Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant
By W. Chan Kim and Renée Mauborgne
Harvard Business School Press, 2005
272 pages, $27.95
Can a business masterpiece be created using a paint-by-numbers kit? The answer provided by INSEAD professors W. Chan Kim and Renée Mauborgne in Blue Ocean Strategy is “yes.” The authors set out to provide practical frameworks and analytics for the systematic pursuit and capture of value in the emergent markets they call “blue oceans.” These are markets where demand is untapped and competition does not yet exist, whose pristine beauty is displayed in stark contrast to the murk and stagnation of their crowded red counterparts.
Although the blue ocean metaphor is evocative, the arguments in the book are less compelling. The authors examine the histories of the corporations they use as examples as if these organizations were themselves strategic actors. Thus the wildly successful entertainment company Cirque du Soleil is portrayed as analyzing, planning, deciding, and acting as if the company were an individual. This is harmless shorthand for casual discussion, but it is a hindrance to understanding the causal connections involved in navigating uncharted oceans. Could the Cirque really have substituted the systematic development and execution of strategy for the passionate, gloriously messy learning process it actually went through?
Such judgment generally surfaces retrospectively. As the Cirque’s creative director once said, “We intend to look back over the last 10 years to find where we are headed.” One questions whether the lessons to be drawn from this example, or the authors’ other ones, are really about strategizing, or whether they are more about learning and the evolution of successful ventures. In short, some readers may be concerned that the authors have confounded the question of why some enterprises succeed with the question of how they are created.
But although Blue Ocean Strategy may not help managers find truly undiscovered opportunities, the authors’ “strategic canvas” offers both a diagnostic framework and an action plan that invites managers to challenge the boundaries of their existing definitions of industries, customers, and markets by a combination of eliminating, reducing, raising, and creating the various ingredients that comprise a successful venture: the authors call the resulting profile a “value curve.”
Although they separate strategy formulation from implementation in the structure of the book, the authors warn against this split in practice, arguing that it leads to a lack of trust, commitment, and cooperation among employees. They outline a “fair process” of strategy formulation that calls for extensive field exploration and early involvement of those who will be implementing the strategy. In this way, a strong basis for effective execution is built in from the start.permalink.