality/value

Managers will learn how to use blue ocean strategy to break the value-cost trade off, thereby opening up new market space.

Details

Strategy & Leadership, vol. 43 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article

W. Chan Kim and Renée Mauborgne

This paper reports the results of more than a decade‐long research journey on how firms can go beyond competing to creating uncontested market space, or “blue oceans,”

Abstract

Purpose

This paper reports the results of more than a decade‐long research journey on how firms can go beyond competing to creating uncontested market space, or “blue oceans,” that makes the competition irrelevant.

Design/methodology/approach

Studies over 150 blueocean creations in over 30 industries spanning more than 100 years from 1880 to 2000. Analyzes not only winning business players that created blue oceans but also their less successful competitors. Searches for convergence among the strategic moves that created blue oceans and divergence between these moves and those of less successful players caught in the red ocean of bloody competition.

Findings

Finds clear strategic patterns that united the strategic moves that created blue oceans and separated these from the strategic moves that left companies battling for incremental market share in red oceans of overcrowded markets.

Practical implications

This paper addresses the following key questions: How can companies create blue oceans in an opportunity‐maximizing, risk‐minimizing way? What makes the creation of blue oceans increasingly imperative? Why has the field of strategy to date paid scant attention to how to reconstruct market boundaries to open up blue oceans of uncontested market space?

Originality/value

This paper makes strides in filling a central void in the field of strategy. For the past 25 years the field of strategy has focused principally on how to build competitive advantages to beat the competition within established market boundaries. While important, with supply exceeding demand in more and more industries this often leads to a red ocean of bloody competition. Instead of battling rivals, companies need to go beyond this. They need to create blue oceans of uncontested market space to prosper in the future. This article gives an insight into how firms can achieve this.

Details

Journal of Business Strategy, vol. 26 no. 4
Type: Research Article
ISSN: 0275-6668

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Article

Brian Leavy

To study blue ocean strategy (value innovation management), which not only reframes the strategic challenge – from competing to making the competition irrelevant – but

Abstract

Purpose

To study blue ocean strategy (value innovation management), which not only reframes the strategic challenge – from competing to making the competition irrelevant – but also provides a series of tools and frameworks to act on this insight in a way that maximizes the opportunity and minimizes the risk.

Design/methodology/approach

This interview with Professors W. Chan Kim and Renée Mauborgne considers the concept of value innovation management and examines the ideas and tools they developed in their book Blue Ocean Strategy (Harvard Business School Press, 2005), the product of a successful twenty‐year research and consultancy partnership.

Findings

Blue ocean strategy is applicable across all types of industries from typical consumer product goods to b2b. It offers an alternative approach to the existing strategic planning process, one that is based not on preparing a spreadsheet document but on drawing a strategy canvas.

Research limitations/implications

The interview gives professors Kim and Mauborgne an opportunity to summarize many of their recent research findings.

Practical implications

As blue ocean strategy represents a significant departure from the status quo, managers typically face four hurdles to execution: first, cognitive: waking employees up to the need for a strategic shift; second, limited resources: the greater the shift in strategy, the greater the resources needed to execute it; third, motivation: inspire key players to move fast and tenaciously to carry out a break from the status quo; and fourth, organizational politics. Leaders must identify and effectively deal with internal opponents to change.

Originality/value

Provides a unique overview of value innovation management, its principles, tools, and techniques.

Details

Strategy & Leadership, vol. 33 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

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Article

Dennis Pitta and Elizabeth Pitta

Over the last several decades, product development efforts have seen unacceptably high new product failure rates. One important factor is the presence of competitors who…

Abstract

Purpose

Over the last several decades, product development efforts have seen unacceptably high new product failure rates. One important factor is the presence of competitors who can interfere with marketing strategy and force changes that sap resources and reduce success. As industries try to improve their success, line extensions, i.e. developing products similar but different to successful products, have become more common. Simultaneously, industries have reacted by refining the new product development (NPD) process to make it more reliable and accurate. The refined development techniques are so helpful in refining product benefits with which firms are familiar that they reinforce the pressure to extend the line. The result is overcrowded markets where destructive competition destroys profitability. A “blue oceanstrategy promises to change the destructive cycle of market crowding. Originally the framework focused on overall market strategy. However, it has a direct application to NPD. Revising the NPD process to incorporate a blue ocean viewpoint before the idea generation stage may reduce the failure rate and create breakthrough products that are not easily emulated. This paper aims to address this issue.

Design/methodology/approach

The paper reviews the NPD literature as well as work implementing a blue ocean strategy. It delineates the tools developed for applying blue ocean concepts to strategy. The paper then applies a blue ocean approach to the NPD process with the objective of developing new products and services that are unhindered by competitive offerings. Implementing a blue ocean strategy involves four main actions and may be focused on six targets. The paper integrates the elements into a strategic opportunity product development matrix which may help practitioners. Moreover, it identifies at which stage of the new product development process blue ocean concepts should be introduced.

Findings

The paper reveals that there are no unvarnished panaceas in product development. Applying a blue ocean strategy to avoid competition early in the product life cycle promises to reduce dangerous competition to allow the product to succeed. However, the gains will probably not extend indefinitely. It requires constant improvement and application of the concepts to gain a measure of sustainability. If firms are successful early, they may be able to defend gains in some areas to retain profitability, while seeking new blue oceans.

Practical implications

Blue ocean applied to marketing strategy has seen large gains in success. Integrating efforts to find uncluttered market space holds the promise of increased success. It will also refine the NPD process.

Originality/value

Blue ocean strategy has not been applied to the new product development process in the literature. The paper integrates the concepts of the strategy with the elements of product development. The result is a new approach toward success products and product introductions.

Details

Journal of Product & Brand Management, vol. 21 no. 1
Type: Research Article
ISSN: 1061-0421

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Article

Brian Leavy

This masterclass examines the blue ocean value innovation process, how it works in practice and how it has evolved since the publication of Blue Ocean Strategy (2005) by…

Abstract

Purpose

This masterclass examines the blue ocean value innovation process, how it works in practice and how it has evolved since the publication of Blue Ocean Strategy (2005) by W. Chan Kim and Renee Mauborgne as explored in their new book their new book Blue Ocean Shift (2017).

Design/methodology/approach

The main focus is the value innovation methodology that underlies blue ocean strategy.

Findings

Blue ocean strategy is a process of value innovation that uncovers new aggregations of demand by redefining the offering category.

Practical implications

Blue ocean strategy tends to focus on value innovation that uncovers new aggregations of demand by redefining the category while disruptive innovation tends to concentrate on new demand-creation that expands the current served market.

Originality/value

Blue ocean strategy sets out to reconfigure value propositions in compelling new ways that can deliver a quantum leap beyond the current red ocean value-cost frontier through raising buyer value and lowering company costs simultaneously. The emphasis on both value and innovation is essential to the creation of new “blue ocean” market spaces.

Details

Strategy & Leadership, vol. 46 no. 3
Type: Research Article
ISSN: 1087-8572

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Article

Norman T. Sheehan and Ganesh Vaidyanathan

Researchers Kim and Mauborgne argue that firms seeking to grow in mature markets need to create new buyer value, thereby entering Blue Ocean markets, where they don't have

Abstract

Purpose

Researchers Kim and Mauborgne argue that firms seeking to grow in mature markets need to create new buyer value, thereby entering Blue Ocean markets, where they don't have rivals. In contrast, firms fighting rivals in bloody, Red Oceans will struggle to remain profitable. To facilitate the search for Blue Oceans the paper aims to offer managers a new tool to uncover new points of buyer differentiation.

Design/methodology/approach

This paper draws from the strategy, marketing and economics literatures to illustrate how firms can enhance performance by creating Blue Oceans.

Findings

This paper suggests that one way to generate Blue Ocean strategies is to use the fundamental building blocks of value creation. Based on extensive work with value creation logics, it proposes that there are three types of value firms can offer customers: lower prices using an industrial efficiency logic; increase user connectivity with a network services logic; or enhance the offering's fit with the user needs using a knowledge intensive logic. By combining parts of two or more of the value creation logics, managers may construct innovative bundles of attributes.

Practical implications

Blue Ocean strategies are most appropriate for companies in the mature/decline phase of the product life cycle that are suffering from declining revenues and decreasing customer loyalty. Organizations facing these pressures typically attempt to increase the bottom line by increasing marketing and branding efforts while cutting costs and trying to dodge price wars. These value renovations usually meet with little success as competitors are attempting the same moves in what is largely a zero sum game. Instead of focusing on besting rivals, Kim and Mauborgne argue firms should aim for value innovation by redefining their offerings to compete in niches where there is no competition. Applying value creation logics helps managers redefine their offerings.

Originality/value

This is the first paper to outline how combining value creation logics leads to discovering Blue Oceans.

Details

Strategy & Leadership, vol. 37 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article

Emiel F.M. Wubben, Simon Düsseldorf and Maarten H. Batterink

The purpose of this paper is to discover an uncontested market space in the European fruit and vegetables industry (EFVI), and thereby assess the ex‐ante applicability of…

Abstract

Purpose

The purpose of this paper is to discover an uncontested market space in the European fruit and vegetables industry (EFVI), and thereby assess the ex‐ante applicability of the Blue Ocean Strategy of Kim and Mauborgne.

Design/methodology/approach

The search for an untapped market space made it necessary to first configure the logic of the Blue Ocean Strategy, which the authors coined the BOS‐framework. Next, the application to the EFVI required a two‐stage research strategy, namely desk research with six case studies, and a large survey.

Findings

The findings confirm that the Blue Ocean Strategy‐framework enables one to identify ex ante an untapped market space, characterized by the combination of sweeties' attributes with fresh fruit. The revolutionary untapped market space which the authors arrived at is “Youngfruit”, targeted at the new buyer group children and teenagers.

Originality/value

The research provides important insights in future key success factors to set oneself apart from competitors and change the rules of the game in the very competitive EFVI. Furthermore, this paper is (one of) the first to assess empirically the qualities and limitations of the Blue Ocean Strategy.

Details

British Food Journal, vol. 114 no. 2
Type: Research Article
ISSN: 0007-070X

Keywords

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Article

Petri Parvinen, Jaakko Aspara, Joel Hietanen and Sami Kajalo

This paper aims to investigate the role of new value creation mechanisms in a company's sales strategy. Using value creation and strategic marketing as theoretical…

Abstract

Purpose

This paper aims to investigate the role of new value creation mechanisms in a company's sales strategy. Using value creation and strategic marketing as theoretical approaches, the study explores the underpinnings of blue ocean strategy (BOS) and categorizes ways in which BOS is reflected in sales management activities. The link to performance and the influence of contextual moderation are also examined.

Design/methodology/approach

The article reports on a study on sales management in a 168‐respondent survey of CEOs and sales directors of Finnish companies across industries. The operationalization is quantitative, and principal component analysis with the varimax rotation method is used to examine the companies' approach to executing BOS and the firms are categorized using the cluster analysis method. Furthermore, the linkage to self‐reported business performance is statistically analyzed.

Research limitations/implications

This study identifies four approaches to using BOS: strategic awareness‐building; customer‐specific solution orientation; enforcement‐orientation; and non‐employment of blue ocean thinking. While only the enforcement‐orientation cluster has superior performance to non‐users of BOS across the entire sample, there are surprisingly notable performance differentials within different combinations of contexts.

Practical implications

The study points out that enforcing BOS at the level of action and implementation in sales management pays off. The findings entail that choosing between the identified BOS approaches and implementing them should be context‐specific. Furthermore, the development of skills is emphasized over knowledge management.

Originality/value

For concepts primarily directed at managerial audiences, the theoretical foundations and empirical testability is often not the primary concern. This study presents investigative work geared at revealing the key factors underlying blue ocean strategies in sales management. The paper represents one of the first verifications of the link between blue ocean strategy and business performance.

Details

Management Decision, vol. 49 no. 8
Type: Research Article
ISSN: 0025-1747

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Article

Svend Hollensen

The purpose with this article is to analyze the “Blue Ocean” phenomenon in depth. The goal is to better understand the underlying dynamic strategies in the form of

Abstract

Purpose

The purpose with this article is to analyze the “Blue Ocean” phenomenon in depth. The goal is to better understand the underlying dynamic strategies in the form of interactions between theory and management practices.

Design/methodology/approach

Single case study, Nintendo, which strategy is being confronted with the strategies of the two competitors, Sony and Microsoft. This is done in order to distinguish the value propositions of the three players in the game console industry

Findings

The main finding is that even if a company can create a Blue Ocean very fast with the right value proposition at the right time, it may be short-termed and may be transformed into a Red Ocean again within 1-2 years, unless the company's competitiveness is safe-guarded.

Practical implications

The results show, that Nintendo started out with a Red Ocean around 2005 with their GameCube. Then they turned it into a Blue Ocean with their introduction of “Wii” in November 2006. But Nintendo could not prevent Sony and Microsoft in turning it back to a Red Ocean, with their introduction of similar product features (motion controls), but at better quality. If Nintendo will be able to reestablish the Blue Ocean with their introduction of the “Wii U” in November 2012 is questionable.

Originality/value

There is constantly a need for reformulating the strategy through a dynamic and creative process, in order not to turn the Blue Ocean into a Red Ocean again.

Details

Journal of Business Strategy, vol. 34 no. 5
Type: Research Article
ISSN: 0275-6668

Keywords

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Article

Thomas G. Marx

The purpose of this paper is to test the proposition that business strategy affects leadership functions, skills, traits, and styles, and to assess the implications of…

Abstract

Purpose

The purpose of this paper is to test the proposition that business strategy affects leadership functions, skills, traits, and styles, and to assess the implications of these effects for the practice of both leadership and strategic planning.

Design/methodology/approach

This is an empirical study based on over 450 responses to an online survey. Continuous rating scales allowed the use of regression analysis to test the impacts of different strategies on leadership.

Findings

The results provide strong empirical evidence that Product (Differentiation vs Low Cost strategies), Best Value, and Blue Ocean strategies have significant effects on leadership. Market strategies (Broad vs Niche strategies) have limited impacts. The greater complexity of Product, Best Value, and Blue Ocean strategies underlie these findings.

Research limitations/implications

This study explores the effects of strategy on leadership. Future studies need to explore if these effects are moderated by external, competitive conditions, and if strategy mediates the impacts of leadership on organizational performance.

Practical implications

The practical implications of these findings are that leaders must adjust their behavior and leadership styles to effectively implement alternative strategies, and planners must assess their organization’s leadership capabilities when formulating strategy.

Originality/value

There have been numerous studies of the impacts of external/internal conditions on leadership, but this is one of the first studies of the critical impacts of strategy on leadership.

Details

Journal of Strategy and Management, vol. 8 no. 2
Type: Research Article
ISSN: 1755-425X

Keywords

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