Blue Ocean Strategy

By Renée Mauborgne & Chan W Kim.

This post summarizes the book Blue Ocean Strategy by Renée Mauborgne & Chan W Kim. It shows the differences between a winning strategy (Blue) versus a competitive one (Red).



A- The 6 Blue Ocean’s principles

B- Blue Ocean value innovation

C- Red Ocean VS Blue Ocean strategies


A- The four actions framework

  1. Which of the factors that the industry takes for granted should be eliminated?
  2. Which factors should be reducedwell below the industry’s standard?
  3. Which factors should be raisedwell above the industry’s standard?
  4. Which factors should be createdthat the industry has never offered?

B- Blue ocean strategy Canvas [yellow tail]

C- The Eliminate-Reduce-Raise-Create Grid

D- The 3 Blue Ocean’s principles

These three characteristics serve as an initial litmus test of the commercial viability of blue ocean ideas.


Emphasize the main strategic points (easy drinking, ease of selection, fun and adventure).


Apply the four actions of eliminating, reducing, raising, and creating to differentiate your profiles from the industry’s average profile.

Compelling Tagline

A good tagline must not only deliver a clear message but also advertise an offering truthfully, or else customers will lose trust and interest. In fact, a good way to test the effectiveness and strength of a strategy is to look at whether it contains a strong and authentic tagline (“The essence of a great land . . . Australia.”)

E- Reading the Value Curves

A Blue Ocean Strategy

Does the Value Curves meets the 3 criteria?When a company’s value curve, or its competitors’, meets the three criteria that define a good blue ocean strategy—focus, divergence, and a compelling tagline that speaks to the market—the company is on the right track.

A Company Caught in the Red Ocean

Does the Value Curves converges with its competitors? If yes, it signals that a company is likely caught within the red ocean of bloody competition. A company’s explicit or implicit strategy tends to be trying to outdo its competition on the basis of cost or quality.

Over delivery Without Payback

Does the company deliver high levels across all factors? So does the company’s market share and profitability reflect these investments?If not, the strategy canvas signals that the company may be oversupplying its customers, offering too much of those elements that add incremental value to buyers. To value-innovate, the company must decide which factors to eliminate and reduce—and not only those to raise and create—to construct a divergent value curve.

An Incoherent Strategy

When a company’s value curve looks like a bowl of spaghetti—a zigzag with no rhyme or reason, where the offering can be described as “low-high-low-low-high-low-high”—it signals that the company doesn’t have a coherent strategy.

Strategic Contradictions

Are there strategic contradictions?These are areas where a company is offering a high level on one competing factor while ignoring others that support that factor. An example is investing heavily in making a company’s Web site easy to use but failing to correct the site’s slow speed of operation.

An Internally Driven Company

In drawing the strategy canvas, how does a company label the industry’s competing factors?For example, does it use the word megahertzinstead of speed, or thermal water temperature instead of hotwater? Are the competing factors stated in terms buyers can understand and value, or are they in operational jargon?



A- 6 paths framework

Path 1: Look Across Alternative Industries

Example: purchase its own aircraft or commercial airlines flights for business travelers? àNetJets (fractional jet ownership) created a new industry between these two.

Path 2: Look Across Strategic Groups Within Industries

Example: traditional health club (conviviality, external from home) + home exercise program (price, less equipment) -> Curves combined best strategies from both of them.

Path 3: Look Across the Chain of Buyers

Novo Nordisk(insulin producer) went from doctors influencers to final customers directly. 

Path 4: Look Across Complementary Product and Service Offerings

Example : in the bus industry the maintenance costs are high + buyers are looking for the best bus price when they decide to buy some àNABIadopted fiberglass in making its buses (less maintenance, lower consumption, lower powered engines etc.).

Path 5: Look Across Functional or Emotional Appeal to Buyers

  • Swatch(budget watch industry into an emotionally driven fashion statement).
  • QB House(from an emotional industry to a highly functional one).
  • Cemex(functional to emotional).

Path 6: Look Across Time

What trends have a high probability of impacting your industry ?

  • Applewith iTunes (with illegal downloads it was predictable that a regular industry will emerge).
  • Cisco predicted the high volume traffic on internet and so it focused on servers’ development.


A- The four steps of visualizing strategy

Example: European Financial Services (EFS)

Bloomberg went into the field to discover their customer’s needs (2. Visual Exploration). 

B- Using the Pioneer-Migrator-Settler (PMS) Map

Pioneers: they offer unprecedented value àsources of profitable growth

Settlersthese are me-too businesses àno much future 

Migratorssomewhere in between red and blue ocean àoffer improved value, but not innovative value

TI baseband à Settlers, “vache à lait” for a short period – Need to have the three kinds.


Reach beyond existing demand : Golf Callaway’s example with the bigger club than the standard one. Non-client àClient.

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