Coffee shops and baristas have been around much before the rise of Starbucks. Use the above checklist as a guide through the process and hold internal brainstorming sessions for each point. The result is that buyers get the convenience of a private jet at the price of a commercial airline travel. Blue Ocean Strategy is a marketing approach developed by W. Chan Kim and Renee Mauborgne, professors at INSEAD, a private university with locations around the world. So he created Compte-Nickel, a simple and convenient banking service at low cost that looked beyond current bank customers and reached low-income earners and other people excluded by legacy banks. Standardization reduced costs by employing unskilled laborers instead of car artisans. It cost $850, half the price of existing cars. But its not always clear how to create a blue ocean strategy for yourself. Here customers dont buy a jet outright. To get a better understanding of how this works, lets review Chan Kim and Renee Mauborgnes Four Actions Framework. By 1924, CTR held 85% of the tabulating market and became IBM. How did [yellow tail] become the number one imported wine and the fastest-growing brand in the history of the US and Australian wine industries? Rather than aim for the existing comic buyers, who were children, Marvel created new, more complex characters that appealed to college students noncustomers of the comic book industry up to this point. Download Free PDF View PDF. IBM also unbundled hardware, services, and software, selling individually and creating the new software and services industries. By 2003 more than two billion illegal music files were being traded every month. This allowed the company to dramatically reduce or eliminate all the factors the wine industry had long competed on tannins, complexity, and aging. But nowadays, there are literally tons of entertainment options kids can choose from (video games, anyone? Nintendo, the Japanese video game company created its first console in 1977 and became internationally famous with the release of games Donkey Kong in 1981 and Super Mario Bros. in 1985. History reveals that there are no perpetually excellent companies. Compte-Nickel a blue ocean in the fintech industry, 6. By doing some competitor analysis and adding a dash of blue ocean theory, Amazon . The first example of blue ocean strategy comes from computer games giant, Nintendo, in the form of the Nintendo Wii. Inspirited Realty. Furthermore, he created a new leasing model where businesses could avoid large upfront costs and upgrade machines frequently. The Nintendo Wii launched in 2006 and at its heart is the concept of value . Casella also made selection easy by offering only two choices of [yellow tail] Chardonnay, the most popular white wine in the US; and red Shiraz. From the strategy canvas elements explained above, the horizontal axis lists the critical success factors. Stitch Fix is a personal styling company that mails its customers boxes of stylish, carefully selected clothing. Simple theaters were constructed in lower-rent neighborhoods. Recognized as one of the most iconic and impactful strategy books ever written, _BLUE OCEAN STRATEGY_ , now updated with fresh content from the authors . Where to Look For Your Blue Ocean. 8 Henry Ford created the Model T, the first standardized, mass-produced automobile. It develops mental horizons and helps in recognizing the opportunities. Study the New Players: Be aware of their Products and Approaches. 2. By looking at the alternatives of beer and ready-to-drink cocktails, Casella Wines created three new factors in the US wine industry easy drinking, easy to select, and fun and adventure. According to Chan and Rene ( pictured ), blue ocean strategy is when a company simultaneously pursues differentiation and low cost to open a new market space and create new demand. Apple capitalized on this decisive trend with a clear trajectory with the creation of iTunes in 2003. Marvel a super-powerful blue ocean strategy example, 3. Until that time, Americas five hundred automakers built custom-made novelty automobiles. The following blue ocean strategy examples all highlight strategic moves that delivered products and services in a way that opened and captured new market space, with a significant leap in demand. Its the mindset of a red ocean strategist. With the launch of iTunes, Apple unlocked a blue ocean of new market space in digital music that it has now dominated for more than a decade. The Blue Ocean Team shares case studies, stories and practical insights related to the blue ocean tools and principles developed by Chan Kim and Rene Mauborgne. Instead of competing with the expensive and high-end processing power of PlayStation 4 or Xbox One, the Nintendo Switch was a small device that allowed users to play games on a TV and on the go, connecting seamlessly between one device and the other. Their only well-known character was Captain America, invented specifically to encourage Americans to support WWII. By thinking in terms of complementary products and services, Philips saw that the biggest issue the British had in brewing tea was not in the kettle itself but in the complementary product of water, which had to be boiled in the kettle. Stitch Fix was founded by a woman and, with 86% of female employees, the company has one of the largest female workforces in the AI space, if not across almost all industries. Blue Ocean Strategies presents a systematic approach to making the competition irrelevant and outlines principles and tools any Hotels can use to create and capture their own blue oceans.. Now is the time for Hotels to be proactive and not think tomorrow will look like today, but anticipate change and implement new innovative Content and Social Media . Today, more than thirty years on, Quicken still remains the number-one-selling personal financial software. From 1960 to 1964, the company introduced Spider-Man, Iron Man, The Hulk, The X-Men, and many other characters about 8,000 in all. In 1909 it dropped to $609, by 1924 it was down to $240. Despite the number of automakers, the industry was small and unattractive with cars unreliable and expensive, costing around $1,500, twice the average annual family income. Supplier power on the part of star performers was strong. The book includes many illuminating examples of Blue Ocean strategy in action, including: The National Youth Orchestra of Iraq found success by "reducing the emphasis on technical. ONGC Global energy corporation ONGC, short for Oil and Natural Gas Corporation Limited, is an Indian multinational crude oil and gas corporation. In this perennial bestseller, embraced by organizations and industries worldwide, globally preeminent management thinkers W. Chan Kim and Renee Mauborgne challenge everything you thought you knew about the requirements for strategic success. Founded in 2014, the company has quickly become one of the leading fintech startups in France until it was successfully sold to BNP Paribas for over 200 million euros in 2017. Here's what you'll find in our full Blue Ocean Strategy summary: Allen Cheng is the founder of Shortform. Here are 3 awesome examples of the Blue ocean strategy: Starbucks The world-renowned barista sees its green sign on almost every block of major cities. This will be analyzed and explained using the . Blue Ocean Strategy is a powerful framework for finding new business opportunities. Figure 4: Four Action Framework (Eliminate-Reduce-Raise-Create) Example: Cirque du Soleil To illustrate their ideas, Chan Kim and Mauborgne used several real-life examples in their book. Specifically, these new markets give a company a very high competitive advantage as well as low price/cost pressure. The wine industry criticized the sweet fruitiness of [yellow tail] but consumers loved the wine. HealthMedia - a blue ocean strategy example in healthcare 5. The strategy canvas of [yellow tail] shows how its strategic profile breaks from the competitors in the US wine industry. A blue ocean strategy is a market-creating business approach that seeks to create and capture blue oceans - untapped emerging markets ripe for growth. The iPhone was a couple years late to the smartphone party. Small and unknown, they had expected to sell 25,000 cases in their first year. The circus industry is no longer as popular as it once was. The research focused on discovering the common factors that lead to the creation of blue oceans and the key differences that separate those winners from the mere survivors and those adrift in the red ocean.The database and research have continued to expand and grow over the last ten years since the first edition of the book was published and the strategic moves we studied depict similar patterns, whether blue oceans were created in for-profit industries, non-profit organizations, or the public sector. But Ford and Chrysler followed this strategy, and they began a red ocean period of competition and imitation. Learn theessentialsof blue ocean strategy and shift created by #1 Management Thinkers in the World. Nintendo 's switch to a blue ocean 3. Cash flow was so tight they struggled to make payroll. Lets look at the Strategy Canvas of [yellow tail]. Companies often target the person with purchasing power, who may sometimes be a different person with different preferences from the actual user. Instead, your aim is to redraw industry boundaries and operate within that new space, making the competition immaterial. Instead they should create blue oceans of uncontested market space and make the competition irrelevant. In the 1970s, IBM, DEC, and others competed on building more powerful machines for the business market. It made the automobile accessible to the mass of the market. Marvel invented characters that were people first and superheroes second: Spider-Man, The Hulk, Iron Man, the X-Men. Nickelodeons were widespread, but were considered low-brow. When markets are active, traders and analysts must make rapid decisions. To sort out their personal finances people can buy and install a financial software package, hire a CPA, or simply use pencil and paper. Arriving too early. Start by identifying what your target market needs and doesnt currently have. Blue Ocean challenges companies to push the boundaries of their industries and offer consumers something unique of immense value. And it was priced so that the majority of Americans could afford one. It also scored a home run by making wine shop employees ambassadors of [yellow tail], introducing fun and adventure into the sales process by giving the Australian outback clothing. ), What blue oceans are, and how you create one for your business, Why some businesses succeed in creating blue oceans, and why others fail, The red ocean traps you have to avoid if you want business growth. In a little more than a decade, the U.S.-based financial information provider, Bloomberg became one of the largest and most profitable business information providers in the world. Despite its importance to British culture, the British teakettle industry had flat sales and shrinking profit margins until Philips Electronics, the Dutch consumer electronics company, came along with a teakettle that turned the red ocean blue. Wine alternatives like beer and spirits accounted for the majority of sales, so clearly most Americans saw wine as a turn off. Pharma concentrates primarily on influencing doctors, the decision-makers who write prescriptions. This involves creating and capturing new demand, breaking the value/cost trade-off, and redefining market boundaries to create a leap in value for buyers. Learn how you can implement these strategies within your business. Cuneo and Marvels most vital blue ocean strategic move was entering the motion picture industry, a blue ocean strategic pivot that saw the company roar back to success in the 21st century in the form of Marvel Studios. Today iTunes offers more than 37 million songs as well as movies, TV shows, books and podcasts. The basic message of Blue Ocean Strategy is that organizations should not try to compete in existing markets (red oceans) but rather create or find new markets where competition does not yet. It is based on the view that market boundaries and industry structure are not a given . Viagra is another example of blue ocean strategic move in the healthcare industry. All rights reserved. They have tremendous income but work such long hours that they have little time to spend it. Based on an eponymously titled book, this strategy argues that cutthroat competition results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. Companies should instead look for new market space and ways to reinvent the industry. The example provided in this book of a company that effectively utilized value innovation was the Cirque du Soleil. Identifying the best blue ocean for your company will require the reconstruction of market boundaries. Stitch Fix - a blue ocean example in the fashion retail industry 4. Neither the pencil nor other software packages could compete. Netflix did not invent movies, but it offered a unique opportunity to watch them online. Think of it as a wedding registry, except that instead of giving silverware, for example, Cemex positioned cement as a loving gift. He reads broadly, covering a wide range of subjects including finance, management, health, and society. [yellow tail] created a unique and exceptional value curve to unlock a blue ocean. The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation. Dell reduced delivery time to 4 days, compared to the industry average of 10 weeks. The Apple II combined existing technology into an easy-to-use solution with compelling software for the home (like word processors and games). The result was an easy-drinking wine that did not require years to develop an appreciation for. It was intimidating and pretentious. Bloomberg saw that it was traders and analysts, not IT managers, who make or lose millions of dollars for their employers each day. Another great example of Blue Ocean Strategy applied by firms across Globe is using the Power of Economies of Scale. With the intuitive Strategy Canvas editor you can draw Strategy Canvas in seconds. Bloomberg focused instead on traders, who wanted ease-of-use and more powerful features like keyboard shortcuts, multiple monitors, and analytical tools to help them assess fair market value. In 1924, General Motors introduced variety a car for every purse and purpose. This was a Blue Ocean Strategy example. Moreover, simplifying the software cut costs. The result was the new market space of fractional jet ownership. The industry focused on purchasers IT managerswho valued standardized systems, which made their lives easier. Can you create a new product targeting their pain points? How to Shift From Red Oceans to Blue Oceans, Powerful tools to create your business strategy, a blue ocean example in the fashion retail industry, Stitch Fix: A Blue Ocean Strategy in Retail, Viagra created a blue ocean in lifestyle drugs, Fintech: Compte-Nickel, Creating New Demand In The Retail Banking Sector, Blue Ocean Practical Introduction Online Course, How to Be a Blue Ocean Strategist in a Post-pandemic World, A Blue Ocean Compass for Your Post-Covid Strategy, Which factors that the industry takes for granted should be, Which factors that the industry has never offered should be. This trend was underscored by the fast-growing demand for MP3 players that played mobile digital music, such as Apples hit iPod. All rights reserved. Blue Ocean Strategy. It didnt feel like a special night out any longer. Diabetics needing insulin had to deal with vials, syringes, and needles several times a day. Initially, Facebook started as an innovative blue ocean company that created social networks. The phlegmatic British typically took a teaspoon and went fishing to capture the off-putting limescale before drinking home-brewed tea. Cirque du Soleil a classic example of blue ocean strategy. Nantucket Nectars can use following Blue Ocean Strategy (BOS) tools and techniques to overcome the red ocean of cut throat competition in Innovation & Entrepreneurship industry. Founded in 1939 as a comic book company, Marvel plodded along in its first few years at a time when superheroes had fallen out of fashion. The first example of blue ocean strategy comes from computer games giant, Nintendo, in the form of the Nintendo Wii. Recommendations to consumers to buy [yellow tail] flew out of their mouths. Most of families extra money was spent on village festivals, quinceaeras (girls fifteen-year birthday parties), baptisms, and weddings. Despite being confrontational because the strategy . For anyone tired of competing head-to-head and wanting to seize new growth. They operate and compete in the saturated short-haul airline business and focus on providing low-cost services. This was a Blue Ocean Strategy example. Consider the big movies of the last decade. In 1952, the first electronic computer, named the UNIVAC, was released by a competitor. The first example of blue ocean strategy comes from computer games giant, Nintendo, in the form of the Nintendo Wii. Blue ocean strategy examples In the work 'Blue Ocean Shift', Kim and Mauborgne take the example of an initiative by the government of Malaysia as a suitable example of a blue ocean strategy. Definition and examples Blue Ocean Strategy is a marketing theory in which a business enters a market that has little or no competition. Before movies, a major form of visual entertainment was through live theater or operas. In their classic book, Blue Ocean Strategy, Chan Kim & Rene Mauborgne coined the terms 'red ocean' and 'blue ocean' to describe the market universe. If youre interested to learn more about Compte-Nickels blue ocean and how it went from a startup to achieving strong profitable growth, check out this case Fintech: Compte-Nickel, Creating New Demand In The Retail Banking Sector. Cirque did away with animals and costly star perform. A former street performer, Guy Lalibert decided to escape the red ocean of circuses to create a blue ocean of theatrical entertainment: Cirque du Soleil. The HealthMedia case study is analyzed in detail in New York Times and #1 Wall Street Journal bestseller Blue Ocean Shift. Apple observed the flood of illegal music file sharing that began in the late 1990s, enabled by file sharing programs such as Napster, Kazaa, and LimeWire. Many industries had accepted it to get benefits, such as Netflix, Canon, iTunes, Cemex, Philips, NetJets, Curves, JCDecaux, Quicken, Polo Ralph Lauren, etc. Blue Ocean Strategy | Shift | Leadership 23,159 followers 1d Report this post In 2009 Howard Stoeckel, Wawa's then-CEO, saw the company drifting into a red ocean. Cemex went a step further, throwing small festivities for the town when a room was finished thereby reinforcing the happiness it brought to people and the tanda tradition. It doesnt need to replace your current mode of operation. They explain how companies can gain an advantage over their competitors by creating blue . Every second counts. dan bam. Explore in-depth the blue ocean strategy examples of Nintendo Wii and Nintendo Switch. . Many in the business world hold to the conventional belief that companies can either create greater value to customers at a higher cost or create reasonable value at a lower cost. Perhaps most appealing, your jet is always available with only four hours notice. Few families built additions, and those that did took on average four to seven years to build a single additional room. Prestige and quality are judged by things like the personality and characteristics of a wine, reflected in the uniqueness of the soil, the winemakers skills, the aging process, and so on. The Eliminate-Reduce-Raise-Create (ERRC) Grid above shows how Marvel was able to break the value-cost trade-off, i.e., strategic actions that created unprecedented value at low cost. There were far more noncustomers than customers. By combining the decisive factors of both groups and eliminating or reducing everything else, Polo Ralph Lauren not only captured share from both strategic groups, but also drew many new customers into the market. He is credited with taking Marvel from bankruptcy to being acquired by Disney for over $4 billion in just over a decade. Intuit focused on bringing out both the decisive advantages that financial software had over the pencil speed and accuracy; and the decisive advantages that the pencil had over software simplicity of use and low price and eliminated or reduced everything else. By 1923, the majority of American households owned an automobile. A shift towards High-Value alternatives. Competition pushed theaters to be small, running a movie per week. (Shortform example: Corporate software-as-a-service (SaaS) products traditionally target the buyer in corporations, like the Chief Information Officer or senior management. They only buy a small fraction of it. In the 1990s, the SUV was introduced, featuring increased space over the minivan and rugged four-wheel drive and towing capabilities. With lower costs, Ford was able to charge a price that was accessible to the mass market. It was intimidating and pretentious, and the complexity of taste even though it was where the industry sought to excel created a challenge to the inexperienced palate. About Press Copyright Contact us Creators Advertise Developers Terms Privacy Policy & Safety How YouTube works Test new features Press Copyright Contact us Creators . By thinking in terms of solving the major pain points in customers total solution, Philips saw the water problem as its opportunity. French fintech Compte-Nickel found a blue ocean in the crowded French retail banking sector by identifying noncustomers and developing a strategy to attract them. Developed by Chan Kim and Renee Mauborgne, the Strategy Canvas is a diagnostic and action framework for building a compelling blue ocean strategy. The US wine industry in 2000 faced intense competition, mounting price pressure, increasing bargaining power on the part of retail and distribution channels, and flat demand despite overwhelming choice. iTunes is estimated to account for more than 60 percent of the global digital music download market. Create, edit and share documents with our all-in-one PDF solution. This was a Blue Ocean Strategy example. When you begin your strategic planning, recognizing the difference between a red and blue ocean may not be as easy as the colors would indicate. Here at ClearPoint, we recently used the framework for our own business. Learn more about yellow tail wines blue ocean strategy here. This was another Blue Ocean Strategy example. Reviewing the Blue Ocean Strategy Is the Blue Ocean Strategy valid and reliable. Traditional copy machine manufacturers targeted office purchasing managers, who wanted machines that were large, durable, fast, and required minimal maintenance. The core principle of blue ocean strategy is value innovation. Because it doesnt exist, you dont have competitors competing directly against you. 7.3 Developing a New Market: Blue Ocean Strategy 7.3.2 The six principles of Blue Ocean strategy implementation In assessing the solutions developed by both other banks in other countries, such as Barclays, but also tech companies solutions, such as PayPal and Amazon, it became evident to the MobilePay team, that these solutions were not . We learned that on any given feature, there are lots of competitors that offer good solutions. Taking a Blue Ocean approach means your goal isnt to outperform the competition. These were used as interludes for live theater. Offering complements to your product even at cost may add additional value through bundling. So Bloomberg designed a system specifically to offer traders a leap in value, one with easy-to-use terminals and keyboards labeled with familiar financial terms. There are several examples of the blue ocean strategy worldwide. Don't push yourself too hard. What is blue ocean strategy? Today, one can hardly speak of strategy without involving the language of . The shape of its value curve diverged from the other players, a result of not benchmarking competitors but instead looking across alternatives. The product was so simple, easy to use, fun and productive that buyers fell in love with it. Consider what happens before, during, and after your product is used. To answer this question, we need to look at some examples from a range of industries and identify the specific strategic actions blue ocean companies took to achieve profitable growth. The same company can be brilliant at one moment and wrongheaded at another. With point-to-point service and an exponential increase in the number of airports to land in, there are no flight transfers; trips that would otherwise require overnight stays can be completed in a single day. Amazon typically tops the charts due to its bookstore-alternative beginnings, followed by Uber. It opened up a market that was non-existent and created a whole new need. Check out some of the blue ocean strategy examples below that enabled organization to successfully break out of red oceans and create blue oceans of uncontested market space. Now, nearly thirty years later, NetJets share of the blue ocean it unlocked still stands a staggering five times greater than that of its nearest competitor. The Nintendo Wii launched in 2006 and at its heart is the concept of value innovation. All this was to change in the 1980s when Marvels new owners took a red ocean approach that sucked all the value out of the brand. To learn how Stitch Fix created a blue ocean in the retail industry, read the blog Stitch Fix: A Blue Ocean Strategy in Retail. Focus on your Product: Substitute Products are not yet a Threat.
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