Blue Ocean

Strategy
Go where the profits and growth are - and where the competition isnt

W. Chan Kim & Rene Mauborgne

The Strategy Canvas

of Cirque du Soleil
hi
Ringling Brothers

offering level

Cirque du Soleil

Smaller Regional Circus

lo
Price

Animal Shows
Star Performers

Aisle Concessions

Multiple Show
Arenas

Thrills & Danger

Fun & Humor

Unique Venue

Theme

Multiple
Productions

Refined Viewing
Environment

Artistic Music
& Dance
Kim & Mauborgne 2006

The Strategy Canvas

of Cirque du Soleil
Eliminate

hi

Create

Raise

Reduce

Ringling Brothers

offering level

Cirque du Soleil

Smaller Regional Circus

lo
Price

Animal Shows
Star Performers

Aisle Concessions

Multiple Show
Arenas

Thrills & Danger

Fun & Humor

Unique Venue

Theme

Multiple
Productions

Refined Viewing
Environment

Artistic Music
& Dance
Kim & Mauborgne 2006

Personal Finance Software Industry

hi
Quicken

offering level

Personal Finance Software

The Pencil

lo
Price

Ease of Use

Optional Features

Speed

Accuracy
Kim & Mauborgne 2006

Red Ocean Versus

Blue Ocean Strategy
Red Ocean Strategy

Blue Ocean Strategy

Compete in existing market space

Create uncontested market space

Beat the competition

Make the competition irrelevant

Differentiation or low cost

Differentiation and low cost

Competitive Advantage

Value Innovation

Segment existing customers

Attract noncustomers

Exploit existing demand

Create and capture new demand

Kim & Mauborgne 2006

Substantially Higher Returns from

Investments in Blue Oceans
Business Launch

86%

Revenue Impact

Profit Impact
Red Oceans
Market-Competing Business Launches

62%

39%

14%

38%

61%

Blue Oceans
Market-Creating Business Launches

Kim & Mauborgne 2006

Is there a pattern
to blue ocean
creation?
Kim & Mauborgne 2006

Researching the History of

Blue Ocean Creation
Data: 150 blue ocean creations, more than 30
industries, over 100 years (1880-2000)

hotel, cinema, retailing, airline, energy, computer, broadcasting,

home construction, automobile, steel manufacturing, chemicals,
cosmetics, software, etc.

Variables considered: industrial,

organizational, strategic variables

Kim & Mauborgne 2006

Innovation
Random

Systematic

Entrepreneur

Pattern

Entrepreneurial Risk

A way of Thinking

Trial & Error

Learning from Failures
DNA / Culture
Units for Experimentations
(Spin-offs)

Theory
Methodologies
Analytical Frameworks
Opportunity Maximizing &
Risk Minimizing

Risk Taking or Risk Avoiding

Schumpeterian School

Value Innovation School

Kim & Mauborgne 2006

Minimizing Risks and Maximizing

Opportunities in Formulating and
Executing Blue Ocean Strategy
Formulation Principles

Formulation Risks

Reconstruct market boundaries

Search Risk

Focus on the big picture, not the numbers

Planning Risk

Reach beyond existing demand

Scale Risk

Get the strategic sequence right

Business Model Risk

Execution Principles

Execution Risks

Overcome key organizational hurdles

Organizational Risk

Build execution into strategy

Management Risk

Kim & Mauborgne 2006