Blue Ocean Strategy (Summary)
How did a circus without a single animal, star performer, or three-ring-show not only survive but achieve global revenues that rivaled Ringling Bros. and Barnum & Bailey at its peak? Cirque du Soleil didn't try to outperform the competition; it created a new market for theatrical, artistic circus that made the competition irrelevant.
Stop Competing, Start Creating with Value Innovation
The core of a Blue Ocean Strategy isn't to out-compete rivals, but to make them irrelevant by creating a leap in value for buyers and your company. This is 'Value Innovation'—simultaneously pursuing differentiation and low cost.
Casella Wines launched [yellow tail] and redefined the American wine market. Instead of competing on traditional factors like vineyard prestige and complex taste profiles, they offered a simple, fun, easy-to-drink wine. This lowered production costs (no need for expensive aging) while creating new value for millions of consumers who were intimidated by traditional wine culture.
Redefine Your Industry with the Four Actions Framework
To break from the competition, you must challenge your industry's long-held assumptions. The framework asks four key questions: Which factors that the industry takes for granted should be eliminated? Which should be reduced? Which should be raised? And which should be created?
The Nintendo Wii applied this framework perfectly to the video game market. It eliminated the need for cutting-edge HD graphics and processing power. It reduced the complexity of its controllers. It raised the interactivity and ease of play. And it created motion-sensing controls that opened gaming up to families and casual players, a massive blue ocean.
Focus on Noncustomers, Not Competitors' Customers
Instead of fighting for a bigger share of the existing market, you should look to the 'noncustomers'—people who don't currently use your industry's offerings. Understanding why they abstain reveals how to unlock new demand.
Curves, the fitness company for women, didn't target existing gym members. It targeted the huge population of women who found traditional gyms intimidating, expensive, and inconvenient. By creating a simple, 30-minute circuit in a supportive, women-only environment, they attracted millions of noncustomers and built a fitness empire.
Visualize Your Strategy to See New Opportunities
The 'Strategy Canvas' is a diagnostic tool that maps the current competitive landscape. By plotting the factors an industry competes on and where competitors invest, you can visually identify how to diverge and create a unique value curve, rather than mirroring the competition.
The traditional circus strategy canvas would show high investment in star performers, animal shows, and multiple arenas. Cirque du Soleil's canvas looks completely different. It shows low investment in those areas but high investment in new factors like theme, artistic music and dance, and a refined environment, creating a value curve that is completely distinct from its rivals.
