Blue Ocean Strategy

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Authors: Chan Kim and Renee Mauborgne

Publisher: Harvard Business School Publishing

Reviewer: Goke Ilesanmi

          It is a great challenge to corporate organisations to handle competition effectively, get appreciable market share and achieve profitability. This is why I want us to examine this book entitled “Blue Ocean Strategy”.  It is co-authored by Chan Kim and Renee Mauborgne. Kim is the Boston Consulting Group Bruce D. Henderson chair professor of Strategy and International Management at INSEAD; while Renee Mauborgne is the INSEAD distinguished fellow and professor of Strategy and Management.

According to Kim and Mauborgne, companies have long engaged in head-to-head competition in search of sustained, profitable growth. They add that companies have fought for competitive advantage, battled over market share and struggled for differentiation, yet in today’s overcrowded industries, competing head-on results in nothing but a bloody “red ocean” of rivals fighting over a shrinking profit pool. These authors say based on a study of 150 strategic moves spanning more than a hundred and thirty industries, tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth.

The text contains three parts of nine chapters. Part one is entitled “Blue ocean strategy” and contains two chapters. Chapter one is tagged “Creating blue oceans”. According to Kim and Mauborgne here, it will always be important to swim successfully in the red ocean by out-competing rivals. They expatiate that red oceans will always matter and will always be a fact of business life. These authors say but with supply exceeding demand in more industries, competing for a share of contracting markets, while necessary, will not be sufficient to sustain high performance.

They say although the term “Blue ocean” is new, its existence is not and it is a feature of business life, past and present. Kim and Mauborgne educate that despite the fact that economic conditions indicate the rising imperative of blue oceans, there is a general belief that the odds of success are lower when companies venture beyond existing industry space. They add that if one lacks understanding of the opportunity-maximising and risk-minimising principles driving the creation and capturing of blue oceans, the odds will be lengthened against one’s blue ocean initiative.

Chapter two is based on the subject matter of analytical tools and frameworks. These authors say we have spent the past decade developing a set of analytical tools and frameworks in an attempt to make the formulation and execution of blue ocean strategy as systematic and actionable as competing in the red waters of known market space.  Kim and Mauborgne stress that these analytics fill a central void in the field of strategy, which has developed an impressive array of tools and frameworks to compete in red oceans, such as the five forces for analysing existing industry conditions and three generic strategies, but has remained virtually silent on practical tools to excel in blue oceans.

“Instead, executives have received calls to be brave and entrepreneurial, to learn from failure, and to seek out revolutionaries. Although thought-provoking, these are not substitutes for analytics to navigate successfully in blue waters,” disclose these authors. Kim and Mauborgne add that in the absence of analytics, executives cannot be expected to act on the call to break out of existing competition. They stress that effective blue ocean strategy should be about risk minimisation and not risk-taking.

Part two is summarily tagged “Formulating blue ocean strategy” and covers four chapters, that is, chapters three to six. Chapter three is entitled “Reconstruct market boundaries”. According to these experts here, the first principle of blue ocean strategy is to reconstruct market boundaries to break from the competition and create blue oceans.          Kim and Mauborgne submit that the challenge is to successfully identify, out of the haystack of possibilities that exist, commercially compelling blue ocean opportunities.

In chapters four to six, they discuss the concepts of focusing on the big picture, not the numbers; reaching beyond existing demand; and getting the strategic sequence right.

Part three is generically christened “Executing blue ocean strategy” and contains three chapters. According to these authors in chapter seven entitled “Overcome key organisational hurdles”, once a company has developed a blue ocean strategy with a profitable business model, it must execute it. In their words, “Companies, like individuals, often have a tough time translating thought into action whether in red or blue oceans. But compared with red ocean strategy, blue ocean strategy represents a significant departure from the status quo.”

In chapters eight and nine, Kim and Mauborgne analytically X-ray the concepts of building execution into strategy and the sustainability and renewal of blue ocean strategy.

Conceptually, this text scores a pass mark in that it stresses the need to avoid wasting time on unnecessary competition symbolised by the red ocean and create a virgin space of the blue ocean to stay ahead of competition comfortably.        

Stylistically, the text is a success. For instance, the choice of words employed in this text is very comprehensible and the well-researched concepts, brilliantly articulated. The creativity of these authors is confirmed by the highly suggestive and visually communicative cover design reinforcing the major subject matter of blue ocean strategy. Kim and Mauborgne meticulously use graphics for the purpose of visually enhancing understanding of readers. The title of the text is metaphoric and appealing. Also worthy of note is the use of paradox in the text. For instance, these authors say companies must stop competing with each other, especially that the only way to beat competition is to stop trying to beat the competition. However, some ideas seem repetitive in the text. Probably Kim and Mauborgne deliberately employ this style to create emphasis.

On the whole, the text is good for everybody and organisations that are prepared for enduring success through strategic knowledge of how to take extra steps to achieve business growth and profitability.

GOKE ILESANMI (FIIM, FIMC, CMC), CEO of Gokmar Communication Consulting, is an International Platinum Columnist, Professional Public Speaker, Career Mgt Coach and Certified Mgt Consultant. He is also a Book Reviewer, Biographer and Editorial Consultant.

Tel: 08055068773; 08187499425

Email: gokeiles2010@gmail.com

Website: www.gokeilesanmi.com.ng

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